(Yicai) July 29 -- Shares of Easyhome Furnishing Chain Store Group sank after China’s biggest home furnishings retailer confirmed rumors that its chairman, who was the subject of an official investigation, has died.

Easyhome [SHE: 000785] closed down 2 percent at CNY2.88 (40 US cents) per share in Shenzhen today, after plunging 7 percent yesterday in the wake of the rumors.

Wang Linpeng, who was Easyhome’s founder, chairman, chief executive officer, and actual controller, died at home on July 27 aged 57, the Beijing-based firm announced yesterday. According to unconfirmed rumors on Chinese social media, he jumped to his death.

Wang had been released from custody four days before following a three-month detention and investigation, about which the authorities have not yet released any information. Detention is a measure usually imposed on individuals suspected of serious job-related offences or crimes.

Backed by e-commerce giant Alibaba Group Holding, Easyhome owns 407 furniture malls, four shopping malls, four modern department stores, and 165 supermarkets. It has annual gross merchandise volume of CNY122.2 billion (USD17 billion).

In 1998, Wang was sent to Beijing by the state-owned firm he worked for to rebuild and lead Easyhome after its sole mall was destroyed by fire. Under his leadership, the company grew exponentially and by 2015 it had become a nationwide chain with annual revenue of over CNY10 billion (USD1.4 billion).

With Wang at the helm, Easyhome was able to attract big investors such as Alibaba, life insurer Taikang Insurance Group, and venture capital firm Sequoia Capital. 

In 2015, Wang became Easyhome’s actual controller by buying stock from a number of major individual shareholders. His personal wealth also reached CNY12.5 billion, giving him a spot on the Hurun Global Rich List.

Questionable IPO

Easyhome went public in 2019 through a backdoor listing after Wuhan Zhongnan Commercial Group, a Shenzhen-listed shopping mall operator controlled by the Wuhan’s state assets manager through Wuhan Shanglian, bought the company for as much as CNY38.3 billion.

The move sparked questions over whether it had led to the loss of state-owned assets and whether the valuation was reasonable. After the transaction was completed, Wang’s wealth swelled to about CNY36.8 billion, while Wuhan Shanglian’s stake in Zhongnan Commercial sank to 1.9 percent from 43 percent.

It is worth noting that Xu Honglan, the former vice mayor of Wuhan who attended Easyhome’s listing ceremony, was expelled from the Communist Party of China and was dismissed from public office in June 2021 on suspicion of corruption, taking bribes, and other crimes. The matter has been handed to prosecutors.

Easyhome’s net profits began to fall after 2020, as China’s property market slumped. In the first half of this year, profit tumbled 39 percent from a year earlier, though revenue rebounded. Profit sank 41 percent last year and revenue fell 4 percent.

As earnings weakened, Easyhome’s debt stress kept rising. According to its 2024 financial statement, the company had about CNY4.3 billion (USD603.3 million) in non-current liabilities and short-term loans due within a year and only CNY2.2 billion in cash and cash equivalents.

Despite this, Wang began to monetize its assets by selling shares and increasing dividends to shareholders. In 2023, he pocketed over CNY2 billion from equity sales and, by distributing more than 90 percent of the company’s net income as dividends from 2019 to 2023, he personally received nearly CNY2 billion.

Wang was detained by the supervisory committee of Wuhan’s Jianghan district for investigation in April, and his remaining 372 million shares in Easyhome were frozen. The probe again fueled rumors of his involvement in the loss of state-owned assets during Easyhome’s backdoor listing. 

Editors: Tang Shihua, Futura Costaglione