The turmoil around Evergrande shocked many investors.
(Photo: Bloomberg)
Dusseldorf Hong Kong-listed China Evergrande Group is an offshore company based in the infamous Ugland House in Georgetown, the capital of the Cayman Islands. The office building is to be the seat of 18,000 legal entities. Former US President Barack Obama once described it as “either the largest building in the world or the largest tax fraud in the world”.
Investors who buy shares in companies like Evergrande do not hold shares in the operating 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 made a risk clear: 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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