Evergrande seems like China’s Lehman moment, says Uday Kotak; praises India for IL&FS move

China's indebted real estate company Evergrande has led to descend of global markets. Reacting to it, Uday Kotak, CEO of Kotak Mahindra Bank, on Tuesday said that Evergrande looks like China's Lehman Brothers of the US.

The Lehman Brothers had filed for bankruptcy in 2008 and played a major role in the financial crisis of that time. Kotak also praised the Indian Government for taking swift action in the Infrastructure Leasing & Financial Services (IL&FS)  case.

After IL&FS defaulted its loans in 2018, the Indian government took control of the firm and appointed a new board under the leadership of Uday Kotak. The board found out more than 250 firms were part of the IL&FS group, which had an outstanding amount of Rs 94,000 crore.

Evergrande Crisis

Evergrande, China's one of the biggest reality developers, is battling to avoid defaulting over $300 billion, prompting concerns about economic fallout. The real estate company's shares have fallen around 80% this year and the firm has been degraded several times by rating agencies. It currently has nearly 800 unfinished residential projects and is seeing protests from thousands of homebuyers who have partially made payment for their properties.

According to the company, the current tensions is due to poor demand. However, China's crackdown on big companies has also played a part. Evergrande's expansionary moves such as venturing in businesses across electric vehicles, theme parks, sports, bottled water, food and beverage among others have also harmed it. As per reports, the company also sold off apartments at low rates to raise money.

Image: Pixabay/AP/PTI