Missing Chinese financier Bao Fan's China Renaissance plummets after 17-month suspension
Shares of China Renaissance Holdings, whose founder Bao Fan has been involved in a probe by Beijing for more than a year, plummeted in Hong Kong as they resumed trading after 17 months of suspensions.
The stock tumbled by as much as 73 per cent to HK$1.98 on Monday, before later narrowing the decline to 66 per cent. The Hang Seng Index was down 2 per cent. Shares last traded on March 31, 2023.
The company has fulfilled all the requirements for a trading resumption after publishing overdue financial results for 2022 and 2023 while confirming that its business operations remain normal in China and Hong Kong, the investment bank said in a statement to the Hong Kong exchange.
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"Given the board considers that the company has fulfilled all requirements prescribed under the Resumption Guidance, an application has been made by the company to the stock exchange", the statement said. "Shareholders and potential investors are advised to exercise caution when dealing in the shares of the company."
China Renaissance has been in the spotlight for more than a year. Its founder, Bao Fan, has been involved in an unspecified investigation by the Chinese government since February 2023 and the company has not been able to contact him since. The financier resigned as chairman and CEO of the company in February of this year, citing "health reasons" as well as the desire to "spend more time with the family".
The years-long slump for Hong Kong and Chinese stocks has weighed on China Renaissance's business, as a reduced number of stock offerings and deals involving mergers and acquisitions have sapped a critical source of revenue.
The company's first-half loss narrowed to 73.8 million yuan (US$10.4 million) from a year-earlier loss of 180.1 million, according to its interim report published last week. China Renaissance posted a loss of 471.9 million yuan for 2023, wider than a year-earlier loss of 429.9 million, according to separate annual results that were published last week.
"The volume and number of private equity transactions across the market declined significantly, and the private placement advisory market mirrored the subdued trends in investment and financing markets", China Renaissance said in its 2023 annual report. "The overall market turbulence and the general downturn throughout the year posed significant challenges to all business segments, both domestically and internationally."
China Renaissance named Hui Yin Ching, Bao's wife, as its non-executive director, according to a separate exchange statement. The couple owns 48.7 per cent of the company, it said.
Bao, who will turn 54 next month, took China Renaissance public in 2018. The investment bank was involved in a number of the most high-profile capital-market deals involving Chinese technology companies, including the merger of Didi and Kuaidi to create Didi-Chuxing; the combination of Meituan and Dianping; Ctrip's takeover of Qunar to create Trip.com; and the merger of 58.com and Ganji.com.
China has intensified an anti-corruption campaign in its US$60 trillion financial sector over the past year, heeding Beijing's call to eradicate hedonism from the industry and conform to President Xi Jinping's common prosperity initiative. In April, authorities launched an investigation into the former chairman and party chief of state-owned China Everbright Group, Li Xiaopeng, and Liu Jin, the president of Bank of China, abruptly resigned last month.
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