A CHINESE online financing company has failed to pay investors who bought equity-backed products partially underpinned by projects linked to China Vanke, according to people familiar with the matter.
Shenzhen-based Penging, which is partially owned by Vanke, used revenue from real estate projects related to the developer as underlying assets for products it then sold to some Vanke staff, the people said, requesting not to be named because the matter is private. Investors failed to receive payments starting a few months ago, the people added.
Penging said it could not retrieve money as scheduled due to market factors, without specifying what it invested in, according to a statement on its WeChat account on Monday (Jul 1).
Vanke is among property developers that have seen sales of new homes tumble amid an unprecedented slump that’s entering its fourth year.
About 100 current and former Vanke employees have formed a WeChat group seeking their money, the people familiar said.
One Vanke staff member bought about 500,000 yuan (S$93,240) worth of products voluntarily for annualised returns in the range of 5 per cent to 6.5 per cent.
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Even though the wealth management arm at another large developer, China Evergrande Group, had already missed payments in 2021, the person said staff at Vanke were confident in the developer’s business at the time and fought for quotas to put money in.
Another person bought 200,000 yuan worth of products, underpinned by Vanke projects in Hefei city and Guizhou province. She was promised returns of 5.2 per cent.
A representative for Vanke declined to comment. Penging didn’t respond to requests for comment. Vanke’s US dollar bonds due 2027 and 2029 fell after the story. Its bond due 2027 was set for the lowest since May 15.
Chinese regulators have been trying to curb such wealth products, which often use off-balance sheet items as underlying assets. Authorities detained some staff at the money management arm of Evergrande last year.
The Chinese state-backed developer Vanke, once considered a sound company, has been raising funds to calm investor concern over liquidity stress. The company has been exploring asset sales and is seeking a 50 billion yuan bank loan to avoid what would amount to one of the biggest defaults in the years-long industry crisis.
The developer continues to face headwinds as its home sales growth stalled in June. Its month-on-month contracted sales growth slowed to 7.9 per cent, underperforming the average 36 per cent rise at the 100 biggest real estate companies in China. BLOOMBERG
