The Evergrande Crisis in China
| Case Code: FINC197 Case Length: 16 Pages Period: 2020- 2021 Pub Date: 2022 Teaching Note: Available |
Price: Rs.400 Organization: Evergrande Group Industry: Real Estate Countries: China Themes: Corporate Finance, Capital Structure |
Abstract Case Intro 1 Case Intro 2 Excerpts
Abstract
The case “Evergrande Crisis: Trouble for Real Estate in China” talks about the financial crisis faced by China’s second largest property developer, the Evergrande Group (Evergrande), and its impact on China’s economy. The case starts off by giving a brief history of the company. It then describes the growth of the real estate sector in China. The case touches next upon the details of the crisis including the reasons for the crisis, how Evergrande got affected by it, and its impact on the company’s future as well as the future of the real estate market in China. It also highlights the views of different experts regarding the effect of this crisis on China’s economy. The case ends with the company’s plans to overcome the crisis.
Issues
The case is structured to achieve the following teaching objectives:
- Understand the concept of restructuring and its role in managing the financial distress of a company.
- Understand the relationship between capital structure and a firm’s value.
- Understand the role of government policies to bring stability to the real estate market .
Contents
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Introduction
Growth of Real Estate Sector in China
Origin of Evergrande
Beginning of the Crisis
Evergrande – A Part of the Crisis
Experts’ View
Way Forward
Exhibits
Keywords
Debt Restructuring; Capital Structure; Financial Distress; Housing Bubble; onshore and offshore bonds; ThreeRedLines(TRL)policy; Financial Restructuring; Evergrande Crisis
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