(Bloomberg Opinion) — The disappearance of high-profile banker Bao Fan is fueling speculation of a new crackdown on China’s financial industry.
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Bao’s company, China Renaissance Holdings Ltd., said Thursday it had lost contact with the banker, one of the country’s most prolific dealmakers in the past two decades. China Renaissance shares fell as much as 50% in early Hong Kong trading on Friday.
Bao has been out of contact with the company for about two days, a person familiar with the matter said, adding that the banker’s family has been told he is assisting in an investigation.
Former Chinese Renaissance chairman Cong Lin has been involved in an investigation by authorities since September, said the person, who asked not to be named because the matter is private.
While it’s not uncommon for executives in China to become unreachable when embroiled in a government investigation, Bao’s absence is sending chills through the financial industry. The outspoken financier has sprawling connections across sectors and has been the go-to banker for some of China’s biggest companies.
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The investment bank said its board is not aware of any information indicating that Bao’s unavailability may be related to the company’s business or operations, and that he functions normally under the executive committee. Bao has a majority stake and is the company’s chairman and chief executive officer.
A spokesman for China Renaissance in New York declined to comment on Bao when contacted by phone on Thursday. The firm did not immediately respond to an email request for comment about Cong on Friday. Caixin was the first to report Bao’s absence.
“It could be a long-term glut on the stock, given that Bao is the point man for the company,” said Willer Chen, a senior analyst at Forsyth Barr Asia Ltd.
Chinese President Xi Jinping launched a sweeping anti-corruption probe in late 2021 targeting the nation’s $60 trillion financial sector, which has led to the downfall of dozens of officials. The investigation has also implicated the investment banking community, nabbing bankers from brokerages including Everbright Securities Co. and Guotai Junan Securities Co.
Still, China has softened its stance toward the private sector in recent months, praising Ant Group Co. for following the Communist Party’s lead and resuming the Didi ride-hailing service on app stores. He has also issued sweeping measures to shore up the real estate sector.
Bao, a former banker at Morgan Stanley and Credit Suisse Group AG, made a name for himself by being able to negotiate difficult mergers and acquisitions, including those that led to the formation of Didi Global Inc. and Meituan.
China Renaissance itself is also an active investor, backing many tech companies that have become giants, including NIO Inc. and WuXi AppTec Co., according to its website.
He was a bookbroker in JD.com Inc.’s $2 billion US initial public offering in 2014, and a top underwriter for Kuaishou Technology’s Hong Kong listing in 2021, the largest offering ever. initial Internet public since the debut of Uber Technologies Inc. in 2019.
Bao expanded the company’s business into wealth management and brokerage services. China Renaissance had about 48.6 billion yuan ($7.1 billion) under its investment management as of the end of June 2022, according to its most recent interim report.
Cong held various positions at Industrial & Commercial Bank of China Ltd. He left China Renaissance last year, a person familiar with the matter said.
–With the assistance of Jacob Gu, Foster Wong and John Cheng.
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