The health of China’s real estate sector is in the spotlight with reports property giant Evergrande could default on its $300bn debt pile, and that the private banking arms of Credit Suisse and Citibank are no longer accepting the bonds of another highly indebted Chinese property developer, Fantasia, as collateral.
Any default by Evergrande, China’s second biggest property group, could trigger a knock-on effect for the country’s real estate sector, putting banks on red alert for restructuring and disposal mandates – as well as potential loan losses.
Bankers say a restructuring of Evergrande looks inevitable, with a number of banks likely to be busy as a result. The likes of Lazard, Rothschild and Houlihan Lokey have restructuring teams in Hong Kong, while other firms are also likely to be drawn in.
Joe Lai at Credit Suisse is one of the top bankers in the sector. The Swiss bank has worked on its previous bond deals, leading the syndicate with Bank of America. Lai runs Credit Suisse’s investment banking and capital markets division in China as well as running real estate and industrials for greater China.
Lai is one of a trio of top-rated real estate bankers that head-hunters say includes Kara Wang, who is co-head of real estate investment banking for Asia at Citi, with a focus on Greater China and Cara Li, who is head of Head of Asia Pacific Real Estate Investment Banking at Morgan Stanley at Morgan Stanley and
Li has worked at Morgan Stanley since 2004, but rival real estate teams have been experiencing churn of senior bankers. This month, Jie Wei joined Goldman Sachs as head co-Head of Real Estate Investment Banking for Asia excluding Japan (Aej) after spending just eight months at HSBC. In July, Winnie Ng joined Bank of America as co-head of Asia Pacific real estate investment banking from JP Morgan.
Ng’s move followed the appointment by JP Morgan last November of Rita Chan as head of real estate investment banking for AeJ. Chan joined from Goldman where she spent 15 years.
According to rankings by Dealogic, Goldman Sachs and Lazard were flying high as the top advisers on Chinese M&A real estate deals this year. However, both banks have been left licking their wounds after US private equity firm Blackstone pulled its planned $3bn purchase of Chinese property developer Soho China last week. Goldman advised Blackstone while Lazard advised Soho China, whose shares plummeted 40% as a result on September 13.
David Rothnie – Read more on efinancialcareers.com