China Renaissance shares plunge after saying chairman unreachable
CHINA Renaissance Holdings saw its shares plummet by as much as 50 per cent on Friday (Feb 17) after the investment bank said it was unable to contact its chairman and chief executive, Bao Fan, in the latest disappearance of a top business executive.
The disappearance of Bao, the company’s founder and controlling shareholder, drove the bank’s Hong Kong-listed stock to hit a record low of HK$5 (S$0.85) in early trade, wiping off HK$2.8 billion in market value.
The stock regained some ground later in the day to finish lower by 28 per cent in the Hong Kong market, which was down 0.7 per cent. Nearly 30 million shares of the boutique investment bank changed hands on Friday, the highest on record.
“The board is not aware of any information that indicates that Mr Bao’s unavailability is, or might be, related to the business and/or operations of the group, which are continuing normally,” the mainland China-based bank said in a bourse filing on Thursday.
A spokesperson referred Reuters’ request for comments on Friday to the statement.
The well-known dealmaker’s disappearance is the latest in a series of similar cases: High-profile Chinese executives have been going missing with little explanation amid the sweeping anti-corruption campaign spearheaded by President Xi Jinping.
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In 2015 alone, at least five executives became unreachable without prior notice to their companies, including Fosun Group chairman Guo Guangchang. The company later said he was assisting with investigations regarding a personal matter.
The latest disappearance comes after China’s border reopening and a brighter outlook for deals due to a renewed focus on boosting the sagging economy, as well as an easing in regulatory crackdowns on technology companies.
Bao, who previously worked at Credit Suisse and Morgan Stanley, has been hailed as one of China’s best-connected bankers.
He was involved with major technology mergers, including the tie-ups of ride-hailing firms Didi and Kuaidi, food delivery giants Meituan and Dianping, and travel-device platforms Ctrip and Qunar.
Deals adviser
Dickie Wong, executive director of research at Kingston Securities, said: “If a listed company voluntarily discloses that a senior manager or a major shareholder cannot be contacted, it’s truly unusual, as the person might have been out of reach for some time.”
An investor’s worst nightmare is that a company’s ability to continue operations is impaired, leading to a stock sell-off, he added.
Bao started China Renaissance in 2005 and listed it in Hong Kong in 2018 after raising US$346 million. In recent years, he has taken an increasingly active role in the group’s private equity business, said two sources with direct knowledge of the matter. They declined to be named, citing sensitivities.
China Renaissance is currently ranked ninth on China’s equity capital markets leagues table for 2023, data from financial market information provider Refinitiv showed, after the bank advised on Jiangsu Sanfame Polyester Material’s US$363 million convertible bond last month.
China Renaissance earned US$20.6 million in Chinese-related investment banking fees in 2022, down from US$43.13 million a year earlier, the data showed.
The bank acted as adviser for some of China’s biggest tech initial public offerings, including those of JD.Com and Kuaishou Technology, as well as Didi’s New York listing in 2021.
Didi ran afoul of the Chinese regulators when, in 2021, it pressed ahead with the US stock listing against the authorities’ will, sources told Reuters.
China Renaissance is also an active investor in the tech sector. In 2019, it raised more than 6.5 billion yuan (S$1.3 billion) in a yuan-denominated fund.
Bao’s disappearance also comes days after property developer Seazen Group said it was unable to contact or reach its vice-chairman. REUTERS
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