Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.China Renaissance, one of the country’s leading tech sector investment banks until the disappearance of its founder Bao Fan last year, was ordered to wire authorities Rmb78mn ($11mn) after its star dealmaker went missing, according to a company filing.Regulators have provided the bank with so little information about Bao’s status and the reason for the large payment that the group’s in-house accountants and auditors have struggled with how to record the amount in its latest financial statements.Their difficulties underscore how Beijing’s increasingly heavy-handed and opaque actions against entrepreneurs have eroded business confidence in the country.Bao’s disappearance in February 2023 sent chills through the country’s tech and finance sectors, with concern intensifying 10 days later when the boutique investment bank said he was “co-operating in an investigation”.Nineteen months on, Chinese authorities have yet to make any public allegations against Bao or provide China Renaissance with any information. People familiar with the matter said the government was still holding him.“The Group is not privy to and has no reliable information on the status of any investigation with which Mr Bao is in co-operation,” the company said last week in its overdue 2023 earnings statement. Last October, the company was asked by “the relevant authority” to send it Rmb78mn, but no further information was provided, leaving China Renaissance’s accountants and lawyers guessing what the money was meant for and how to account for it. Ultimately, the company opted to book the payment as a receivable on its balance sheet, noting that it may be “refunded or confiscated” or there could be “additional amounts” to come. Lawyers advising the company said it could “constitute property associated with a case under investigation”, according to its filings.The hard-to-categorise payment led the external auditors, the Chinese firm Zhonghui Anda CPA, to issue a “qualified opinion” on the bank’s financials, noting they could not “assess the recoverability” of the money. China Renaissance had earlier swapped in Zhonghui for Deloitte after the Big Four firm hesitated to sign off on results before they could speak to Bao.China Renaissance declined to comment further and did not provide details of any relevant authority that might comment. It said in its filing that it believed “the audit qualification can only be removed when there is more clarity as to the status or outcome of the [Rmb78mn payment] and the [Bao investigation] . . . for a revision of their assessment”.In February, Bao’s resignation from all of his formal positions was announced “for health reasons and to spend more time on his family affairs”, in a step needed to report audited financial results and resume trading on the Hong Kong stock exchange.Last week, audited results for 2022 and 2023 were issued, allowing the group to resume trading on Monday after a 17-month suspension. Its shares promptly plunged to a record low, ending the day down 66 per cent and cutting its market value to HK$1.4bn (US$180mn).The firm also named Hui Yin Ching, Bao’s wife, as a non-executive director. The couple owns 48.7 per cent of the investment bank, which brokered some of the biggest deals in China’s tech sector, including the creation of ride-hailing service Didi and food delivery giant Meituan.The group’s financial report on “one of the most challenging years in the history of China Renaissance” revealed how Bao’s detention and a year-long slump for Hong Kong and Chinese stocks and IPOs had damaged its business.Losses of Rmb471.9mn were recorded in 2023 and Rmb73.8mn in the first six months of 2024. Revenues from investment banking, once its core business, were cut in half last year.The disappearance of its chief rainmaker has hindered its activities, forcing the group to suspend fundraising for a renminbi-denominated investment fund and shelve plans to raise a dollar-denominated vehicle.
