April 13, 2023 Updated: April 13, 2023
The headquarters of
China Renaissance is seen in Beijing on Feb. 27, 2023. (Greg Baker/AFP via
Getty Images)
China’s “M&A King”
Bao Fan has been missing for over 50 days, sending shockwaves throughout the
country’s financial and political circles.
On April 3, China
Renaissance Group, the company Bao founded, announced a trading halt,
suspending trading from 9:00 am that day. The release of its annual performance
report for 2022 has also been deferred as the auditors cannot issue an audit
report in Bao’s absence.
Bao is the company’s
chairman, executive director, chief executive officer, and controlling
shareholder.
On Feb. 16, the company’s
board of directors announced that they had been unable to contact Bao, and on
Feb. 26, they revealed that he was “cooperating” with authorities’
investigations.
If we take Feb. 16 as the
starting date, Bao has been missing for over 50 days.
Impressive
Resume
Bao, born in 1970,
founded China Renaissance Group in 2005 at the age of 35.
Prior to that, he served
as the chief strategy officer of China-based IT services and software company
Asiainfo Group. He also worked at international financial companies such as
Morgan Stanley and Credit Suisse, accumulating seven years of investment
banking experience on Wall Street.
Bao’s influence in the
Chinese financial industry is enormous.
In 2015, China
Renaissance Group facilitated four major mergers and acquisitions in China’s
Internet industry: the merger of ride-hailing giants Didi and Kuaidi, the
merger of classifieds site 58.com and Ganji.com, the merger of lifestyle
e-commerce platform Meituan and online review site Dianping, and the merger of
online travel agencies Ctrip and Qunar.
Since then, Bao has been
involved in almost all major financing, mergers and acquisitions, and IPO deals
in China’s internet industry.
According to IT Juzi, a
Chinese business information service provider, China Renaissance Group has
brokered 439 public transactions with 727 different investors from 2014 to
2021, including numerous big-name investors. His reputation as the “King of
M&A” in China is well-deserved.
Bank
of China Chairman Implicated
The day after Bao went
missing, Liu Liange, chairman, executive director, and Chinese Communist
Party (CPP) boss at the Bank of China, was removed from his positions.
One month later, the Bank
of China claimed that Liu had “voluntarily” resigned. On March 31, the Central
Commission for Discipline Inspection announced that Liu was under investigation
for serious law violations.
Liu had worked in China’s
banking system since the 1990s, holding key positions, including 11 years at
the China Exim Bank and later serving as the Party boss and chairman of the
Bank of China.
As reported by Beijing
Caixin, sources close to the Bank of China said that Liu’s case is likely
connected to the recent investigation into Bao’s case.
Before Liu’s downfall,
several high-ranking executives at the Bank of China were taken away for
investigation between July and September 2022.
Early
Repayment Clause
Although China
Renaissance Group has stated that its business and operations are currently
running as usual, it has been noted that the company has signed loan agreements
with specific clauses.
In May 2021, China
Renaissance Group announced that it had obtained its first syndicated loan
since going public. The loan, totaling $300 million over a three-year period,
was led by the Bank of Communications (Hong Kong) and involved other banks such
as Citibank (Hong Kong), China Citic Bank International, and Bank of China
(Macau).
The financing agreement
stipulates that if Bao is no longer the largest shareholder of China
Renaissance Group or no longer serves as board chairman, the main lenders can
cancel their commitments and demand immediate mandatory repayment of all
outstanding loans under the financing.
The market is concerned
that if Bao cannot perform his duties for an extended period, creditors may
lose confidence in China Renaissance Group, and the aforementioned $300 million
loan may be subject to early repayment.
China Renaissance Group
has not responded to the request of The Epoch Times for comment by press time.
Xi
Targets Financial Sector
Chinese leader Xi Jinping
has been disciplining the financial sector in China, with dozens of personnel
changes seen in bank executive positions this year. According to the CCP’s
Central Commission for Discipline Inspection, in the first three months of
2023, at least ten high-level executives in China’s financial sector have been
investigated.
One week after Bao went
missing, the Central Commission for Discipline Inspection published an article
on Feb. 23 mentioning “finance” 16 times.
The article claimed that
the commission aimed to eliminate “political risks,” break the “financial
elite” and “Westernization” mindsets, rectify the industry’s “unspoken
rules,” eliminate the mentality of “law does not punish the masses” and
investigate issues such as “shadow shareholders” and the “revolving door.”
Political commentator Ji
Lin, who resides in Japan, told The Epoch Times on April 10 that as China’s
economy continues to decline and the fiscal deficit becomes severe, debt crises
may erupt at any time. Therefore, Xi is taking action in the financial system,
attempting to ease the situation.
Ji said that China’s
financial sector is controlled by influential families, and through factional
purges, Xi can replace key positions with his trusted individuals.
Ji also said that China’s
capital circle is full of unspoken rules involving collusion between officials
and businessmen, where capital magnates receive illegal benefits and protection
from officials and, in turn, act as officials’ hidden henchmen who help with
reaping profit and money laundering.
“With Bao Fan’s
qualifications, he is likely such a henchman figure. Thus, if Bao is being
investigated, many individuals associated with him may also fall,” Ji said.
Ellen Wan contributed to this report.
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