Shares of China Renaissance Holdings collapsed by 50% after founder went missing
2023.02.18 13:15
Shares of China Renaissance Holdings collapsed by 50% after founder went missing
By Kristina Sobol
Budrigannews.com – In the latest case of a high-level business executive going missing, Chinese dealmaker Bao Fan, founder of investment bank China Renaissance Holdings Ltd., has vanished. This has alarmed investors and caused its stock to fall by as much as 50% on Friday.
In a late Thursday exchange filing, the boutique bank with headquarters in mainland China stated that it was unable to get in touch with Bao.
The board of China Renaissance stated that it was unaware of any information suggesting that Bao’s “unavailability is or might be related to the business and/or operations” of the group, which were going on as usual.
The dealmaker’s disappearance is the latest in a string of high-profile Chinese executives to vanish without a trace during President Xi Jinping’s comprehensive anti-corruption campaign. The circumstances surrounding Bao’s disappearance are still a mystery.
At least five executives disappeared without warning in 2015 alone, including Fosun Group Chairman Guo Guangchang, who Fosun later claimed was assisting with personal investigation investigations.
The vast financial sector of China was targeted by the country’s ruling Communist Party in 2021, kicking off a new phase of an ongoing, years-long campaign to uncover corruption and illegal dealings.
The disappearance, which occurred following China’s post-pandemic border reopening, has brightened the outlook for deals and eased regulatory restrictions on technology companies.
China Renaissance’s Hong Kong-listed stock hit a record low of HK$5 in early trade as a result of Bao’s disappearance—he was also the controlling shareholder, chairman, and CEO of the business. As a result, the stock lost 360 million HK$ ($2.8 billion) in market value.
Later in the day, the stock gained some ground and ended the day down 28% in a Hong Kong market that lost 1.3%. On Friday, the boutique investment bank’s share price reached a record high of nearly 30 million.
Bao, who previously held positions at Morgan Stanley (NYSE:) and Credit Suisse Group AG, is regarded as one of China’s most influential bankers.
He was involved in major technology mergers like the merger of Didi and Kuaidi, a ride-hailing company, and the food delivery giants Meituan and Dianping. He was also involved in platforms for travel devices like Ctrip and Qunar.
Dickie Wong, executive director of research at Kingston Securities, stated, “It’s truly unusual if a listed company voluntarily discloses that a senior manager or a major shareholder cannot be contacted, as the person might have been out of reach for some time.”
Wong continued, “A stock sell-off is not surprising given the uncertainty.” Investors’ worst nightmare is when a company cannot continue operations.
Wang Wenbin, a spokesperson for the Chinese Foreign Ministry, responded that he was unaware of the situation when asked on Friday during a daily news conference whether the banker had been detained.
According to two people with direct knowledge of the situation, Bao is in charge of China Renaissance and has been participating more and more actively in the group’s private equity business over the past few years.
Due to the sensitive nature of the matter, the sources declined to be named.
The investment bank’s public filing was cited by a spokesperson for China Renaissance in response to a Reuters request for comment on Friday.
After providing advice on Jiangsu Sanfame Polyester Material’s $363 million convertible bond last month, China Renaissance is currently ranked ninth on Refinitiv’s equity capital markets league table for 2023.
According to the data, the company’s Chinese-related investment banking fees earned $20.6 million in 2022, down from $43.13 million the previous year.
In 2005, Bao started China Renaissance as a two-person team with the goal of connecting venture capitalists and private equity investors with capital-hungry startups. It has since expanded into trading, underwriting, and other services.
After raising $346 million, the investment bank entered the Hong Kong market for the first time in 2018.
China Renaissance has advised some of China’s biggest tech initial public offerings (IPOs), including Didi’s New York listing in 2021 and those of JD (NASDAQ:).Com Inc and Kuaishou Technology.
According to sources who previously spoke with Reuters, Didi pushed through with the U.S. stock listing in 2021 against the wishes of Chinese regulators.
Additionally, China Renaissance is an active tech sector investor. In a fund denominated in yuan, it raised more than 6.5 billion yuan, or $950 million, in 2019.
The property developer Seazen Group Ltd. reported that it was unable to contact or reach its vice-chairman days before Bao vanished.
