(Bloomberg) — In the go-go years when China churned out a billionaire every two days, banking rainmaker Bao Fan is close to reaching that milestone.
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His skills are advising tech giants like Alibaba Group Holding Ltd. made him one of the country’s most sought-after financiers, helping him amass a fortune of more than $800 million through his ownership stake in China Renaissance Holdings Ltd.
Bao’s career collapsed last year when he disappeared from public view after being detained by authorities amid a crackdown. The extent of the financial freefall was revealed when Renaissance shares tumbled after stopping for 17 months. His stock is now worth $55 million, down 93% from its peak in February 2021, based on filings and calculations by the Bloomberg Billionaires Index. Bao benefits from having a direct 35% stake in the company, through two vehicles and a trust.
A spokesman for China Renaissance had no immediate comment when contacted by Bloomberg News.
Bao’s sudden comedown cast a pall in China’s financial sector, which has been a frequent target of President Xi Jinping’s “common prosperity” drive. More than a hundred executives and financial officials were caught up in the anti-corruption push in 2023 alone, as bankers face pay cuts and belt-tightening to curb what officials say is a “hedonistic” lifestyle.
“Lack of transparency about why all these stars of the financial sector – some of whom are not stars – are being held is really not going to help capital return to China,” said Alicia Garcia Herrero, chief Asia Pacific economist at Nataxis.
The rampant violations and job losses are forcing bankers to rethink their careers, as they try to shift Beijing’s dramatic shift toward top manufacturing and renewable energy, and away from the finance and real estate that has driven China’s economy for decades.
Bao, 53, is one of the top losers to follow the pivot. The former banker at Morgan Stanley and Credit Suisse founded China Renaissance in 2005, making a name for himself after joining a brokerage that led to the creation of ride-hailing service Didi Global Inc. and food delivery giant Meituan.
His ability to spot rising tech stars made him one of China’s most influential bankers, luring billionaire Jack Ma to become a cornerstone investor when his company went public in 2018. He later turned to private equity to back startups and tech companies, managing more than $8.8 billion in assets by the end of 2020.
It all began to unravel when Bao was arrested in February last year without an official explanation. China Renaissance says only that he has lost contact with people. He was later detained for an unspecified investigation by Chinese authorities amid a wider financial sector crackdown. Earlier this year, the former chairman and chief executive officer stepped down “for health reasons and to devote more time to family matters,” according to a company statement.
The company gave no indication of where the founders were when it released earnings that had been delayed for more than a year. His current legal status is unclear.
The crash has hurt the business, which has also been hit by a slump in transactions as China’s economy descends into a deflationary spiral. The company posted a loss of nearly 74 million yuan ($10.4 million) in the six months to June as revenue fell 39% to 329 million yuan. This resulted in a loss of 471.9 million yuan for all of 2023, the second consecutive year in the red.
Almost a third of staff in Hong Kong, which includes investment banking, private equity and wealth management teams, have resigned or lost their jobs, Bloomberg News reported in February.
China Renaissance shares fell 66% in Hong Kong on Monday, the first day of trading since March last year, reducing the company’s market value to HK$1.39 billion ($178 million).
Elsewhere, there will be at least 130 investigations and convictions of executives and financial officers in 2023 alone. China has appointed a new chief to crack down on financial corruption, suggesting the investigation is far from over.
In the absence of Bao, the company promises to “look forward to a new era.”
“Despite all kinds of difficulties and challenges, China Renaissance is still actively seeking growth and forges ahead with determination in the midst of adjustments,” according to the earnings report.
–With assistance from Pei Yi Mak, Cathy Chan and Lulu Yilun Chen.
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