Developer SRE Group Ltd informed the Hong Kong stock exchange today that its chairman, Peng Xinkuang was temporarily unable to perform his duties after having been detained by police in mainland China.
The real estate development subsidiary of financially troubled China Minsheng Investment Group said that on 19 January it had appointed executive director Zhu Qiang as acting CEO to take care of Peng’s duties, while saying that it “will closely monitor the development of this matter and will make further announcement(s) if the Company is aware of any further development and clarification” regarding its chairman’s status.
The announcement by SRE Group comes just over two years after Peng’s predecessor resigned amid a Hong Kong corruption investigation, and adds to the misery of parent firm China Minsheng Investment Group after the mainland private equity fund manager defaulted on both foreign and domestic bond obligations during the first half of last year.
Detention Said Not Related to Corporate Role
SRE, which has projects in the US and the UK in addition to mainland China, indicated that it had received the information regarding Peng’s detention from his family members, with the action by China’s Public Security Bureau said to be “due to personal matters.”
Now 44, Peng originally joined SRE as an executive director and CEO in 2015 before being appointed chairman in 2017, following the resignation of former chairman He Binwu. He had left the developer on the same day that his former employer, developer China Jinmao revealed that it had been raided by Hong Kong’s anti-graft body, with the departure said to be related to that investigation.
Earlier in his career Peng had served as a director of China Minsheng Investment Group, as well as having previous experience as chairman of Meixi Lake Investment Co Ltd in the Hunan provincial capital of Changsha.
During the first half of 2019 SRE Group lost over RMB 199 million on revenues of RMB 470 million. In September the developer announced that it was being sued by its largest shareholder, SRE Investment Holding, seeking repayment of RMB 150.4 million.
China Minsheng Woes Continue
The setback for SRE Group comes after China Minsheng Investment Group came close to collapse in 2019 after its founder Dong Wenbiao stepped down in 2018 after coming under investigation for corruption.
After defaulting on a RMB 3 billion bond on 29 January of last year, the mainland private equity firm had assets frozen across the country, which resulted in a number of high profile project sales.
Shortly after the February bond default the company sold its 50 percent stake in a mixed-use project in Shanghai’s South Bund area to Greenland Group for RMB 12 billion, with that development having since been rebranded as the Greenland Bund Centre.
In late October the investment firm announced that its senior and mid-tier executives would have their salaries reduced, with a report in the Shanghai Securities News indicating that cuts would reach as high as 83 percent, with 53 percent estimated to be the average reduction.
SRE’s Global Ambitions
Since taking control of SRE Group in 2015, China Minsheng Investment has been using the developer to make real estate investments in the US and Europe, as well as in mainland China.
In May 2017, SRE paid $100 million to purchase an 80 percent interest in a luxury residential site in San Francisco, where it had planned to build a 120-unit condo project with US partners.
Prior to that US foray, SRE made its first acquisition in Britain by purchasing the central London headquarters of Société Générale for £84.5 million ($112.8 million) in September 2016.