Author | Zheng Li
Edit | High Mountains
Source | Unicorn Finance
In February 2023, the "king of China's Internet mergers and acquisitions" Huaxing Capital (1911. HK) issued an announcement that Bao Fan, then chairman of the board of directors and controlling shareholder, "lost contact", breaking the tranquility of the capital circle for a while. Not only that, but on April 3 of the same year, the company suspended trading in the capital market. Over the past year or so, China Renaissance Capital has been working hard for the resumption of trading.
After a lapse of 17 months, Huaxing Capital finally resumed normal trading on September 9. However, judging from the market performance, the stock fell by more than 70% after the market opened on September 9. As of the close of the day, Huaxing Capital quoted HK$2.45 per share, down 66.3%, and the latest market value was HK$1.393 billion, compared with HK$4.129 billion at the time of suspension, evaporating HK$2.56 billion (a total of RMB2.336 billion).
In addition to the actions in the capital market, since Bao Fan was exposed to the "loss of contact", Huaxing Capital began to "change blood" in personnel. On September 6, China Renaissance Capital also updated the list of directors and their roles and functions. Executive Directors include Xie Yijing (Chairman), Lin Jiachang (Vice Chairman), Du Yongbo and Wang Lixing; Non-executive directors include, Xu Yanqing and Lin Ning; Independent non-executive directors include Yao Jue, Ye Junying and Zhao Yue. Among them, the newly appointed Xu Yanqing and Bao Fan are husband and wife.
In the investment circle, Bao Fan's status was second only to Shen Nanpeng, the managing partner of Sequoia Capital, and Zhang Lei, the founder of Hillhouse Group. Before the "loss of contact", in his investment career, Bao Fan's figure was all over the domestic Internet industry, and there was a saying in the venture capital circle: If you don't know Bao Fan, it means that your business is not big enough.
Now, Bao Fan has taken a back seat, Huaxing Capital has achieved "de-Baofan", regardless of the stock price performance, it can be seen from a series of actions that Huaxing Capital is gradually returning to the right track.
1
After 17 months of suspension, Bao Fan's wife became the owner of Huaxing Capital
According to the information disclosed by Huaxing Capital, CR Partners Limited, the controlling shareholder holding about 38.38%, requested the appointment of Xu Yanqing as a director. She is considered by the Board and the Nomination Committee to have the character, experience and integrity to be a suitable non-executive Director. Effective September 6, the term is three years.
Source: Announcement
According to the previous prospectus, CR Partners Limited is held by Bao Fan, Xie Yijing, Du Yongbo and Wang Xinwei.
According to public information, Xu Yanqing also indirectly held shares in the company in 2018. CR Partners Limited is 73.37% owned by FBH Partners. As for FBH Partners, Bao Fan and Xu Yanqing hold 79% and 21% of the equity respectively.
At present, Bao Fan holds a total of 277 million shares in Huaxing Capital, accounting for 48.71% of the total issued shares. Under the Securities and Futures Ordinance, Xu Yanqing is also deemed to hold approximately 48.71% of the equity interest in Bao Fan.
Huaxing Capital emphasized that Xu Yanqing had not previously participated in Huaxing Capital's business, and confirmed that she had not received an investigation notice or court proceedings from Bao Fan to cooperate with the investigation. The Board and the Nomination Committee unanimously agreed that the incident would not adversely affect her appointment as a non-executive Director.
On the evening of September 8, four executive directors, including Chairman of the Board of Directors Xie Yijing, Vice Chairman Lin Jiachang, and two co-presidents, Wang Lixing and Du Yongbo, also spoke out in support of Xu Yanqing.
Each of the four executive directors undertook to the Company that they would not sell any interest in the Company's shares (i.e. the lock-up period commitment) from 8 September 2024 to 7 March 2025. Each executive director may terminate its lock-up period commitment by giving 5 calendar days' written notice to the Company. The four executive directors together hold approximately 2.2% of the shares of the Company.
Xu Yanqing has a rich resume. According to public information, Xu Yanqing, 54 years old, is the founder, chairman and CEO of China Airlines Aviation Technology (Tianjin) Co., Ltd. China Airlines Aviation Technology Co., Ltd. provides global business jet leasing business and is committed to serving high-end customers with Internet solutions.
Since the news of Bao Fan's "loss of contact", Huaxing Capital has undergone a series of personnel changes.
Bao Fan has resigned as Executive Director, Chairman of the Board and Chief Executive Officer of China Renaissance Capital on February 2, 2024, and Xie Yijing has been appointed as Chairman of the Board.
According to the biographical information, Xie Yijing is the founder, executive director, managing director, co-head of the investment banking division and head of the medical and life science business department of the group. Mr. Tse also previously served as the Chairman of the Company's Environmental, Social and Governance Committee, a member of the Executive Committee and a director of certain subsidiaries of the Company.
At the same time, Lin Jiachang was appointed as an executive director and vice chairman of the board of directors of China Renaissance Capital; Du Yongbo was appointed as Executive Director; Wang Lixing and Du Yongbo were appointed as co-presidents of the Group on the basis of their existing executive directorships; Sun Qianhong was appointed as a non-executive Director. Sun Qianhong is a relative of Mr. Bao Fan, who is still the controlling shareholder of the Company as of the date of the announcement.
Source: Canned Gallery
In addition to Huaxing Capital, the directors, supervisors and senior executives of Huaxing Securities, a subsidiary of Huaxing Capital, have also experienced a round of "blood change".
On February 13, 2023, the then chairman Cong Cong, director Wang Hui, director Ma Ning and supervisor Dong Jianjin withdrew; The new main personnel are: Yang Chenyang, Wang Cheng, Tao Jian and Xin Xin as directors, Zheng Yi as supervisors, and Yang Liyang as the person in charge of finance.
It is worth mentioning that when Bao Fan cooperated with the investigation of relevant authorities in February 2023, some media reported that the incident may be related to the illegal operation of Cong Cong, the former chairman of Huaxing Securities, in the ship leasing business. However, China Renaissance Capital did not respond to this.
2
China Renaissance Capital's "LP Circle of Friends"
Huaxing Capital, founded by Bao Fan, was established in 2005 and listed on the main board of the Hong Kong Stock Exchange in September 2018, and was the most active financial intermediary in China. The hope of the world-class investment bank of the Chinese is placed on Huaxing.
Source: Canned Gallery
Huaxing Capital has gathered a beautiful "LP circle of friends", with VC/PE, market-oriented FOF, and unlisted companies being the majority. Bao Fan's figure has spread all over the domestic Internet industry, so much so that there is a saying in the venture capital circle: If you don't know Bao Fan, it means that your business is not big enough.
In his early years, Bao Fan worked on Wall Street in United States, serving Morgan Stanley and Switzerland Credit, helping multinational companies with fund raising, mergers and acquisitions, bank loans, etc., during which he led China Unicom's US$5.6 billion overseas listing project. In 2000, he joined AsiaInfo Group Co., Ltd. (hereinafter referred to as "AsiaInfo Group") as the chief strategy officer, responsible for investment, mergers and acquisitions and strategic cooperation.
AsiaInfo Group is an IT services and software company, and during his four years at AsiaInfo Group, Bao Fan was able to get in touch with many local Chinese high-tech companies, and thus established a strong circle of friends. This also laid the groundwork for Bao Fan's investment in Internet companies.
In the early days of the establishment of Huaxing Capital, Bao Fan's strong circle of friends played a big role. In the A to D round of financing of Huaxing Capital, there are the blessings of Shen Nanpeng's Sequoia Capital, Liu Qiangdong's smart Group Global, and Li Shimo's Chengcheng Capital.
At that time, it was in the era of the Internet, and Huaxing Capital was deeply involved in it and seized this outlet. In 2015, the four major mergers and acquisitions led by Huaxing Capital: Didi and Kuaidi, Meituan and Dianping, 58 and Ganji, Ctrip and Qunar were its highlight moments, and Bao Fan himself was selected as one of the world's 50 most influential people by the United States financial magazine Bloomberg Markets.
Since then, Huaxing Capital has invested in the dual-listed Shell. In 2016, Huaxing Capital participated in its B round of financing with Tianjin Fengxiang Technology Partnership (Limited Partnership) as the main body, with an investment amount of 1.324 billion yuan, and in 2017, it participated in the C round of financing with Tianjin Fengxiang Technology Partnership (Limited Partnership) as the main body, with an investment amount of 626 million yuan.
In addition, Huaxing Capital has also invested in Jingdong Technology, Li Auto, Qihoo 360, 51Talk, Tongcheng Travel, Logical Thinking, etc., and has made a lot of money.
According to the "prospectus" disclosed by Huaxing Capital, Huaxing Capital's income in 2017 was US$212 million, and the income in the first quarter of 2018 was US$92.92 million, and the net profit in 2017 was US$58.1 million, and the net profit in the first quarter of 2018 was US$35.67 million.
On September 27, 2018, Huaxing Capital was listed on the Hong Kong stock market, and a group of bigwigs shared the capital feast. In addition to Sequoia Capital and Chengcheng Capital, which participated in the early investment, on the eve of listing, Liu Qiangdong of JD.com, Liu Yonghao of New Hope, Zuo Hui of Lianjia, Liang Jianzhang of Ctrip, etc., participated in the subscription of a total of 86 million US dollars of convertible bonds issued by Huaxing Capital, which can be automatically converted into shares.
The landing on Hong Kong stocks is also a watershed moment for the change in the investment strategy and direction of China Renaissance Capital. Huaxing Capital's follow-up investment began to shift from the Internet to medical technology and new energy industries.
Bao Fan once said in an interview: "The outside world has always thought that Huaxing is still an Internet company, but in fact, after 2018, we almost stopped investing in the Internet." Now we invest in advanced manufacturing, new energy, medical technology, and some pretty good cases, all because there are many excellent colleagues who have joined. ”
In addition, Bao Fan's investment criteria have also changed. 10 years ago, Bao Fan looked at the project with three criteria: whether the thing was promising and developable; whether it has a strong team; Whether people and things are matched.
10 years later, Bao Fan's three criteria for the project were: whether it is suitable for the environment; whether it is beneficial to society; Whether the governance model of the project is in line with the model that China is currently encouraging. "When we invest in a company, we must see whether the values of the company are consistent with the overall values of China."
After 2018, Huaxing Capital participated in the investment in Zhihu (2390. HK), Chalk (2469. HK), ArcherMind Technology (300598. SZ) and other enterprises have also brought a lot of returns to Huaxing Capital.
Since January, China Renaissance Capital has announced the successful financing of at least 10 companies, and China Renaissance Capital has served as a financial advisor.
At the beginning of the year, Altron Lightyear, an AI full-link marketing company, announced that it had received $15 million in Series A+ financing, which was co-led by Meitu and Cathay Capital, followed by Binfu Capital and Wanwu Venture Capital, with China Renaissance Capital as the exclusive financial advisor.
On January 5, Suteng Juchuang Technology Co., Ltd. (hereinafter referred to as "Suteng Juchuang"), a global leader in the lidar and perception solutions market, was listed on the main board of the Stock Exchange.
Huaxing New Economy Fund, a subsidiary of China Renaissance Capital, made a strategic investment in Suteng Juchuang in 2021 and has accompanied the company's growth since then. The investment banking team of China Renaissance Capital also accompanied Suteng Juchuang through multiple rounds of private placement financing, and acted as joint sponsor, overall coordinator, joint global coordinator, joint bookrunner and joint lead manager during the Hong Kong listing.
In terms of network building, Bao Fan has achieved the ultimate. Yang Haoyong, the former CEO of Ganji.com, once publicly said, "In the circle of investment banking, Bao Fan has a very high status. He has a good relationship with many people in the circle, and everyone sells him face, which I think is a very important factor in Huaxing's success. ”
In 2017, Bao Fan once told the media: "I often say that Huaxing wants to 'go to Bao Fan'. Without Bao Fan, Huaxing has no past, but only Bao Fan, Huaxing has no future."
Time is silent, but it gives all the answers. Huaxing Capital has lagged behind in the adjustment for a while, but it has not really dispelled the market's concerns.
The investment manager of an investment institution once told Tencent News Column "Deep Web": "We have an invested company in the consideration of follow-up financial advisors, the founder of the future listing plan, Huaxing Capital is one of the institutions he focuses on, but some investors reminded the founder to pay attention to the stability of the project team, Huaxing Capital in recent years The liquidity of the team is a bit large." ”
3
In the financial circle, there is no eternal "myth"
The capital market is generally concerned about whether the Bao Fan incident has a direct impact on the performance of Huaxing Capital. According to the four financial reports disclosed by Huaxing Capital on September 4, the outside world was able to get a glimpse of it. The report shows that in 2023 and the first half of 2024, the company will lose a total of 546 million yuan.
According to the results of the first half of 2024, the total income of Huaxing Capital was 329 million yuan, a year-on-year decrease of 38.7%, and the loss attributable to the company's owners was 73.822 million yuan, narrowing the year-on-year loss. Specifically, the revenue of the three major sectors of investment banking, investment management, and Huaxing Securities fell by 13.5%, 57.1%, 13.6%, and 40.4% respectively.
Source: Canned Gallery
In the first half of 2024, Huaxing Capital's total income and net investment income totaled 360 million yuan, a year-on-year decrease of 39%, and Huaxing Capital achieved a net loss attributable to the company's owners of 74 million yuan.
Source: Financial report
Net investment income mainly comes from investing in self-managed private equity funds, third-party private equity funds, listed equity investments, wealth management-related products, structured finance-related products, financial bonds and other cash management products.
In the long term, in 2022 and 2023, the total income and net investment income of Huaxing Capital will be 1.585 billion yuan and 1.006 billion yuan respectively, a year-on-year decrease of 9.12% and 36.54%.
As Bao Fan cooperated with the investigation of the incident, Huaxing Capital's asset management business also faced challenges. In the 2023 announcement, the company stated that the fundraising of Huaxing New Economy RMB Fund IV and USD Fund IV (hereinafter referred to as "Huaxing New Economy Fund IV") ended early, and the investment period was also terminated early, and no new project investment will be made.
Bao Fan once publicly said, "Our goal is very simple, there is only one goal for Huaxing in the future, to become the most powerful investment bank in China, there is no one." ”
It's just that there is no eternal myth in the financial world.
At the close of trading on September 9, the market value of Huaxing Capital evaporated by HK $2.56 billion. When his wife comes to the stage, how will the venture capital story of China Renaissance Capital be interpreted? Let's talk in the comment section.