China Renaissance, one of the country’s leading investment banks, was on Friday working to calm anxious employees following the disappearance of its founder and renowned dealmaker Bao Fan.
Shares in the Hong Kong-listed company fell 50 per cent when the market opened on Friday before paring losses to be down about 28 per cent, after the boutique bank disclosed it was unable to contact Bao.
China Renaissance has been in turmoil since September, when group president Cong Lin was detained by Chinese authorities. Business figures in China often become unreachable when they are the subject of a government investigation.
In a message sent to employees on Friday morning and seen by the Financial Times, Wang Lixing, head of investment banking, sought to ease concerns about Bao’s disappearance. “Good morning . . . I think everyone has had a restless night,” Wang said, calling on staff “not to spread or believe rumours”.
Wang did not mention Bao by name but told employees that management had been in touch with the “backbone of our investment banking division”.
He added that “in such a critical moment, everyone must believe in the group, believe in the executive committee, and not lose our heads”, but acknowledged that “the available information is limited”.
China Renaissance did not immediately respond to a request for comment.
The disappearance of Bao, who made his fortune in tech deals, comes despite Beijing appearing to ease a crackdown on the sector, which had throttled the investment bank’s once-thriving business in lucrative listings and corporate finance.
The bank said in a filing to the Stock Exchange of Hong Kong on Thursday evening that the company “has been unable to contact Mr Bao Fan” and was not aware that his “unavailability is or might be related to the business and/or operations of the group”.
People close to Bao believe his problems may be connected to his lieutenant Cong, who served as China Renaissance’s president from 2020, after serving as chair of ICBC International Holdings Limited, a unit of one of China’s largest banks.
The Shanghai branch of China’s securities regulator called in Cong for a “supervisory discussion” on September 6 in connection with securities violations, including overlapping activities between its shareholders and management and senior executives who held part-time jobs in shareholders’ companies, according to a notice.
Three days later Cong resigned as a director of the group’s Hong Kong securities unit and his securities licences in the city connected to China Renaissance were cancelled, according to public records. The group said little about Cong’s apparent exit and he does not appear among its management on its website.
Cong was detained by Chinese authorities around that time, according to one person close to the matter. Chinese business media Caixin had reported that Cong was detained in September.
Bao’s disappearance adds to a long list of Chinese financial executives who have disappeared as part of Chinese president Xi Jinping’s long-running anti-corruption campaign, which he launched shortly after coming to power in 2012.
Bao’s connections to China’s tech sector were formed in the late 1990s when he met the founders of the country’s “tech trinity” — Alibaba’s Jack Ma, Tencent’s Pony Ma and Baidu’s Robin Li. “I met them when they were nobody,” Bao told the FT in 2018.
But the fortunes of China’s tech moguls have drastically changed under Xi’s tenure, and shares in most tech groups have not fully recovered from a sell-off sparked by a crackdown on the sector.
A period of intense regulatory scrutiny began two years ago, with ride-hailing group Didi Chuxing’s botched initial public offering. China Renaissance served as Didi’s bookrunner on the New York listing.
Didi pushed ahead with its $4.4bn share sale in 2021 despite national security concerns from regulators. The group was forced to delist in June last year.
Additional reporting by William Langley in Hong Kong
This post is originally appeared on FT