Authorities end investment banking dream

Happy Wednesday. Here’s what we’ve got today…

• A look at the future for China Renaissance Holdings

• The deal sheet, plus EU healthcare’s performance

Bloomberg reported this week that an unlisted Hong Kong firm has held takeover discussions with China Renaissance Holdings, the financial services firm founded by Chinese investment banker Bao Fan.

The Back Story

The current talks are the latest development in China Renaissance’s more than year-long saga with Chinese authorities.

In September 2022, the group’s president, Cong Lin, was unexpectedly detained in relation to a corruption probe. Within months, Bao was detained as well.

At the time, China Renaissance said in a securities filing that it was “unable to contact” its chief executive. In a later statement, the firm disclosed that Bao was cooperating with an investigation being carried out by Chinese authorities. Those close to Bao said his own detention was likely linked to that of Lin and expressed hope that Bao would quickly return to public life.

That never happened. Bao’s whereabouts and legal standing remain unclear, as do Cong Lin’s.

Last week, China Renaissance provided an update with the announcement that Bao had resigned as chairman and CEO, citing “health reasons and to spend more time on his family affairs.” Co-founder Xie Yi Jing will take his place.

The firm has been stuck in limbo through Bao’s absence, unable to make formal decisions on critical matters such as a potential sale of the company. The new succession plan may now allow those talks to progress.

Bao’s Background

Prior to his disappearance, Bao was considered one of the most high-profile financiers in mainland China.

After early-career stints with Morgan Stanley and Credit Suisse, Bao founded China Renaissance in 2005. He gradually grew the business into one of the country’s leading boutique advisors, often beating out traditional Wall Street banks for sought-after mandates.

Bao was particularly well-connected within Chinese tech circles. “First-generation tech entrepreneurs,” he told the FT in 2018, had something extra that he was drawn to. “I thought, these guys could be the future of China.”

He built a reputation for exceptional levels of trust and, at times, simultaneously advised both sides of deals, including the merger of Meituan and Dianping—a tie-up whose consummation was reached after Bao locked both sides in a Beijing hotel room for a day. The agreement ultimately led to the combined business’ $53 billion IPO in 2018.

Other notable deals include the IPOs of JD.com and Kuashou, and secondary listings for Didi and Baidu. Bao was also the banker of choice for tech giants Alibaba and Tencent.

The Future of China Renaissance

Per Bloomberg, nearly a third of China Renaissance’s Hong Kong staff have either resigned or been laid off. Including staffers in Mainland China, more than 100 employees have departed over the past year.

The firm’s offerings include strategic advisory, equity research, sales & trading, private equity, and wealth management. Some divisions have been particularly hard hit: more than half of the advisory group has departed, leaving behind a team of less than 10 people.

New investments have also ground to a halt within the private equity business, which has been left unable to secure investment committee approval in the absence of committee chairman Bao.

A relatively new addition to China Renaissance, the principal investing arm grew to manage more than $8.8 billion by the end of 2020 and contributed nearly half the firm’s revenue. Through various dollar and yen-denominated funds, the firm’s primary strategy centered around a relatively small number of outsize equity investments into Chinese growth-stage startups, to which it often also provided operational and strategic support.

Heading Toward a Deal

The company’s stock has been suspended since Bao’s disappearance last year, with China Renaissance most recently trading at a market value of around $530 million (down from its 2021 peak of nearly $2.2 billion).

It’s unclear how much value remains, though the firm’s trading and securities licenses are an attractive asset. Bloomberg cited unnamed sources close to the matter who said the firm had received interest from “a Hong Kong-based financial group with a Middle East backer,” along with approaches from a handful of smaller Chinese brokerages. Discussions remain early, and no diligence has taken place.

Even beyond his personal legal uncertainty, China Renaissance’s current situation is likely to be a profoundly disappointing outcome for Bao. Speaking with the FT in 2018, he shared his vision for the firm:

• Founder Adam Neumann and Third Point are considering a bid for troubled co-working provider WeWork.

• Permira is considering a sale of portfolio company Best Secret, a European online fashion retailer that could be worth more than $4.3 billion, per Bloomberg.

• CVC Capital Partners is preparing to sell Good Choice, a South Korean health insurer and pharmacy services provider, in a deal that could be worth up to $1.5 billion, per Bloomberg.

• Novartis (SWX: NOVN) has agreed to acquire oncology-focused MorphoSys for €2.7 billion.

• Barratt (LSE: BDEV) has agreed to acquire fellow homebuilder Redrow (LSE: RDW) in a £2.52 billion deal.

• California Resources (NYSE: CRC) has agreed to acquire Aera Energy, an oil and gas exploration and production company, from IKAV and CPP Investments for $2.1 billion.

• Bitgo acquired Brassica, a London-based remittance services and cryptographic auditing firm, for $1.75 billion.

• Blackstone is considering the sale of its 49.9 percent stake in Sipartech, a French fiber optic network operator, in a deal that could value the company at around $1.1 billion, per Reuters.

• CBRE Group (NYSE: CBRE) has agreed to acquire J&J Worldwide Services, a provider of facilities management and other support services, from Arlington Capital Partners for $1.05 billion.

• Entrust is in exclusive talks to acquire Onfido, a provider of identity verification and fraud prevention solutions, for around $650 million.

• Clean Harbors (NYSE: CLH) has agreed to acquire HEPACO, an environmental and industrial services provider, from Gryphon Investors for $400 million.

• Amundi has agreed to acquire Alpha Associates, a private markets investment firm, for €350 million.

• Haveli Investments agreed to acquire cybersecurity provider ZeroFox Holdings for $350 million.

• Exponent agreed to acquire Chanelle Pharma, a generic pharmaceutical company.

• Inovalon, a healthcare data analytics company backed by Nordic Capital and Insight Partners, has acquired VigiLanz, a provider of clinical surveillance and patient safety solutions.

• SageWater, backed by Boyne Capital and Grindstone Partners, has acquired AMA Repiping, a provider of repiping services for commercial and residential properties.

• Standard Industries is in talks to acquire Air Mail, a media startup backed by TPG and RedBird.

• Duetto, a hospitality technology company backed by Warburg Pincus, Accel, and Battery Ventures, has acquired Micerate, a provider of bookings solutions for the hospitality industry.

• Holcim acquired ZinCo, a German provider of green roof and green wall systems.

• Swell Energy, backed by SoftBank, Ares Management, Climate Capital, and Ontario Power Generation, acquired Renu Energy Solutions, an installer of residential and commercial solar panels.

• Australian LNG producers Woodside Energy and Santos have called off their planned $52 billion merger.

• Abu Dhabi Investment Authority (ADIA) is in talks over the purchase of a minority stake in Dalian Wanda Group's shopping mall business.

• Braemont Capital acquired Loenbro, an industrial services company, from Tailwind Capital.

• Chartis, an Audax portfolio company, acquired HealthScape Advisors, a Chicago-based healthcare consulting firm.

• Hellman & Friedman and Valeas Capital Partners acquired a majority stake in Baker Tilly, an accounting and advisory firm.

• Main Post Partners has made a strategic investment in Highland Arms Enterprises, a garage door service provider franchisee.

• Outdoor Living Supply, backed by Trilantic North America, has acquired The Rock Place, a provider of landscaping materials and outdoor living products.

• Tellurian (Nasdaq: TELL) is preparing to sell its Haynesville upstream business.

• Shiseido (TSE: 4911) acquired Dr. Dennis Gross Skincare from Main Post Partners.

• LuLu, one of the Middle East’s largest hypermarket chains, has invited banks to pitch for a possible dual-listing in Riyadh and Abu Dhabi that could raise around $1 billion, per Bloomberg.

Tech, Vertical SaaS, & Misc. Enterprise

• NinjaOne, a provider of IT management platforms, raised $231.5 million in Series C funding led by Iconiq Growth.

• Kennet Partners and Federated Hermes Private Equity invested €25 million in Screendragon, a software provider specializing in project management and workflow automation solutions.

• Colossyan, an AI-based corporate training video production platform, raised $22 million in new funding led by Lakestar, with participation from existing backers Launchub, Day One Capital, and Emerge Education.

• Sensos, a proactive logistics platform spun out from Sony Semiconductor Israel, raised $20 million in new funding led by Magenta Venture Partners and JAL Ventures, with participation from Israel Cargo Logistics and Sumitomo Corp.

• Ionix, developer of an attack surface management platform, raised $15 million in Series A extension funding led by Maor Investments, with participation from Hyperwise Ventures, Team8, and USVP.

• Synthetaic, a developer of AI solutions for automated image detection and classification, raised $15 million in Series B funding. Lupa Systems and TitletownTech co-led, with participation from IBM Ventures and Booz Allen Hamilton.

• Goodshuffle, a provider of event rental management and production software, raised $5 million in new funding from FINTOP Capital.

• Galileo.AI, a developer of an AI prompt-based design platform, raised $4.4 million in seed funding led by Khosla Ventures.

• Camb.ai, a language localization and AI language dubbing provider, raised $4 million in seed funding led by Courtside Ventures, with participation from TRTL Ventures, Blue Star Innovation Parters, Ikemori Ventures, Eisaburo Maeda, and Dubai Future District Fund.

Fintech

• Tuum, a developer of cloud-native core banking solutions, raised €25 million in Series B funding. CommerzVentures led, with participation from Speedinvest and existing backer Long-Term Venture Partners.

• Overflow, a provider of financial solutions for churches and nonprofits, raised $20 million in Series B funding led by Wesleyan Investment Foundation, with participation from Uncork, R7, and TheGP.

• Kin, a DTC homeowner’s insurer, raised $15 million in new funding led by Activate Capital.

• Finally, a provider of small business financial management software, raised $10 million in new funding led by Peakspan Capital, with participation from Active Capital.

Consumer & Media

• Heura Foods, a Spanish plant-based meat brand, raised €40 million in Series B funding. Upfield led, with participation from Unovis Asset Management, ECBF VC, and Newtree Impact.

• StatusPRO, a developer of sports-focused VR technology and games, raised $20 million in Series A funding led by GV.

• Ultra Violette, a developer of SPF skincare products, raised $15 million in growth funding from Aria Growth Partners.

• Elemind, a developer of neurotech wearables, raised $12 million in seed funding led by Village Global, with participation from MIT Investment Fund, E14 Fund, and LDV Partners.

• Blush, an invite-only dating app, raised $7 million in seed funding from Naval Ravikant, Mark Bailey, Simon Rothman, and Larry Rudolph.

Healthcare & Life Sciences

• Ambience Healthcare, a developer of AI architecture and applications for healthcare providers, raised $70 million in Series B funding. Kleiner Perkins and OpenAI co-led, with participation from Andreessen Horowitz and Optum Ventures.

• Stellar Sleep, a chronic insomnia-focused mental health platform, raised $6 million in seed funding. Initialized Capital led, with participation from Y Combinator, Lombardstreet Ventures, Switch Ventures, Moonfire Ventures, Scrum Ventures, 8vdx, and Goodwater.

Industrials, Greentech, & Other

• Starship Technologies, a developer of autonomous delivery robots, raised $90 million in new funding co-led by Plural and Iconical.

• River, an Indian EV startup focused on scooters, raised $40 million in Series B funding led by Yamaha Motor. Existing investors Al-Futtaim Group, Lowercarbon Capital, Toyota Ventures, and Maniv Mobility also participated.

• Avnos, a developer of hybrid direct air capture systems, raised $36 million in Series A funding led by NextEra Energy, with participation from Safran Corporate Ventures, Shell Ventures, Envisioning Partners, and Rusheen Capital Management.

• 10Beauty, a company developing an AI-powered full salon-quality manicure machine, raised $17 million in Series A extension funding led by Shine Capital.

• Synaptec, a developer of distributed sensor technology for electrical infrastructure, raised £6.5 million from Megger Group, Proserv, and Equity Gap.

• PineBridge Investments raised $1.7 billion for its third private credit fund.

• Pretium raised nearly $1 billion for a new fund focused on single-family rentals.

• Coalesce Capital raised $900 million for its debut buyout fund.

• Trinity Hunt Partners raised $700 million for its latest fund.

• Scion Life Sciences raised $310 million for its debut life sciences venture fund.

• Encore Consumer Capital raised $258 million for its latest fund.

• Northleaf Capital Partners raised a new $212 million growth fund.

1. European healthcare outperforms with less volatility.

• StepStone finds EU healthcare private equity beats out the broader market. — StepStone Group

2. “Fin-meme-lord” Litquidity reveals identity to the FT.

• Former Jefferies banker Hank Medina is the man behind Litquidity, one of finance’s earliest Instagram meme pages. — Financial Times

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