(Bloomberg) — In the glory years when China was making a billionaire every two days, banker Bao Fan himself nearly reached that milestone.
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His skills in advising tech giants such as Alibaba Group Holding Ltd. made him one of the country’s most sought-after financiers. His stake in China Renaissance Holdings Ltd. helped him amass a fortune of more than $800 million.
Bao’s career collapsed last year when he disappeared from public view after being detained by authorities amid a broader crackdown. The extent of his financial freefall was revealed on Monday as Renaissance shares tumbled after a 17-month hiatus. His stake is now worth $55 million, down 93% from a February 2021 peak, according to a filing and calculations from the Bloomberg Billionaires Index. Bao owns about a 35% stake in the company directly through two holding companies and a trust.
A China Renaissance spokesman declined to comment when contacted by Bloomberg News.
Bao’s sudden downfall has cast a shadow over China’s financial sector, which has become a frequent target of President Xi Jinping’s “general prosperity” campaign. More than 100 financial executives and officials have been caught up in the anti-corruption drive in 2023 alone, as bankers face pay cuts and budget cuts to curb what officials see as “hedonistic” lifestyles.
“The lack of transparency about why all these financial sector stars — some of them aren’t even stars — are being held up is really not going to help the return of capital to China,” said Alicia Garcia Herrero, chief Asia Pacific economist at Natixis.
The crackdown and continued job losses are forcing bankers to rethink their careers as they try to navigate Beijing’s dramatic shift toward high-value manufacturing and renewables, and away from finance and real estate, which have powered China’s economy for decades.
Bao, 53, is one of the most high-profile losers to follow this turn. The former Morgan Stanley and Credit Suisse banker founded China Renaissance in 2005 and made a name for himself by brokering mergers that created 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. He convinced billionaire Jack Ma to become a major investor when his company went public in 2018. He later moved into private equity to back startups and tech companies. As of the end of 2020, he managed more than $8.8 billion in assets.
That all began to unravel when Bao was arrested last February without any official explanation. China Renaissance said only that it had lost contact with him. He was later detained for an unspecified investigation by Chinese authorities amid a broader scrutiny of the financial sector. Earlier this year, the former chairman and CEO resigned “for health reasons and to devote more time to his family affairs,” according to a statement from the company.
The company gave no indication of the founder’s whereabouts Monday when it reported earnings figures that had been delayed for more than a year. His current legal status is unclear.
The turmoil has taken its toll on the company, which has also been hit by a slump in dealmaking as China’s economy spirals into deflation. 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. The company posted a loss of 471.9 million yuan for the full year 2023, its second straight year in the red.
Nearly a third of Hong Kong’s staff, including investment banking, private equity and wealth management teams, resigned or lost their jobs, Bloomberg News reported in February.
Shares in China Renaissance fell 66% in Hong Kong on Monday, the first trading day since March last year, sending the company’s market value down to HK$1.39 billion ($178 million).
Elsewhere, there were at least 130 investigations and punishments of financial executives and officials in 2023 alone. China has appointed a new head to tackle financial corruption, indicating that the investigations are not yet complete.
In Bao’s absence, the company has vowed to “usher in a new era.”
“Despite various difficulties and challenges, China Renaissance still actively pursues growth and continues to move forward steadfastly amid adjustments,” the earnings report said.
–With help from Pei Yi Mak, Cathy Chan, and Lulu Yilun Chen.
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