In recent years, many well-known private capital consortiums, such as the Delong department, the tomorrow department, the Universal Department, the Anbang department, the Baoneng department, the HNA department, etc., have exploded for one reason or another, and finally disappeared, or were scattered and reorganized, and those who landed safely were also cautious in words and deeds, and the company's prospects were full of uncertainty.
Today, the well-known Oceanwide Department is also facing the biggest financial crisis in the company's history due to high debt. Oceanwide's liquidity crisis, which actually showed signs as early as two years ago, forced companies to sell assets to save themselves.
According to media statistics, in the past two years, Through the sale of assets, Oceanwide has accumulated more than 23 billion yuan in cash, most of which is used to repay debts, including the two transfers of the equity of its most profitable Minsheng Securities to shareholders with state-owned asset background in Shanghai, obtaining 6.65 billion yuan of funds. But even so, the company's debt pressure has not been significantly alleviated.
According to the latest annual report, as of the end of 2020, Oceanwide Holdings' liabilities reached 146 billion yuan, of which short-term borrowings and non-current liabilities due within one year totaled nearly 50 billion yuan, while the company held only 19.4 billion yuan of monetary funds, which was completely unable to cover the debt. At this time, more than 95% of the equity of Oceanwide Holdings held by Lu Zhiqiang has been pledged.
Selling Oceanwide?!
Never seen Oceanwide sell assets so intensively, but it really happened.
——At the beginning of 2019, Oceanwide Holdings transferred some of its core property assets, Beijing Oceanwide International Project and Shanghai Dongjiadu Project, to Sunac for nearly 14.9 billion yuan, of which 12.553 billion yuan was paid in cash and offset 2.334 billion yuan in debt.
——At the beginning of 2020, Oceanwide Holdings announced that it would sell the relevant assets of San Francisco for US$1.2 billion, and also announced that it intended to increase the capital and share of its holding subsidiary Minsheng Securities, raising no more than 2.5 billion yuan in the form of non-public issuance of shares.
In January 2021, Oceanwide Holdings transferred 40% of its shares in Minsheng Securities to others, returning 6.6 billion yuan; in the same month, Oceanwide sold its core Wuhan CBD project for 3.06 billion yuan, and in March transferred the Courtyard by Marriott Wuhan Hotel for 545 million yuan to pay off debts.
In April 2021, due to a debt dispute, 803 million shares of the company held by China Oceanwide, the controlling shareholder of Oceanwide Holdings, were judicially frozen by the Second Intermediate People's Court of Beijing Municipality, of which 294 million shares were subsequently publicly auctioned on the Alibaba judicial auction network platform.
On June 3, 2021, Oceanwide Holdings announced that it would sell its international data group IDG to Blackstone for US$1.3 billion. IDG, a world-renowned market research, technology media, data and marketing company, acquired by Oceanwide in 2017, with Lu Zhiqiang personally standing as chairman and declaring that IDG will "help the group's diversified layout". After holding it for less than four years, this "important asset" was sold by Oceanwide.
In addition, between June and August 2021, Oceanwide Holdings matured to redeem the principal balance of domestic bonds of 3.7 billion yuan, its core subsidiary Wuhan Central Business District Company was sealed due to unpaid Shandong Expressway financial lease payment of 2 billion yuan, two plots under its name were sealed, and the 100% equity of Shenyang Oceanwide Construction was frozen; the San Francisco project to be sold was also sued by local subcontractors because of the project payment dispute, forced to terminate the sale, and faced hundreds of millions of dollars in litigation.
Rating agencies such as Oriental Jincheng and United Credit also downgraded the long-term credit rating of Oceanwide Holdings in May this year, and the rating outlook remained negative, resulting in a sharp rise in the cost of issuing bonds by Oceanwide.
What is striking is that the Taishan Association, known as one of the "most mysterious chambers of commerce" in China, reported in January this year that it had disbanded itself due to deep internal differences and contradictions, and Lu Zhiqiang, as an important member of the Taishan Association, had a high prestige in the meeting.
In the eyes of some people, like the Taishan Society, legends such as Lu Zhiqiang and his ocean-spanning system seem to be unable to escape the fate of defeat at the moment.
The Gangster's Empire
Lu Zhiqiang, the helmsman of Oceanwide, is undoubtedly a legendary figure in The Chinese business community.
Originally a division-level official in Shandong's Weifang Technology Development Zone, Lu began to go to the sea at the age of 36 to do business due to hopeless promotion. After earning the first pot of gold in the education and training industry, Lu Zhiqiang, who was very sensitive to the direction of policy, saw that the country had signs of launching housing reform, realized that the real estate market would have great prospects, so he resolutely adjusted the business direction, founded Shandong Oceanwide Group Company, started community real estate, and founded China Oceanwide Holding Group in Beijing in 1988.
Since then, China's real estate market has entered an upward cycle, and Oceanwide's real estate business has also become bigger and bigger, developing a series of well-known projects such as Wuhan CBD Project, Beijing "Oceanwide International Residential Area", Hangzhou "Minsheng Financial Center", Shenzhen "Oceanwide Lafite Garden", and even acquiring a large number of commercial real estate in overseas areas such as Los Angeles, San Francisco, New York, and Hawaii. The real estate business has not only brought a lot of money to Oceanwide, but also become the most powerful foundation of Oceanwide's business empire.
In addition to real estate, Lu Zhiqiang also aimed at the financial industry and began to plan his financial territory very early.
At the end of the 1990s, China's financial industry opened an opening to private capital, and Lu Zhiqiang participated in the establishment of the first private bank in China, Minsheng Bank, with the blessing of the "Taishan Association" (that is, Taishan Industrial Research Institute, one of the most well-known chambers of commerce in China) and the All-China Federation of Industry and Commerce.
In 2000, Minsheng Bank was listed, and Oceanwide Holdings held 9.42% of the shares, becoming the second largest shareholder; after the promulgation of the Administrative Measures for Securities Companies in 2002, private enterprises were allowed to enter the securities industry, and Oceanwide Holdings immediately led the capital increase and expansion of Minsheng Securities (formerly Yellow River Securities), took Minsheng Securities, and invested in Haitong Securities.
In the same year, Lu Zhiqiang also participated in the establishment of the first private life insurance company in China, "Minsheng Life". So far, Oceanwide has initially completed its layout in the three key financial fields of banking, securities and insurance.
| Photo: Lu Zhiqiang
In 2009, Oceanwide became the 000416 through a series of capital operations. SZ), the largest shareholder, immediately changed its name to Minsheng Holdings. Relying on Minsheng Holdings, Oceanwide has accelerated the pace of financial expansion, successively pocketed Minsheng Futures and Minsheng Insurance Brokers, and invested in Internet financial enterprises such as Jinlian Financial Services and Xingmin Insurance Brokers through its Minsheng E-commerce Holdings.
In 2012, Oceanwide was approved to reorganize China Tourism International Trust (later minsheng trust), and in March 2014, it invested another 1 billion yuan to participate in the establishment of China Minsheng Investment Co., Ltd. (CMIG).
In August 2014, the "New National Ten Articles" was released, and the state had a clear attitude to vigorously develop the insurance industry. Oceanwide Group, which has just announced its transformation from real estate to "real estate + finance + strategic investment", has immediately entered the insurance industry in a big way, and within a year has initiated the establishment of two companies, Asia-Pacific Reinsurance Company and Asia-Pacific Internet Life Insurance Company, acquiring 51% of the equity of Minan Property & Casualty Insurance, a series of actions that make people dizzying.
Statistics show that in the three years after the proposed transformation in 2014, Oceanwide Group spent nearly 40 billion yuan in the financial field layout (including 12 billion yuan in the securities industry, 10 billion in trusts, and 9 billion in insurance), and won the most valuable licenses in the financial industry, with Minsheng Securities, Minsheng Trust, Minsheng Futures, Asia-Pacific Property & Casualty Insurance, Minsheng Insurance Brokerage, Oceanwide Fund, Minsheng Fund, Minsheng Pawn, Minsheng Wealth, Minsheng Financing Guarantee, Oceanwide Asset Management, Minjin, Xingmin Insurance Brokers and other more than ten holding financial institutions, and have successively invested in Bank of Zhengzhou, Guangxi Beibu Gulf Bank, Bank of Dalian, Bank of China, China CITIC Bank, building a huge financial kingdom covering banking, insurance, trust, securities, funds, futures, Internet finance and so on.
| Figure: The large financial layout of Oceanwide Holdings Image source: International Financial Observation
In addition to the merger of financial institutions, Oceanwide has also invested in more than 40 well-known listed companies in China, such as Legend Holdings, Jiuzhitang, Shaanxi Coal, Huiyuan Juice, Yintai Commercial, Red Star Macalline, Xifeng Wine, etc., involving biomedical, energy and chemical industry, food consumption and many other fields, and most of them are leaders in the industry.
Overseas, Oceanwide has acquired heavyweight international financial companies such as the American International Data Group (IDG) and Hong Kong-licensed brokerage Quamnet International, and tried to acquire Genworth Group, the largest long-term care insurance company in the United States, for $2.7 billion, to enter the US insurance market and form a domestic and foreign layout of the insurance industry with Minan Insurance (the plan to acquire Genworth was terminated in April this year).
With an accurate grasp of important historical nodes and national policy trends such as housing reform and securities market reform, with the business skills of shangzhi and the rich contacts in the political and business circles, Lu Zhiqiang only took less than 40 years to expand his Oceanwide Department from a local real estate company in Shandong to a huge business empire spanning real estate, finance, energy, listed companies and overseas investment, and the asset scale of the Oceanwide Department was once as high as 330 billion yuan, which is one of the largest private financial holdings in China.
Lu Zhiqiang himself, because of his status as a member of the National Committee of the Chinese People's Political Consultative Conference, a member of the Standing Committee of the All-China Federation of Industry and Commerce, and the vice president of the Shandong Federation of Industry and Commerce, has been called The "Red Top Businessman" and "The Big Man Behind the Big Guy" in contemporary China.
The bitter fruit brewed by leverage
Like other private financial holding consortiums, Oceanwide also uses various leverage to leverage asset operations and support its continuous expansion of its commercial territory through financing means such as issuing bonds, stock revolving pledges, fixed increase shares, and related loans.
With the continuous regulation of real estate and financial deleveraging in China in recent years, tightening the overseas investment of enterprises, and the oceanwide system with real estate and finance as the core business, the debt crisis has become increasingly apparent, and the company has begun to pay the price for the rapid expansion and negligence of risk control in the past few years.
On the one hand, soaring liabilities put Oceanwide under tremendous financial pressure, and the interest payment alone will cost 2 billion yuan per year; on the other hand, the company's operating performance has continued to decline, with revenues of 16.876 billion yuan, 12.404 billion yuan and 12.502 billion yuan respectively from 2017 to 2019, with a year-on-year change of -31.59%, -26.50% and 0.79%, and a net profit of 2.891 billion yuan, 931 million yuan and 1.095 billion yuan, a year-on-year change of -7% and -67.81% year-on-year. , 17.62%, before and after the fluctuation is very large.
In 2020, although Oceanwide Holdings achieved revenue of 14.057 billion yuan, an increase of 12.17% year-on-year, the net profit was a loss of 4.621 billion yuan, down 522% year-on-year, such a large decline, never in the company's history.
In the first quarter of 2021, Oceanwide Holdings lost money again, with an estimated loss of 120 million yuan to 220 million yuan. The company explained that the increase in financial expenses, the sharp decline in the fair value change income of financial assets and investment income were the main reasons for the company's overall loss.
In the words of industry insiders, the decline in the profitability of commercial real estate, the financial pressure brought about by high-leverage expansion, and the investment of subsidiaries (such as the postponement of a number of trust projects in Minsheng Trust, and involving the 8 billion "fake gold" case of Jinhuang Jewelry), are directly related to The current financial crisis of Oceanwide.
Hundreds of billions of debts are at the top, Taishan will be dissolved, and the mythical color gathered above the Pan-Ocean System and Lu Zhiqiang's head is now slowly fading. People can't help but wonder what big moves Lu Zhiqiang, a "red-top businessman," can make in addition to accelerating the sale of houses, pledging equity, and introducing war investment, and the building will fall down.