Famed Chinese rainmaker goes missing in latest executive disappearance

February 17 (Reuters) – Chinese dealmaker Bao Fan, founder of investment bank China Renaissance Holdings Ltd (1911.HK), has disappeared in the recent disappearance of a top CEO, unsettling investors and sending its shares down as much as 50% . on Friday.

The mainland China-based boutique bank said in a stock exchange filing late Thursday that the company was unable to contact Bao.

China Renaissance’s board was not aware of any information that indicated Bao’s “unavailability is or may be related to the business and/or operations of the group,” which was continuing normally.

The dealmaker’s disappearance is the latest in a string of high-profile Chinese executives disappearing without explanation during a sweeping anti-corruption campaign led by President Xi Jinping, though the reasons for Bao’s disappearance are unclear.

In 2015 alone, at least five executives were unavailable to their companies without notice, including Fosun Group chairman Guo Guangchang, who Fosun said later helped investigate a personal matter.

China’s ruling Communist Party turned its attention to the country’s vast financial sector in 2021, launching a new round in a year-long campaign to expose corruption and illicit dealings.

The disappearance comes after China’s border reopened and a renewed focus on boosting the ailing economy has brightened the prospects for deals, as has an easing of regulatory crackdowns on tech companies.

The disappearance of Bao, also the company’s majority shareholder, chairman and CEO, pushed Hong Kong-listed China Renaissance shares to a record low of HK$5 in early trading, wiping out the HK$2.8 billion ($357 million) market value have been done.

The stock regained some ground later in the day to finish down 28% in a Hong Kong market that fell 1.3%. Nearly 30 million shares of the boutique investment bank changed hands on Friday, an all-time high.

Bao, who previously worked at Credit Suisse Group AG (CSGN.S) and Morgan Stanley (MS.N), is hailed as one of China’s most connected bankers.

He has been involved in major technology mergers, including bringing together ride-hailing companies Didi and Kuaidi, food delivery giants Meituan (3690.HK) and Dianping, and travel device platforms Ctrip (9961.HK) and Qunar.

“When a public company voluntarily discloses that a senior manager or major shareholder is unavailable, it is really unusual as the person may have been unavailable for some time,” said Dickie Wong, executive director of research at Kingston Securities.

Investors’ worst nightmare is that a company’s ability to continue operations is compromised, so a stock sale is not surprising given the uncertainty, Wong added.

DEALS CONSULTANT

At the helm of China Renaissance, Bao has taken an increasingly active role in the group’s private equity business in recent years, according to two sources with direct knowledge of the matter.

The sources declined to be named due to the sensitivity of the matter.

A spokesman for China Renaissance referred Reuters’ request for comment Friday to the investment bank’s public filing.

China Renaissance currently ranks ninth in China’s 2023 stock market rankings, according to Refinitiv, after advising on Jiangsu Sanfame Polyester Material’s $363 million convertible bond (600370.SS) last month.

The company earned $20.6 million in Chinese investment banking fees in 2022, up from $43.13 million a year earlier, the data showed.

Bao started China Renaissance in 2005 as a two-person team to match capital-hungry startups with venture capitalists and private equity investors. Since then it has expanded to include services such as underwriting, sales and trading.

The investment bank made its Hong Kong market debut in 2018 after raising $346 million.

China Renaissance has advised on some of China’s largest technology initial public offerings (IPOs), including those of JD.Com Inc and Kuaishou Technology (1024.HK) and the 2021 listing of Didi in New York.

Didi ran afoul of Chinese regulators when it pushed ahead with the US listing in 2021 against the regulator’s wishes, sources previously told Reuters.

China Renaissance is also an active investor in the technology sector. In 2019, the company raised more than 6.5 billion yuan ($945 million) in a yuan-denominated fund.

Bao’s disappearance comes days after property developer Seazen Group Ltd (1030.HK) said it had been unable to contact or reach its vice chairman.

($1 = 7.8483 Hong Kong dollars)

Reporting by Julie Zhu, Kane Wu and Donny Kwok; Additional reporting by Kevin Xu; Writing by Scott Murdoch. Edited by Sumeet Chatterjee, Christopher Cushing, Jamie Freed and Mark Potter

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