(Times of Update) — Shares of China Renaissance Holdings Ltd. fell as much as 73% after trading resumed in Hong Kong on Monday, 17 months after the stock was suspended following the detention of its former chairman Bao Fan.
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The company said it had met the requirements for trading to resume, reporting its results for the first half of the year and last year and 2022. The company replaced Bao in February, a year after he disappeared from public view due to an investigation by Chinese authorities. Shares in China Renaissance were down 63% as of 11 a.m., wiping about HK$2.6 billion ($334 million) from its market value.
Bao was detained as part of an unspecified investigation into a broader crackdown on corruption in the financial sector. His absence has hampered the growth of China Renaissance’s business, reducing revenue and prompting a series of staff departures.
The company posted nearly 74 million yuan ($10.4 million) in losses in the six months to June, with revenue down 39% to 329 million yuan. It suffered a loss of 471.9 million yuan for the full year of 2023, the second consecutive year the company was in the red.
Its number of employees fell by 31% compared to the end of 2022, reaching 521 at the end of June.
China Renaissance has asked AOGB CPA Ltd. to help its audit committee review its internal records, including agreements and payments. The review found no evidence of self-approved expenses by Bao, but did find that a senior executive was hired two and a half years after a loan deal that some media reports said could be linked to the Bao investigation, the company said in a filing.
Bao’s experience illustrates the risks facing businesses in China, where crackdowns and regulatory investigations have become more frequent under President Xi Jinping. In 2023 alone, more than 100 financial sector executives and officials were caught up in an anti-corruption campaign, with the sector also forced to cut salaries to comply with Xi’s drive for “common prosperity.”
Four of the company’s executive directors have pledged not to sell their combined 2.2 percent stake for six months or until March 7. Bao Fan’s wife, Hui Yin Ching, 54, has been appointed as a non-executive director and holds 48.71 percent of China Renaissance’s issued shares.
Bao has extensive connections and is privy to information about the country’s top entrepreneurs. His firm has advised tech giants including Alibaba Group Holding Ltd. and Tencent Holdings Ltd.
Despite Beijing’s reassuring comments about private companies to support the post-Covid recovery, Bao’s experience and increased regulatory scrutiny have unsettled China’s business elite.
A former banker at Morgan Stanley and Credit Suisse Group AG, Bao founded China Renaissance in 2005, making his name negotiating difficult mergers that led to the formation of ride-hailing service Didi Global Inc. and food delivery giant Meituan.
China Renaissance has attracted interest from a Hong Kong-based company…
