A Hong Kong private equity group that manages billions of dollars, Pacific Alliance Group, is financing the troubled One Circular Quay luxury apartment building spearheaded by exiled businessman Huang Xiangmo.
A mortgage over the prime slice of Sydney land is held by a British Virgin Islands company called Global Enterprise Opportunity VIII, which the Guardian has established is a vehicle through which one of Pacific Alliance Group’s investment funds has funnelled money into the development.
Pacific Alliance Group, or PAG, denies that Global Enterprise Opportunity VIII is in any way affiliated with Huang or his family.
PAG is perhaps best known for its investment in Eastern Australia Agriculture and a controversial water deal that netted investors $80m. Not only was the deal done without tender, but it soon emerged that the energy minister, Angus Taylor, had been a director of EAA and its Cayman’s based parent, Eastern Australian Irrigation, before entering parliament.
Founded by Taylor’s friend from Oxford Chris Gradel, who is chief investment officer, PAG and the other investors were able to realise a $52m gain on the water rights sold in the EAA deal. Another investor, EF Realisation fund, which held 9.6% of the Cayman’s based fund, told the London stock exchange it was the highest price ever paid for water by the Australian government.
Taylor faced questions in parliament over what became known as “watergate”, but he has repeatedly said he resigned his directorships before entering parliament in 2013, and that he did not benefit from the water deal.
Sydney’s most expensive dirt
The uncertain fate of One Circular Quay, which remains nothing more than a hole in some of Sydney’s most expensive dirt, is among a series of controversies surrounding Huang.
Huang’s Australian residency was cancelled on character grounds in December and he is now believed to be living in Hong Kong, from where he has mounted a blistering attack on the Australian Taxation Office after it obtained a $140m freezing order against him.
On Twitter, the exiled billionaire has also called for an investigation into an $11m fee he paid to Sydney lawyer Sevag Chalabian, who used to represent the Obeid family.
The money, paid in connection with the purchase by Huang’s Yuhu group of a retail and commercial property development, has been described by seller Seph Glew as an “introduction fee”.
One Circular Quay, which when completed is to contain more than 300 luxury apartments and a hotel complex in two towers located on the corner of George Street and Alfred streets, has changed hands several times, and is now apparently in the hands of a fourth developer, elusive Chinese-born businessman Zhang Bo, a Huang associate who bought the company that owns the site from Yuhu in late 2018.
Huang is reported to have retained the development rights, although a property industry source said the financial scaffolding behind the development has recently been restructured.
Even the City of Sydney Council, which approved the redevelopment in conjunction with the state government is unsure about who owns it. The council continues to deal with the same team of architects and planners who were employed by the Dalian Wanda group, which secured the approval.
Zhang’s sudden emergence as a key building developer in Australia has come after Huang’s residency was revoked and his assets frozen.
Evergrande enters the deal
Zhang has previously been linked to the world’s most valuable real estate company Evergrande, which raises the question about whether it is now in control of the prime site.
But there are few answers about what is happening at One Circular Quay, fronting the shores of Sydney Harbour between the Opera House and the Harbour Bridge and with views across the water to Kirribilli and Admiralty Houses.
The development has endured a troubled recent history. The site, which was once home to Gold Fields House, was owned by US investment firm Blackstone, which sold it to Dalian Wanda Group in 2015 for $415m.
Late in that year, the project was approved by the City of Sydney, with a 57-storey 184-apartment residential tower and a 179-room hotel on the 4,040sqm site. Final approval was granted in 2017.
But Dalian Wanda Group, its expansion driven by highly-leveraged acquisitions, was placed on a watchlist by Chinese regulators in 2017, part of a Chinese government drive against private-sector debt hurting the country’s financial system.
How Huang Xiangmo swooped
When Dalian Wanda, headed by China’s richest man Wang Jianlin came under pressure from the Chinese government, the Yuhu Group – then run by Huang Xiangmo – was part of a consortium that swooped, picking up the Sydney project, and the Gold Coast Jewel development at Surfers Paradise, for $1.13bn.
The other actor in that purchase was Zhang Bo. His new company Dachang Australia, took a half share for $565m. Huang’s Yuhu took the other half.
But company records show Yuhu Group sold the site in 2018 and now appears to have exited the company behind the development, AWH Investment Group.
AWH is now controlled by two companies Cuilam and Dachang, both controlled by Zhang.
Huang’s family members are no longer directors, with his son, Jimmy, resigning as a director of AWH in May 2019. Huang and other family members resigned during 2018.
The transaction was several months old before the tax office hit Huang with a freezing order on all of his assets in Australia and around the world, pursuing him for $140m in an allegedly unpaid tax bill, penalties, and interest.
Zhang is not only linked to Huang through the One Circular Quay deal, but has a history with Evergrande, one of the largest property developers in the world.
Cuilam Investments, Zhang’s company, acquired Evergrande’s dairy products business for about $60m in 2016. Cuilam continues to maintain ties with Evergrande after the sale. It has extensive investments in New Zealand.
Evergrande’s chairman, Xu Jianyin, is best known in Australia after he was given 90 days in 2015 to sell a $39m Point Piper mansion by then treasurer Joe Hockey, after the Foreign Investment Review Board (FIRB) found it had been purchased illegally. The property was purchased by the mysterious Lola Wang-Li, an Australian citizen, who lives in a Pyrmont apartment.
The Australian Financial Review, in investigating Zhang, found he spent $37m over the past two years buying six houses in Sydney’s Beauty Point, on the lower north shore of Sydney harbour.
Zhang has declined interview requests from the media. It’s not known if he is currently in Australia.
Huang has not responded to detailed questions from The Guardian about the status of One Circular Quay and his role in it.
