One year on, a star Chinese dealmaker's absence casts pall over his bank

China Renaissance Holdings

08/02/2024 09:10

By Selena  Li and Julie Zhu
       Feb 8 (Reuters) - One year ago, star dealmaker Bao Fan
was taken away by Chinese authorities and hasn't been seen by
colleagues since - an absence that has caused mounting concern
among staff and clients about the future of his boutique
investment bank, sources say.
    Bao, the founder of China Renaissance Holdings  1911.HK ,
last week resigned as executive director, chairman and chief
executive, the company announced, saying he stepped down for
health reasons and to spend more time on family matters.
    However, Bao retains his stake of roughly 49%. And in recent
months he has remained very much involved in key decision-making
at the bank, albeit communicating remotely, three sources with
knowledge of the matter said.
    When Bao went missing, China Renaissance said at the time he
was cooperating with authorities conducting an investigation but
did not elaborate.
    Sources have previously told Reuters that he was taken away
to assist in an investigation into a former colleague. A Chinese
financial publication reported in May he was detained by
disciplinary and supervision officials. Authorities have as yet
not given any explanation.
    Bao is believed to still be under detention, according to
one of the sources.
    He is one of several high-profile executives in China - most
from the finance industry - who have gone missing in recent
years with little explanation amid a sweeping anti-corruption
campaign spearheaded by President Xi Jinping.
    Bao's resignations show the firm, which has seen headcount
shrink over the past year, is taking some steps to distance
itself from Bao as it tries to mitigate the impact of the
investigation, one of the sources said.
    But Bao is expected to retain a tight grip on the bank due
to his stake and the backing of close associates in top
management who have been running the company in his absence, the
source added.
    The sources were not authorised to speak on the matter and
declined to be identified.
    China Renaissance declined to comment.
    China's Ministry of Public Security and China Securities
Regulatory Commission did not immediately respond to requests
for comment. Reuters was not able to reach the Central
Commission for Discipline Inspection (CCDI), which is the
Chinese Communist Party's anti-graft watchdog, for comment. 
    
    GRIM MOOD 
    Headcount in the bank's advisory and securities units at its
mainland and Hong Kong offices was more than 700 before Bao's 
disappearance and has since dropped by a third, one of the
sources said. That is due to staff quitting of their own accord,
layoffs and contracts not being renewed, the source added.
    At least one company has expressed an interest in acquiring
China Renaissance's securities unit, but Bao has yet to say
whether he would even consider a sale, said one of the three
sources and a fourth person.
    Two of the sources said company management had hoped Bao
would regain his freedom in the third quarter of last year and
his continued detention has come as a surprise.
    In the meantime, Xi's anti-graft campaign shows no sign of
letting up. "We must never turn back, slack off or show mercy in
our fight against corruption," Xi told a CCDI meeting last
month.
    Bao who previously worked at Credit Suisse and Morgan
Stanley, was widely regarded as one of China's best-connected
bankers. He was involved in the mergers of ride-hailing firms
Didi and Kuaidi, food delivery giants Meituan  3690.HK  and
Dianping, and travel platforms Ctrip and Qunar.
    Trade in China Renaissance stock was suspended last April.
It lost 27% between Bao's disappearance and the suspension,
giving it a market valuation of HK$4.1 billion ($525 million).
    Bloomberg on Wednesday first reported that Bao's investment
bank was shrinking and was attracting interest from rivals.
  
    ($1 = 7.8204 Hong Kong dollars)

 (Reporting by Selena Li and Julie Zhu; Editing by Sumeet
Chatterjee and Edwina Gibbs)
 ((Selena.Li@thomsonreuters.com; +852 39525868;))