{"id":3006,"date":"2023-10-19T03:00:57","date_gmt":"2023-10-19T03:00:57","guid":{"rendered":"https:\/\/infundpros.com\/business\/china-renaissance-retrenches-after-influential-founders-detention\/"},"modified":"2023-10-19T03:00:57","modified_gmt":"2023-10-19T03:00:57","slug":"china-renaissance-retrenches-after-influential-founders-detention","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=3006","title":{"rendered":"China Renaissance retrenches after influential founder\u2019s detention"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=3eb1a04d-48f2-41c6-bf2e-4cd7ce3f03b5\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Tech-focused investment bank China Renaissance is struggling to win business from start-ups and new money from investors as the detention of its influential founder Bao Fan enters its ninth month.<\/p>\n<p>China Renaissance was once at the centre of the country\u2019s tech boom, but the sudden disappearance of its founder and chief executive in mid-February, part of a crackdown by Beijing, has created uncertainty. A half-dozen people close to the bank said start-ups were hesitating to hire it, while investors were withdrawing capital or had stopped putting new money into its funds.<\/p>\n<p>\u201cWe\u2019ve advised our start-ups not to use China Renaissance,\u201d said one Beijing-based investor at a midsized fund. \u201cIt is better not to work with them for the time being.\u201d<\/p>\n<p>To shore up its finances, the group has not paid a dividend, cut 115 employees, or 15 per cent of its staff, and moved to cash out earlier investments.<\/p>\n<p>The woes of a bank that once led the country\u2019s private dealmaking tables and has Rmb40bn ($5.5bn) of assets under management show the lingering effects of a tech crackdown, despite the Communist party\u2019s recent charm offensive to reinvigorate the private sector, analysts said.<\/p>\n<p>\u201cUnder Xi Jinping, a disproportionately large number of businesspeople have disappeared,\u201d said Willy Lam, a senior fellow at The Jamestown Foundation. \u201cIt has darkened the horizon for ambitious young people in the tech sector. Now they would rather send their money overseas and leave China themselves.\u201d<\/p>\n<p>A week after China Renaissance revealed it was \u201cunable to contact\u201d Bao in February, the bank said he was co-operating in an investigation. The probe also involves the group\u2019s former president Cong Lin. The whereabouts of both men remain unknown.<\/p>\n<p>In Bao\u2019s continued absence, the group promoted co-founder Kevin Xie to acting chief executive at the beginning of October. People close to the group said the hope was that Xie stepping in as CEO would help resolve a stand-off with longtime auditor Deloitte, which has refused to sign off on China Renaissance\u2019s accounts until it can speak to Bao about the nature of his detention.<\/p>\n<p>The lack of audited financial statements forced the group to suspend trading of its shares in April, threatening the bank with a delisting in 18 months\u2019 time. Two people close to China Renaissance said it was also exploring changing auditors to resolve the issue.<\/p>\n<p>Deals are also drying up. The group\u2019s unaudited financial statements show investment banking revenue slumped to just Rmb112mn in the first half, from as much as Rmb742mn during the comparable period of 2021. \u201cI almost had nothing to do in my past few months,\u201d said one recently departed employee.<\/p>\n<p>By June 30, committed capital promised by investors for China Renaissance\u2019s investment funds had also fallen for the first time. In July, two well-known Chinese venture capitalists quit its board.<\/p>\n<figure class=\"n-content-image n-content-image--full\"><picture><source media=\"(min-width: 700px)\"  width=\"1459\" height=\"1042\"><\/source><source media=\"(max-width: 490px)\"  width=\"625\" height=\"813\"><\/source><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/infundpros.com\/wp-content\/uploads\/2023\/10\/https:\/\/d6c748xw2pzm8.cloudfront.net\/prod\/a8f4f650-698f-11ee-99f9-d7800a607ffb-standard.pn.png\" alt=\"Investor capital committed to China Renaissance declines for the first time\" data-image-type=\"graphic\" width=\"1459\" height=\"1042\"><\/picture><\/figure>\n<p>\u201cNo one is putting in new money,\u201d said one person close to the bank\u2019s executive team. \u201cA lot of limited partners invested because of Bao Fan. It\u2019s like having HongShan [the former Sequoia China firm] without [its leader] Neil Shen.\u201d<\/p>\n<p>The entire Chinese advisory space remains tough as global investors pull back from investing in Chinese stocks and start-ups. But people close to the group said the damage at China Renaissance was particularly stark, especially in tightly regulated areas such as underwriting public offerings.<\/p>\n<p>The person close to management said the group was shifting focus away from IPO work and back to advising start-ups raising money, which was the centre of its business for a long time. However, data from research provider ITjuzi shows that such work has also started to slow. After several years of ranking among the top two advisers by the number of private financing deals put together, China Renaissance has fallen to the sixth most active bank this year, the data show.<\/p>\n<p>Co-founded by Bao in 2005, China Renaissance branched out from connecting investors with start-ups to the more profitable business of advising on major tech mergers such as that of ride-hailing companies DiDi and Kuaidi and blockbuster public offerings including of delivery service Meituan, as well as building a wealth management business.<\/p>\n<p>The group\u2019s cash position fell from Rmb3.1bn at the end of 2022 to Rmb1.8bn on June 30, as the bank moved to repay $300mn owed to a group of mostly Chinese state-owned banks. Provisions for those loans allowed the banks to demand repayment if Bao was no longer the company\u2019s chair. After Bao\u2019s disappearance, the group said it had \u201cvoluntarily prepaid\u201d the loans.<\/p>\n<p>China Renaissance declined to comment.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/3eb1a04d-48f2-41c6-bf2e-4cd7ce3f03b5\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Tech-focused investment&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-3006","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>China Renaissance retrenches after influential founder\u2019s detention | inFundPros<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Tech-focused investment bank\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=3006\" \/>\n<meta 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