China Everbright goes full steam on expansion after painful restructuring
After a painful restructuring and asset disposals, the red chip looks to double its assets under management in three years from HK$33b now
It was awful-tasting medicine, but the patient needed it.
Four years after the 1997 Asian financial crisis, a mountain of outstanding debt and a cash-flow crunch propelled China Everbright to undergo a painful restructuring and a spate of asset disposals.
"When I joined the firm in February 2001, there were four Hong Kong-listed companies on the brink of collapse, leading to a problem of survival," chief executive Chen Shuang told the South China Morning Post.
We had to act decisively on what to sell in order to keep our businesses afloat
He was referring to the aftermath of four acquisitions between 1996 and 1998, including the purchase of Hong Kong-based developer HKC, which was subsequently sold in June 2001 for HK$189 million after suffering huge losses a year after the deal due to a sharp economic slowdown.
After incurring its first-ever loss of about HK$1.2 billion in 1999, HKC recorded a second annual loss of HK$1.1 billion for the following year, with an outstanding debt of more than HK$1.9 billion.
"It was a truly memorable experience when I first joined China Everbright in 2001, when the firm had to deal with the aftermath of the Asian financial crisis of 1997-98," said Chen.
"In response to the cash-flow crunch and in the absence of a helping hand from the mainland, we had to act decisively on what to sell in order to keep our businesses afloat."
Chen also serves as one of the non-official members of Hong Kong's Financial Services Development Council, which comprises 22 members and is the brainchild of Chief Executive Leung Chun-ying.