In the boom years when China produced billionaires Every two daysBanking money maker Bao Fan almost achieved this feat himself.
His skill in advising tech giants like Alibaba Group Holding Ltd. has made him one of the country’s most sought-after financiers, helping him amass a fortune worth more than $800 million through his stake in China Renaissance Holdings Ltd.
Bao’s career collapsed last year when he disappeared from public view after being detained by authorities amid a wider crackdown. The extent of his financial fall was revealed Monday when Renaissance shares plunged after a 17-month hiatus. His stake is now worth $55 million. Bao’s shares have fallen 93% from their peak in February 2021, according to a Bloomberg Billionaires Index profile and calculations. Bao beneficially owns about 35% of the company directly, through two holding companies and a trust.
A China Renaissance spokesman had no immediate comment when contacted by Bloomberg News.
Bao’s sudden demise has cast a shadow over China’s financial sector, which has become a frequent target of President Xi Jinping’s “common prosperity” campaign. More than 100 financial executives and officials have been caught up in an anti-corruption campaign in 2023 alone, while bankers face pay cuts and spending cuts to curb what officials see as “overspending.” “Happy” lifestyles.
“The lack of transparency about why all these stars in the financial sector — some of whom aren’t even stars — are being held back is not really going to help capital return to China,” said Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis.
The crackdowns and ongoing job losses are forcing bankers to reconsider their careers as they grapple with Beijing’s dramatic shift toward high-end manufacturing and renewable energy, and away from finance and real estate that have driven the Chinese economy for decades.
Bao, 53, is one of the most notable losers to follow the shift. The former Morgan Stanley and Credit Suisse banker founded China Renaissance in 2005, making a name for himself by brokering the mergers that created ride-hailing service Didi Global Inc. and food-delivery giant Meituan.
With his eye for rising tech stars, he has become one of China’s most influential bankers, convincing billionaire Jack Ma to become a major investor when his company went public in 2018. He has since moved into private equity to back startups and tech companies, managing more than $8.8 billion in assets at the end of 2020.
It all began to unravel when Bao was arrested in February last year without any official explanation. China Renaissance would only say that it had arrested Bao. Lost connection with him. It was later placed under Detention As part of an unspecified investigation by Chinese authorities amid a broader crackdown on the financial sector, the company’s former CEO resigned earlier this year “for health reasons and to spend more time with his family,” according to a company statement.
The company offered no clues about the founder’s whereabouts on Monday when it released earnings that were more than a year late. His current legal status remains unclear.
The turmoil has hit businesses, which have also been hurt by a drop in deals as China’s economy slides into recession. deflationary spiralThe company reported a loss of about 74 million yuan ($10.4 million) in the six months to June, as revenue fell 39% to 329 million yuan. The company posted a loss of 471.9 million yuan for the full year of 2023, its second straight year of losses.
Nearly a third of employees in Hong Kong, including investment banking, private equity and wealth management teams, have resigned or lost their jobs. Bloomberg News reported In February.
Shares of China Renaissance plunged 66% in Hong Kong on Monday, its first day of trading since March last year, reducing the company’s market value to HK$1.39 billion (US$178 million).
Elsewhere, there were at least 130 investigations and sanctions against financial executives and officials in 2023 alone. China has appointed a new head of its financial anti-corruption agency, suggesting that the investigations are far from over.
In Bao’s absence, the company has pledged to “start a new era.”
“Despite all kinds of difficulties and challenges, China Renaissance is still actively pursuing growth and moving forward with determination amidst adjustments,” according to the earnings report.
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