Evergrande’s new layout, is Xu Jiayin interested in Jia Yueting’s land rather than electric cars?

After saying goodbye to Sun Hongbin, Jia Yueting may welcome another real estate tycoon: Xu Jiayin.

As the news came that Jia Yueting's Faraday Future (FF) successfully acquired land in Guangzhou, the identity of the new investor behind this electric car company in the eye of the storm gradually surfaced.

Although FF has never announced the source of funding, an insider close to FF confirmed to the First Financial reporter in February this year that FF had received financing, and denied that the funds behind the scenes came from the Hong Kong consortium as rumored by the outside world, but from the Chinese real estate giant Evergrande. Interestingly, what Evergrande is interested in may not be a FF electric car that costs 2 million yuan.

The puzzle of land acquisition in Guangzhou

Recently, a land transfer result announcement was published on the official website of Guangzhou Public Resources Trading Center. The announcement shows that Ruichi Intelligent Automobile (Guangzhou) Co., Ltd. (hereinafter referred to as "Ruichi Automobile") won a piece of manufacturing land of about 601 mu in Nansha District, Guangzhou at a reserve price of 364.1 million yuan.

The reserve price is the starting price of the bidding. Ruichi Automobile made the bid on March 28, and the transaction was completed on April 8. Ruichi Automobile is an affiliate of FF.

"Xu Jiayin is not interested in electric cars, but hopes to acquire land through electric car production." The aforementioned insider told the reporter of China Business Network, "But now it is uncertain whether Evergrande Real Estate or Xu Jiayin himself invested in FF."

According to the land transfer announcement issued by the Land and Resources and Planning Bureau of Guangzhou Nansha Development Zone, the bidding conditions for the land used for the electric vehicle project are completely consistent with the public information of Ruichi Automobile.

The announcement clearly states that the successful bidder (i.e. Ruichi Automobile) must introduce a pure electric vehicle assembly project with world-class pure electric vehicle R&D and manufacturing capabilities within one month of winning the land, and must "start development and construction within one month from the date of land transfer, and be completed and put into production within 24 months."

However, according to relevant regulations, after the online bidding transaction is completed, the bad record of the land bidder will be reviewed to confirm the bidder's qualifications, and the review results should be confirmed before April 12, 2018. The reporter of China Business Network checked the website of Guangzhou Public Resources Trading Center and found that the transaction status of the land was "dealt", which means that Ruichi Automobile's transaction has passed the "post-bid review" stage.

Since Jia Yueting has been listed as a dishonest person subject to enforcement for many times, whether this will affect the land transfer results has been questioned by the outside world. Just on April 14, Jia Yueting's wife Gan Wei was also listed as a "dishonest person subject to enforcement" for the first time. The execution information released by the Beijing No. 3 Intermediate People's Court on March 7, 2018 showed that Gan Wei failed to fulfill her obligation to pay the penalty for breach of contract to Zhejiang Zhongtai Chuangzhan Company and was included in the list of dishonest persons subject to enforcement.

Bill Russo, founder and CEO of automotive industry consulting firm Automobility, told China Business News earlier: "Jia Yueting has lost his credibility, and the industry has lost interest in FF's progress."

Evergrande and FF have long been linked

In February this year, FF held its first global supplier conference at its R&D headquarters in Gardena, California, with nearly 200 people from more than 100 suppliers around the world attending. At that time, Nick Sampson, FF's former vice president of R&D and new vice president of product strategy, said on social media: "We are very happy to share the latest progress with our close partners in the industry. FF already has strong momentum and we are ready to provide products to the world." FF reiterated at the meeting that the first mass-produced car, FF 91, will be delivered by the end of 2018.

It is understood that the financing announced by Jia Yueting this time is actually the follow-up news that FF's financing has been completed at the LeTV Auto Conference last December. At that time, the first batch of US$300 million had been received, and another US$250 million was received last week. Jia Yueting said that the remaining funds will also be received in succession.

Although neither Evergrande Real Estate nor Xu Jiayin himself has made a positive response to the investment in FF, the First Financial reporter found through reviewing the materials that proved that Evergrande and FF may have established a connection very early on.

In 2016, Evergrande Group established a private investment company in London called Celestial in order to invest in the UK real estate market. The most direct purpose at the time was to seek investment targets in different industries in the UK and Europe, for example, to participate in the investment bidding of Cala Homes, a high-end house builder in the UK, together with Evergrande.

There are two members of Celestial's founding team, both of whom are German. One is David Stern, a German entrepreneur who still represents the company today, and the other is Stefan Krause, a German who had just left the position of Chief Financial Officer (CFO) of Deutsche Bank and later joined FF as CFO.

Klaus confirmed to the reporter of China Business Network that before joining FF, he worked briefly at Celestial to help Evergrande seek investors to bid together in the UK. However, due to various reasons, Evergrande's acquisition of Cala Homes was shelved. Under such circumstances, Klaus left Celestial, met Jia Yueting through someone else's introduction, and joined FF.

During his time at FF, Klaus' main job was to actively help Jia Yueting raise funds.

There is one detail worth recalling about Jia Yueting's journey to raise funds for FF. On February 15 this year, Jia Yueting delivered a speech at the FF Supplier Conference and revealed that FF had successfully completed more than US$1.5 billion in equity financing. Jia Yueting said that this would basically meet FF's entire equity financing needs before its IPO (initial public offering).

According to media reports yesterday, Evergrande Group's Hong Kong-based fund invested approximately $300 million in FF's offshore company registered in the Cayman Islands at the end of 2017. At the time, FF was valued at $1.5 billion.

However, Evergrande’s final investment of US$300 million (approximately RMB 1.9 billion) in FF had no direct relationship with Klaus - he had already left FF and was busy planning his new project, the electric car company EVelozcity.

A person familiar with FF told the reporter from China Business Network: "After the new capital enters the market, it is possible that Jia Yueting will be asked to make concessions. Even if he is not asked to give up the position of CEO, he will be asked to give up some power."

The source even said that Jia Yueting's biggest problem is that he is stubborn and self-willed, so it is inevitable that he will soon have disagreements with new investors.

The withdrawal of "white knight" Sun Hongbin indirectly confirmed the differences with Jia. Sun Hongbin once commented on Jia Yueting: "He is a person who refuses to give up even a feather."

At the Yabuli China Entrepreneurs Forum at the end of February this year, when a reporter from the First Financial Daily asked Sun Hongbin about Evergrande's possible entry, he refused to respond.

Evergrande invests 100 billion yuan in high-tech

Judging from Evergrande’s recent layout, its strategy of expanding new space through close cooperation with industries supported by the country’s major strategies is becoming increasingly obvious.

In addition to the electric vehicle projects encouraged by the government, on April 9, Evergrande signed a comprehensive cooperation agreement with the Chinese Academy of Sciences in Beijing, stating that it will invest 100 billion yuan in the next 10 years to build three major scientific research bases and officially enter the high-tech industry, covering fields including life sciences, aerospace, integrated circuits, quantum technology, new energy, artificial intelligence, robotics and modern agriculture.

Evergrande has been developing towards diversification in recent years. Xu Jiayin has set a goal for the "New Evergrande" to achieve sales of 550 billion yuan in 2018. The company plans to achieve total assets of 3 trillion yuan, annual sales of 800 billion yuan, annual profits and taxes of more than 150 billion yuan, and debt reduction to the middle and low level of the same industry by 2020, becoming one of the world's top 100 companies.

According to the annual report released by China Evergrande (03333.HK) at the end of last month, the company's full-year revenue in 2017 was RMB 311.02 billion, up 47.1% from 2016; its net profit was RMB 37.05 billion, up 110.3% from 2016.

Michael Cole, a senior real estate analyst, told China Business News: "Evergrande has announced its entry into emerging technology fields including new energy, and investing in FF is consistent with this overall strategy. However, Jia Yueting's controversial record and Evergrande's investment in new fields suggest that this real estate company may need to focus more on its core real estate business."

As for Jia Yueting and FF, Klaus revealed to the First Financial reporter last month that he was very happy that FF had obtained new financing.

Now that Jia Yueting has received financing, his comeback may not be successful. Although FF is in urgent need of funds, what needs to be rebuilt more urgently than the capital chain is the team and confidence, and it also needs a visionary leader who can lead the company to a new chapter.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.