The turmoil around Evergrande shocked many investors.
(Photo: Bloomberg)
Dusseldorf The Hong Kong-listed China Evergrande Group is an offshore company based in the infamous “Ugland House” in Georgetown, capital of the Cayman Islands. The office building is said to be the seat of 18,000 legal entities. It is “either the largest building in the world or the largest Tax fraud in the world, ”said former US President Barack Obama.
Investors investing in offshore companies like Evergrande should be alarmed. Because the stockholders by no means hold shares in the operative business in China. Rather, they are investing in a shell company in a tax haven. The crisis of the heavily indebted real estate developer Evergrande has once again made the risk that goes with it clear. Because in the event of bankruptcy, investors have no access to assets on the mainland. The same goes for bondholders who hold bonds from the offshore company.
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