180 Days Since Fan Bao Went Missing: One Man and the Fate of an Industry

By Lili Yu

Edited by Jing Liu

Fan Bao's fate remains shrouded in uncertainty. Late on the night of August 9, China Renaissance Holdings issued an announcement stating that Bao, who had been taken away for investigation, was "continuing to cooperate with the relevant Chinese authorities' investigation." According to earlier reports, the supervisory authorities had extended Bao's detention "for three months from May 7, 2023" — and this announcement likely related to that deadline. Six months prior, in the early hours of February 16, China Renaissance had confirmed Bao's disappearance. Since then, the company has been suspended from trading for an extended period. An even more pressing deadline looms: if China Renaissance fails to resume stock trading before October 2, 2024, the Hong Kong Stock Exchange will delist it. Its market cap remains frozen at HK$4.132 billion.

Though there had been warning signs — Conglin Jungle, chairman of China Renaissance Securities, was taken away for investigation the previous year — Bao's disappearance still caught most people off guard.

Rewind to New Year's Day 2023. Every China Renaissance employee received a group email from Fan Bao that day. "Boss Bao hadn't sent an open letter in two years," said one longtime employee, who was initially astonished: the letter featured the irreverent, emotionally charged Bao-style language that had been absent for so long, conveying an ambitious "let's go big" energy. Given that Bao was then recovering from COVID, the staff at China Renaissance felt their leader's "fighting spirit had returned."

After three years of pandemic disruptions and the decline of dollar-denominated funds, China Renaissance was under siege from all sides. According to its subsequently published annual report, the firm's total revenue and net investment income in 2022 were RMB 1.587 billion, down 36.6% year-over-year. As the dominant player in China's primary-market financial advisory (FA) industry, China Renaissance's lead over competitors had gradually eroded.

Of course, for Bao, FA had long been just one of several business segments. The new economy wave of the past decade-plus had elevated a cohort of primary-market institutions, with China Renaissance among the biggest beneficiaries. Years earlier, Bao had bet that "China's economy would become the world's largest by volume, and China's capital markets would become among the world's largest," meaning "China would inevitably produce world-class financial institutions or investment banks." But clearly, compared to the VC and PE firms that grew up alongside it, the FA business model's organizational and structural disadvantages meant it could never build the same moats or long-term value as investment or asset management firms. Perhaps this explains why Bao became so fixated on becoming an investor himself in subsequent years.

Over the past six months, as a listed company whose founder has been deprived of his freedom, China Renaissance has inevitably faced pressure from all directions. According to Anyong Waves' reporting, beyond more visible personnel turnover than in previous years, certain businesses have encountered predictable difficulties — such as contraction in primary-market FA operations and fundraising for RMB funds. But these are challenges facing the entire primary market. And things aren't entirely bleak. From multiple sources, we understand that China Renaissance's various business lines are largely operating normally: its 2022 year-end bonuses, though delayed compared to previous years, have all been paid out; beyond Xie Yijing and Wang Lixin, who were entrusted with greater responsibilities, Du Yongbo — previously absent from the executive committee — has also been leading fund operations.

This past February, Anyong Waves traced the story of Fan Bao and China Renaissance in broad strokes. In retrospect, as the most representative investment banker of China's new economy — perhaps without equal — Bao's fate fittingly mirrors the current predicament of the FA industry and the broader primary market. In recent years, beyond the shift from dollar to RMB funds, pure financial investment has migrated toward industrial investment emphasizing sector expertise and supply chain construction. Taihe Capital, the standard-bearer of "FA 2.0" that once rose to prominence through "heavy research, heavy deal execution, heavy value-add," recently proclaimed its own "second founding." For most Chinese primary-market institutions, this is a new inflection point.

Over the past period, Anyong Waves spoke with multiple current and former China Renaissance insiders, attempting to retell the story of Fan Bao and his firm: In China's primary-market FA landscape, no predecessor and still no successor has matched him in expanding boundaries and ultimate win rate — yet why did his story end in such a bewildering fashion?

"Successors"

In September 2022, a longtime China Renaissance employee and a friend had dinner with Fan Bao in a private room at a Sichuan restaurant. Bao seemed somewhat despondent. Discussing the future, his voice caught: "I could retire, move anywhere on earth, live a decent life" — then he turned to the veteran employee — "but what about the six or seven hundred people at China Renaissance?"

According to our reporting, after Bao's detention, China Renaissance briefly descended into chaos without its leader, but management quickly came to terms with the situation and announced two interim firefighting captains: Xie Yijing, co-founder and head of healthcare, and Wang Lixin, managing director and head of advisory services. Wang Lixin, in his engineer-like manner, reassured everyone: "That matter, we'll handle it as it needs to be handled," "What we need to think about is what comes next," "Since we can't control the outcome, let's do what we can control."

Wang Lixin joined China Renaissance as a campus hire in late 2006. Since 2012, he has led the M&A team, orchestrating several landmark deals including the then-sensational mergers of Didi-Kuaidi, Meituan-Dianping, 58-Ganji, and Ctrip-Qunar. Xie Yijing, meanwhile, is an original member who joined China Renaissance in 2005. Beyond being co-founder, he was the man standing beside Bao at the bell-ringing ceremony for China Renaissance's IPO. Before Bao's detention, Xie served as managing director and head of healthcare advisory.

For a long time, however, the healthcare team operated somewhat apart from the broader China Renaissance system. In an industry known for high personnel turnover, Xie Yijing and Wang Lixin were among those who stayed. Thus, many viewed them as the number two and three figures after Bao. Others frequently mentioned include Du Yongbo, Cui Qiang, and Chen Yang. Du Yongbo initially handled some FA business before pivoting to investments, but later found his position awkward when Bao personally took charge of investing. His name was absent from the executive committee listed on China Renaissance's website. Still, after Bao's detention, he has been leading investment operations. Zhou Xiang, a representative of the younger generation who headed Alpha, left long ago to found Mingde Capital (FA).

For an 18-year-old investment bank, China Renaissance's talent bench is merely adequate. Among the many former employees we interviewed, despite their complex feelings toward the firm, there was consensus: this is a place that cares about "values," one of the rare investment banks to enshrine "integrity and kindness" as the first principle of its corporate culture. An informed source told us that when a workplace sexual harassment incident occurred at China Renaissance, Bao expressed deep revulsion and immediately terminated the perpetrator.

As early as 2015, Bao began attempting to "de-Bao-ize" the firm. At a spring review meeting, he delivered an impassioned speech: without Fan Bao, China Renaissance has no past; with only Fan Bao, China Renaissance has no future. In 2018, China Renaissance launched a young leadership program, selecting the most promising post-80s executives for intensive development. Two cohorts ran, totaling 16 people. Xiang Wei, who was announced as Jungle's replacement as acting chairman of China Renaissance Securities just days before Bao's disappearance, was among this group.

Despite all these efforts, China Renaissance failed to retain many people. But the root cause may lie not entirely in Bao's personality or the firm's ups and downs, but in the curse of the FA business model itself.

The Cracks in Survival

FA is an industry where success comes easily, but so does failure. Its strength lies in enabling individuals to achieve financial freedom quickly; its weakness is that it rarely builds companies to last.

China Renaissance's strategic focus, continually expanding from its original FA business into investments and securities, stemmed partly from Bao's personal ambition and character, but more fundamentally from the limitations of the FA model.

The service-for-fee model of FA is inherently non-standardizable, and marginal costs don't decrease with scale. This means it perpetually faces the eternal tension between scale and service quality. An obvious ceiling always looms: profitability may be strong, but growth is capped.

A FA practitioner who entered the industry in 2015 recalled, "Back then, if any ranking didn't place China Renaissance first, that ranking lacked credibility" — "but it's different now."

China Renaissance's FA business once attempted to expand both upstream and downstream. Around 2012, it launched Alpha and Zhulu, internet-based FA platforms targeting early-stage deals. Downstream, it pursued M&A. In the view of a longtime China Renaissance investment banker, full-stage coverage proves ineffective in FA because "the service-dependent nature of FA makes it difficult to cover all stages." Ultimately, neither Alpha nor Zhulu truly succeeded, while downstream it faced increasing encroachment from securities firms moving upstream.

A longtime China Renaissance investor noted that as early as 2017-2018, during a Suning project, they already faced competition from securities firms — "one round was exclusive, but later it became a joint mandate."

The securities business was China Renaissance's most distinctive card. It had already secured full licenses for US and Hong Kong listings. In April 2016, after receiving CSRC approval to establish Huajing Securities, it completed the trifecta of US, Hong Kong, and A-share licenses. Huajing Securities was China Renaissance's ticket back to its home market's distribution channels. If all went well, this was the crucial step that would make China Renaissance a truly "full-spectrum investment bank."

The night the license was approved, Bao wrote an exuberant internal memo: "Heaven's timing, earth's advantage, human harmony — we have them all. China Renaissance people, let's unleash our potential with abandon, do something big, make history."

In early 2020, at a China Renaissance Securities senior strategy retreat, after reviewing business performance, Bao suddenly raised his voice and spoke with fierce intensity: "If after spending so much money, we still can't produce results in securities, why not retreat to the traditional FA business?"

A longtime securities industry investor told Anyong Waves that Bao's anxiety stemmed from entering a market "heavily dependent on resources and capital scale," and a red-ocean market at that, where China Renaissance's previous resource advantages and playbook could hardly yield "disruptive advantages."

China Renaissance paid dearly for this. An employee involved in the early securities business buildup explained that regulatory compliance requirements mandate domestic securities firms operate as fully independent subsidiaries with numerous mandatory positions — meaning even a lean operation needed to pre-build a team of one to two hundred before business commenced.

This license also weathered storms after acquisition. In 2018, a CSRC draft Administrative Measures for Equity of Securities Companies threw many private small and mid-sized securities firms into turmoil. To meet compliance requirements, they either sold shares and attached themselves to large state-owned enterprises through mergers, or rapidly expanded through listing to gain more capital maneuverability.

Years later, when media asked Bao about the fundamental rationale for China Renaissance's listing, he answered: investment banking and securities businesses both require capital. Thus, one view holds that China Renaissance's rushed September 2018 IPO aimed partly to quickly raise capital, expand its equity base, and preserve its A-share securities license.

And this, perhaps, was the turning point in Fan Bao's story.

Indeed, it was in July 2020 — the same period when Bao was anxious, as described at this article's opening — that Jungle joined China Renaissance, appointed by the board as group president, chairman of China Renaissance Securities (Hong Kong), and executive committee member, reporting to chairman and CEO Fan Bao.

Rumors suggest Bao's investigation may be connected to Jungle. But most China Renaissance employees rarely saw him. The only regular sightings were at quarterly internal reviews. A longtime China Renaissance investor found Jungle to have "the aura of a traditional industry leader," noting that "initially he discussed some business, but later he started talking about ESG."

A-share securities was the last domain Bao staked before his detention. But the business he personally directed and invested the most time in was investments.

As of March 31, 2018, China Renaissance managed six major private equity funds (including five China Renaissance New Economy funds and one China Renaissance Healthcare RMB fund), plus several single-company dedicated funds, with approximately $4.1 billion in assets under management.

When building China Renaissance Alpha early on, Bao approached former employee Zhou Xiang with a line: "If disruption is destiny, I'd rather disrupt myself."

But for an FA business that could never truly escape strongman logic, a China Renaissance FA without Bao's presence was like "stepping onto a new battlefield while naturally getting pummeled on the old one."

Only One Possibility

For many years, people saw Fan Bao as an unstoppable, infinitely energetic force. Though not tall, he radiated testosterone. But to those who knew him well, he had changed considerably over time. Most noticeably: he had grown quieter.

The adrenaline-fueled hobbies that once defined him — combat sports, racing, boxing — had become distant memories.

Someone close to him told Anyong Waves that in the past year or two, Bao "occasionally hit the punching bag in his office, practiced Pilates," and in his free time "basically chose to spend time with his children."

Many felt Bao "lacked patience" for the granular, tedious work of company management because he "was a battlefield commander," easily "bored with completed tasks" while "craving the unknown." He was the archetypal "entrepreneurial personality," just "in finance."

Years ago, Bao stated publicly that a core China Renaissance capability was being somewhat prescient about trends. "The feeling isn't always right, but once committed to a direction, we invest and deploy without reservation."

In 2015, as the wave of US-listed Chinese companies seeking A-share relistings began, Bao, long focused on dollar markets, smelled crisis. He worried aloud: "In three years, we might starve." At the time, China Renaissance was riding high after several major M&A deals. Soon, it established an A-share team.

Around 2018-2019, Bao would repeatedly tell colleagues: "Going forward, RMB funds — especially state capital — will become the primary market's mainstream."

When first pivoting to A-shares, to build regulatory and local government recognition and trust, Bao had to personally attend every government meeting. In one China Renaissance investment banker's memory, because the then-current wave of US-listed company relistings triggered a new blue-chip rally, the CSRC conducted extensive research. As a member of the STAR Market advisory committee of the Shanghai Stock Exchange, Bao never missed a meeting. During that period, China Renaissance's investment banking team produced extensive reference materials, explaining how foreign markets operated and what could be adapted for China.

These stories reveal Bao's market acuity and his willingness to make bold, decisive moves.

In some sense, China Renaissance's growth history is also a microcosm of the new economy's collision and integration with the world. On countless occasions, Bao expressed gratitude for "the times." Like the new economy companies he backed, in that bygone golden age, he caught what he considered the best business model in human history — the internet.

But occasionally, Bao showed confusion. In a 2022 interview, he mentioned intensively reading economic history. Though he had "seen enough," the present moment required looking beyond personal experience, "jumping into longer cycles" for perspective.

And four years earlier, in 2018, when he read The Great Leveler, a book on wealth inequality, he "felt like the world was somehow hollow," and worried whether "the bubble had been inflated too large."

What lies ahead for China Renaissance?

A senior executive still with the firm told Anyong Waves, "Whatever happens, China Renaissance has only one possibility: survive." Then he added, "Even if it unfortunately falls, the manner of falling won't be too undignified."

Image source: IC Photo

Layout: Guo Yunxiao