Another Chinese tech billionaire disappears
Fears are rising as the Chinese tech sector sees another billionaire disappear. Recently, China Renaissance Holdings revealed that it had been unable to reach high-profile banker Bao Fan for two days. The next day, Friday 17 February 2023, China Renaissance shares dropped by as much as 50%. Bao’s disappearance has sent shockwaves through China’s tech sector, where the industry saying is, “if you don’t know Bao Fan, you haven’t made it.”
China Renaissance, which has continued to operate normally, is an active investor, backing Chinese tech giants including NIO and WuXi AppTec. According to the board, there is no reason that it’s aware of that would suggest Bao’s “unavailability is or might be related to the business and/or operations” of the group.
Chinese President Xi Jinping launched a broad anti-corruption probe against the finance sector in late 2021, bringing down dozens of officials. It’s also implicated the investment banking sector, involving bankers from brokerages including Everbright Securities and Guotai Junan Securities.
Famously, the same government regulators acted against Didi Global, preventing the company from registering new users between mid-2021 and January this year. Didi had proceeded with a New York listing, against the Chinese regulator’s wishes — and as advised by China Renaissance. Further, one of the difficult mergers that Bao is known for was between the two tech startups that would go on to become Didi Global.
Adding to the intrigue, the president of China Renaissance, Cong Lin, has been involved in an investigation by Chinese authorities since September 2022. So, is the disappearance of Bao Fan part of a twisting tale of government/business corruption, a thrilling case destined to be dramatized? Not quite.
Government crackdown on Chinese tech sector
In terms of business operations, Bao is the chairman and chief executive of China Renaissance, and yes, his not communicating with the company in which he holds a controlling stake is alarming for investors. However, it’s not uncommon for Chinese executives to fall out of contact when involved in a government probe, and Bao’s family have been told he’s assisting an investigation.
Further, his connections reach across sectors; he is the go-to banker for some of China’s largest companies. William Chen, senior analyst at Forsyth Barr Asia, thinks that stock in China Renaissance could see a “long-term overhang, given Bao is the key man for the company.” According to two sources with knowledge of the matter, who declined to be named, Bao had been taking an increasingly active role in China Renaissance’s private equity business in recent years.
However, the reality is that most worries are primarily profit-based, or more cynically, corruption-based. That is to say, the disappearance has come amid fears that the Chinese government is cracking down on finance and tech figures. Within the history of Chinese executives going missing with no explanation — at least six billionaires in the last few years — several cases were suspected of involvement in corruption or misconduct investigations.
So, yes, Bao’s disappearance is worrying — but mainly for other high-ups in the Chinese tech sector and its investors, who stand to lose profit, or face scrutiny themselves.
29 February 2024
29 February 2024