The winter of trillions of planting real estate
The statement of the "collapse" of the planting system in the opinion network has not been interrupted since the death of Xie Zhikun and the explosion of its four major wealth companies, but investors still have a trace of expectations for it in the past two years.
By November 25, 2023, this last glimmer of hope has completely disappeared.
On November 25, the Chaoyang Branch of the Beijing Municipal Public Security Bureau reported that recently, the Chaoyang Branch of the Beijing Municipal Public Security Bureau filed a case for investigation of the suspected illegal crimes of the wealth company belonging to the "Zhongzhi Department" in accordance with the law, and took criminal coercive measures against Xie Moumou and other criminal suspects. In order to fully investigate the facts of the case and make every effort to recover the stolen goods and recover the losses, the circular also asks investors to register the case through three methods: online reporting, mailing the report, and on-site reporting.
The speculation about "Xie Moumou" has not yet been conclusive, but it is certain that with the investigation of the wealth company to which the "Zhongzhi Department" belongs, the last boot has finally landed.
In fact, Zhongzhi has also forewarned about this matter.
Three days before the announcement of the Chaoyang Branch of the Beijing Municipal Public Security Bureau, Zhongzhi Group issued a "letter of apology" to investors on November 22, saying that Zhongzhi Group hired an intermediary agency to carry out a comprehensive liquidation and verification of assets after the accident, and the preliminary due diligence found that the book amount of the group's total assets was estimated to be about 200 billion yuan according to the simulated merger caliber of the intermediary agency, and the scale of debt was huge, and the scale of the principal and interest of related liabilities after excluding the margin was about 4200-460 billion yuan.
Insolvency exceeds 200 billion yuan, and the huge hole is frankly confessed, and said that "at present, it is seriously insolvent, there is a major risk of going concern, and the resources available to pay off debts in the short term are far below the overall debt scale".
Zhongzhi Group also made the following guarantees for the liquidation stage: "The Group will strictly abide by the provisions of the law, actively cooperate with and urge intermediaries to further deepen the work of asset clearance and capital verification, accurately investigate the specific situation of assets and debts, and use all assets and rights and interests of the group for the protection of investors' rights and interests in a fair and just manner." ”
Some legal sources have pointed out that the filing of a criminal case is only the starting point of an illegal fundraising case, and it will take a long time to completely conclude the case, but this will be a later story.
The trillion-dollar capital empire that Xie Zhikun built after nearly 30 years of operation fell apart immediately after his death, and went into bankruptcy and liquidation in just two years, which may have been buried as early as when he built the "sky pavilion" of the Zhongzhi system.
In this regard, most analysts believe that the explosion of the planting system is also dragged down by the real estate industry, because more than a dozen real estate companies it has invested in have been in danger in the past two years.
A few years ago, real estate investment helped it reach its peaks, but now everything is back to a different starting point.
"Wealth" is no more
The Chaoyang Branch of the Beijing Municipal Public Security Bureau has only a few words on the statement of the wealth company to which the "Zhongzhi Department" belongs, that is, the wealth company to which the "Zhongzhi Department" belongs is suspected of violating the law and committing crimes, and criminal coercive measures are taken against Xie Moumou and other criminal suspects.
Behind this is the huge loss of hundreds of billions of dollars of investors.
According to the official website of Zhongzhi Enterprise Group, in the financial sector, the group holds or participates in four wealth management companies, namely Hengtian Wealth, Xinhu Wealth, Datang Wealth, and Gaosheng Wealth.
It has been reported that the total scale of wealth management products involved in the four major wealth companies exceeds 3 trillion yuan, and the number of investors involved exceeds 1 million. The annualized rate of return of these wealth management products is generally between 8% and 12%, which is much higher than the market average.
The crisis was only covered up by the prosperity at the beginning, and it took nearly 30 years for this trillion-dollar empire to be established, and only one month after the death of this soul figure, the four major wealth companies of the Zhongzhi system began to explode one after another, and the speed was far faster than imagined.
Mr. Xie's resume bears a clear mark of the times.
According to public information, Xie Zhikun was born in Yichun, Heilongjiang in 1961 and is the fifth child of the Xie family.
Perhaps thanks to his knowledge as a university student, or perhaps because of his extraordinary business acumen and adventurous spirit, the printing plant was in a state of declining profitability in the 1980s, but under the leadership of Xie Zhikun, its profitability began to slowly improve and turn a profit. Xie was also reused as a result of this, becoming the director of the printing plant.
On this basis, Xie also began to get involved in many fields such as pasta factories, garment factories, wood storage factories, cement factories, and breeding farms, and also acquired some state-owned non-performing assets, and the initial wealth accumulation slowly took shape.
According to the data, Xie Zhikun established Heilongjiang Zhongzhi Enterprise Group Company in 1995 with a total registered capital of 50 million yuan. The first pot of gold began with the purchase of Korean pine resources - Xie Zhikun took advantage of the scarcity of Korean pine to purchase and resell a large number of them, from which he received a very considerable reward. After the establishment of Zhongzhi Group, the main business is also timber and wood semi-finished products.
Two years later, the booming real estate industry attracted the attention of Zhikun, and his steps into the real estate field began, which also provided a shortcut for the rise of the "Zhongzhi system". At that time, Xie began to go out of Heilongjiang and expand his business to Yichun City, Harbin, Beijing, and Shanghai, becoming a well-known local developer.
A few years later, Xie Zhikun set his sights on the financial sector, and began to invest in Harbin Trust and Investment Company in 2001, and then took over Harbin Trust and Investment Company through the cooperation of five enterprises represented by Zhongzhi Group and Heilongjiang Mudanjiang New Materials, and renamed and rebuilt it as Zhongrong Trust Company.
Since then, the planting system has officially opened the door to the financial field, and has also completed the transformation from an industrial to a "full-license" financial holding empire, with assets up to trillions of yuan, and its business territory covers trust, mergers and acquisitions, pawnbroking, guarantees, third-party financial management, etc.
According to the official website of Zhongzhi, the group has now formed a dual main business model of "industry + finance", and has gradually developed into a comprehensive enterprise group covering real industry, asset management, financial services, wealth management and other fields.
In the most well-known financial sector, Zhongzhi Strategic Holdings or Equity Participation in six licensed financial institutions, including Zhongrong Trust, Zhongrong Fund, Hengqin Life Insurance, Hengbang Property Insurance, Zhongrong Huixin Futures and Tianke Jiahao Pawnshop. Holding or participating in five asset management companies, including Zhonghai Shengrong, Zhongzhi International, Zhongxin Rongchuang, Zhongzhi Capital, and Shoutuo Rongsheng, its business covers real estate management, distressed asset management, mixed ownership reform of state-owned enterprises, mergers and acquisitions, and private equity investment. Holding or participating in four wealth management companies, namely Hengtian Wealth, Xinhu Wealth, Datang Wealth, and Gaosheng Wealth.
Regarding the management scale of the four wealth management companies, there have been statistics that in 2020, the management scale of Hengtian Wealth, Datang Wealth, Xinhu Wealth and Gaosheng Wealth reached 930 billion yuan, 600 billion yuan, 850 billion yuan and about 100 billion yuan.
With the expansion of scale, as of the end of November 2021, the cumulative asset allocation scale of Hengtian Wealth has reached 1.5 trillion yuan, making it the largest of the four major wealth management companies. The second is Xinhu Wealth, with a cumulative asset allocation of more than 1.3 trillion yuan.
Just that there are unforeseen circumstances, and at the end of 2021, Zhongzhi Group suddenly issued an obituary saying that the company's founder Xie Zhikun died at 9:40 on December 18, 2021 in Beijing at the age of 61 due to a heart attack.
The collapse of the building also came suddenly.
Only one month after Xie Zhikun's death, in January 2022, Hengtian Wealth announced that due to changes in the market environment and tight capital chain, some of its wealth management products could not be redeemed on time, and at the same time proposed a plan to postpone payment or convert other products. However, this plan was not recognized and accepted by investors, but caused strong dissatisfaction and protests, and many business outlets of Hengtian Wealth were even surrounded and impacted by investors.
Subsequently, Xinhu Wealth, Datang Wealth and Gaosheng Wealth also announced that some wealth management products could not be redeemed on time, and proposed similar plans to postpone payment or convert other products. Not surprisingly, investors have expressed their dissatisfaction and anger, and have taken various ways to defend their rights and recover their principal and interest.
So far, the planting system has always been "steady", "safe", "capital preservation" and other words to attract customers' financial products exploded, and the four major wealth companies have a management scale of more than 3 trillion yuan, an annualized rate of return of 8% to 12% of the past.
The Winter of Real Estate
The reason why the four major wealth companies exploded, some analysts pointed out that most of these wealth management products are based on real estate projects or the equity of listed companies as the underlying assets, mainly real estate projects, infrastructure projects, listed company equity, etc., but these projects are now not high in return and liquidity, and there is a risk of loss and stagnation in the industry downturn.
With the volatility of the real estate market and capital market in the past two years, these assets have not been able to achieve value recovery, resulting in the four major wealth companies being unable to redeem wealth management products on time.
In this regard, there is a view that in the past two years, the planting system has stepped on 15 real estate companies in succession, which is the main fuse that caused the thunder. These real estate companies include Evergrande Group, China Fortune, Kaisa, Sunac, Blu-ray Group, Tahoe Group, Shimao Group, Helenbergh, Huangting International, Mingmen Real Estate, etc.
But it cannot be denied that the past prosperity of the planting system is indeed a two-way "love" with real estate.
Some real estate executives once said that since 2018, the accelerated expansion of real estate companies has begun to be limited by the narrowing of financing channels, and the "planting system" with trillions of funds in hand has naturally become the help behind it.
According to statistics, from 2017 to 2020, Zhongrong Trust, a subsidiary of Zhongzhi Group, invested in real estate accounted for 6.61%, 10.99%, 17.65% and 18% respectively, with an extremely significant growth.
Prior to this, there were a lot of investments in the real estate sector under the leadership of Xie Zhikun, such as Evergrande in 2016 for 9.1 billion yuan to acquire 4.68% of Vanke's equity, behind the transaction there is the shadow of Zhongzhi Group; in 2017, Kaisa resumed trading and gradually got on the right track, the head Guo Yingcheng brought Zhonghai Shengrong, a subsidiary of Zhongzhi, to acquire 51% of the shares of Kaisa's Shenzhen South Gate Dun Urban Renewal Project. It is thanks to their generous support that Kaisa has been able to gradually restart.
Huangting International, whose assets have recently been put up for auction one after another, has also received assistance from the Chinese planting system in 2019.
In addition, it is also said that the most "iron" cooperation object of the Zhongzhi Department in the real estate circle is Shimao, and a number of companies have been established with Shimao with a 50:50 equity ratio through the Zhongzhi Chuangxin investment platform. In the "Notice on the Establishment of Comrade Xie Zhikun's Funeral Committee" issued by Zhongzhi Group, Xu Rongmao, chairman of the board of directors of Shimao Group, is also a member of Xie Zhikun's funeral committee.
In addition, in April 2020, Zhongzhi also took over Zhonghong Building, a well-known unfinished building of Zhonghong Co., Ltd., for 3.312 billion yuan.
The following year, in July 2021, Zhuo Rui Property, a subsidiary of Zhongzhi, also bid for the Shimao Gongsan project for 1.645 billion yuan. According to the plan at that time, a super complex of "Sanlitun + CBD business district" will be built from the East Third Ring Road to the East Fourth Ring Road in Beijing.
At the same time, Shanghai Lujiazui Mingcheng Flower Garden and Tianyuan Xiangtai Building were all acquired by the planting department, and Jia Yueting's LeTV Building was also auctioned by the planting department for 570 million yuan.
The good times do not last long, as the real estate industry enters the adjustment cycle, the performance of real estate companies is getting worse, and the number of real estate companies that have exploded is gradually increasing, and many real estate companies are also among them, which also makes the yield of the plant system sluggish and liquidity difficult.
According to the data, as of December 31, 2021, Zhongrong Trust had 1,187 surviving trust plans, with assets under custody of 638.7 billion yuan, a year-on-year decline. Among them, the amount of huge real estate trusts held reached 89.555 billion yuan, accounting for 14.02% of the investment ratio, which has become a "minefield" buried in it.
In mid-January 2022, the two trust plans with principal and interest totaling 1.12 billion yuan invested by Zhongrong Trust in Huaxia Fortune "Rongyu No. 100" and "Jida No. 11" were declared in default.
In April 2022, Microlight Co., Ltd., which subscribed for 40 million yuan of the "Zhongrong-Rongpei No. 231" product issued by Zhongrong Trust, announced that it would extend the trust product.
In April 2022, Guangdong Tower Concrete subscribed for the "Zhongrong-Rongpei No. 231" product with its own funds of 20 million yuan, and recently announced a postponement of payment, and Zhongrong Trust said that all trust units existing under the trust plan are expected to be extended for 25 months.
In mid-May 2022, Xiangrong No. 223 and Xiangrong No. 287, which were cooperated by Zhongrong Trust and China Fortune, successively had maturity and payment problems.
In May 2022, Zhongrong Trust announced that the A1 trust unit of Zhongrong-Cheng'an No. 96 Accumulative Capital Trust Plan will automatically enter the extension period, with a total scale of 2 billion yuan, and the trust funds will be used for investment in Nanchang Sunac and the project company, and finally for the development and construction of Lot 033 of Sunac Wuhan 1890 Project.
……
In this way, there are traces of the planting system in the real estate drag, but some analysts have pointed out that blindly rushing forward is the root cause of its overturn.
In September 2021, ST Tianshan released a detailed report on changes in equity, showing that there were as many as 19 companies with more than 5% of the shares held by the "Zhongzhi system".
Source: Enterprise announcement
There are many reports that have deconstructed the capital play of the "planting system" - operating a pyramid-like capital structure, that is, "X + Zhongrong Trust + listed company", of which "X" is the asset of the planting system.
Zhongzhi raises funds through Zhongrong Trust, acquires original assets, and then participates in the capital operation of listed companies to obtain equity or cash, and then cooperates with listed companies and their affiliates, and then raises funds through Zhongrong Trust to continue to acquire assets, and so on.
During this period, the financial platforms within the planting system will also cooperate with each other to continue funds, amplify leverage, and diversify risks.
However, it can be seen that most of the more than 3 trillion funds in the planting system are playing investment games, and an analyst said: "Where does such an enterprise come from competitiveness? This is the deep reason for the collapse of Xie Zhikun and his planting system." If he used finance to serve the real industry and use finance to cultivate growing and competitive industries, he would definitely be able to grasp the opportunities of the digital economy. ”
Maybe it will be so, or maybe it won't, it's unknown.
With the bankruptcy filing of the four major wealth companies of Zhongzhi, the next step may be a long execution of liquidation.
According to the data analysis disclosed by a lawyer a few days ago, the debt of Zhongzhi is about 4200-460 billion yuan. Generally speaking, through the criminal enforcement procedure, it is good if the property with a book of 200 billion yuan can be sold for 100 billion yuan. The average debt of 420 billion to 460 billion yuan is 440 billion yuan, that is, the implementation ratio is about 22.7%. However, in actual enforcement, this proportion is not low in the proportion of enforcement cases involving the public, but it cannot be ruled out that the actual enforcement settlement ratio of Zhongzhi cases may be lower than 22.7%.
However, when Xie Zhikun left, the middle plant system had already collapsed, and what the final outcome was, everything still needs to be handed over to time.