China Renaissance targets $800m in Hong Kong offering

The size and pricing of the filing were not disclosed in the firm's prospectus. China Renaissance has marked 40% of the proceeds to expand the investment banking business by strengthening its advisory and equity capital markets divisions, scaling up its securities distribution and research capabilities, and growing into international markets.

Another 20% will be used to grow the firm's investment management division by adding more investment strategies, including mezzanine, fund-of-funds, and buyout strategies. China Renaissance also plans to launch a fund aimed at investment in companies developing technology for the real estate sector. The remaining proceeds will go towards its private wealth management business, Huajing Securities, and technology infrastructure.

China Renaissance was founded in 2005 by Fan Bao (pictured) as a financial advisory firm catering to Chinese companies with the capability to bring technology and operational innovations to the country's economy. Its shareholders include Sequoia Capital China and its chairman Neil Shen, along with Trustbridge Partners and Chengwei Capital. As of March 2018, the firm had advised on about 700 transactions worth over $100 billion.

The investment business, launched in 2013, has supported several leading Chinese technology firms, including local services platform Meituan-Dianping, ride-sharing app Didi Chuxing, contract R&D services provider WuXi Apptec, and financial technology players JD Finance and Lexin Fintech. As of March 2018, it had $4.1 billion in assets under management (AUM) across five growth capital funds and a dedicated healthcare vehicle.

Currently 90% of AUM is contributed by investors based in China, including fund-of-funds, family offices, financial institutions, corporations and high net worth individuals. The firm indicated last year that it plans to increase the non-Chinese share of capital to 40%, with total AUM expected to reach $10 billion by 2020.

The division reported $101 million in revenue for the year ended December 2017, up from $36.7 million the year before. Over the same period, profit grew from $12.5 million to $33.1 million. This represents a substantial contribution to China Renaissance's adjusted revenue of $212 million; however, this figure includes management fees and income from carried interest, which are not counted by the IFRS accounting standard.

With these removed, total revenue came to $139 million, up from $134 million in 2016. Net profit for the same period dropped from $31.8 million to $32,000. China Renaissance attributed this decline to investments in the Huajing Securities business, which launched in 2016 and is expected to help the firm tap long-term opportunities in China's onshore securities markets.

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• Topics
• Greater China
• IPO
• Growth
• Technology
• Healthcare
• China
• China Renaissance
• Exit
• Sequoia Capital
• Trustbridge
• Chengwei Ventures Shanghai