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Chairman and director of Minsheng's SRE Group unit are detained by Shanghai police on embezzlement charges

By Enoch Yiu

/ SCMP |

February 25, 2020 11:30 AM SGT

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The chairman and the executive director of a real estate unit owned by China's largest privately owned financial services group are being detained by Shanghai police on embezzlement charges.

Peng Xinkuang, the chairman and former chief executive of SRE Group Limited, has been approved for arrest under the embezzlement charge, according to a filing to the Hong Kong stock exchange, where the real estate developer's shares are listed. Executive director Chen Donghui has separately been detained by Shanghai police under the same charge, according to the statement, citing SRE's acting chief executive Zhu Qiang.

"The company has attempted to contact Peng and Chen but has been unsuccessful," said Zhu, who was appointed the acting chief executive after the company failed to contact Peng. "Peng and Chen are currently unable to perform their duties as directors of the company and the company is not yet able to obtain any further information to ascertain the nature and status of the arrest and the detention."

Shares of SRE Group fell as much as 2.1 per cent to 4.7 Hong Kong cents today. The stock, listed in Hong Kong in 1999 at 79.8 Hong Kong cents, had fallen by 28.8 per cent this year.

A view of China Minsheng Investment Group Building. Photo: Sina

The Shanghai developer is 75.06 owned by China Minsheng Investment Group (CMIG), the country's largest private-sector investment fund founded in 2014 by 59 entrepreneurs including the retailer Suning Appliance Group and business-park operator Yida Group.

Minsheng first bought 72.45 per cent of SRE Group in 2016 during a HK$1.49 billion bailout, after the developer accumulated HK$19.17 billion (US$2.46 billion) in debt, with 119 million yuan (US$16.93 million) in 2015 operating loss. That stake was later increased to 75.06 per cent, according to stock exchange data.

SRE Group has since turned into Minsheng's property arm, investing in such global projects as the 75 Howard, a harbourfront apartment complex in San Francisco, bought for US$88 million in 2017 and completed last week. In mainland China, SRE Group has residential and commercial real estate projects in Shanghai, Shenyang, Haikou, Wuxi, Jiaxing.

SRE Group's "business and operations remain [normal] and the arrest of the chairman and detention of the director would not have material adverse impact on the operations or financial position of the group," the company said in its filing.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

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