China Renaissance set for wealth management push

The bank, which also offers investment banking services and manages several private equity funds through its investment management division, will offer 85 million shares in the IPO, with the price set at HK$31.8-34.8 per share. If an over-allotment option of an additional 12.8 million shares is fully exercised, China Renaissance could raise up to HK$3.4 billion ($433 million) at a valuation of HK$19.6 billion.

Ant Financial, the financial services arm of Alibaba Group, has committed $50 million as a cornerstone investor in the IPO. China Renaissance described the investment as purely fiscal in nature, with no direct strategic benefits for Ant Financial and Alibaba. However, the firm does plan to work with the companies on possible wealth management and online financial products as opportunities arise.

China Renaissance was founded in 2005 as a financial advisory firm catering to Chinese companies with the capability to bring technology and operational innovations to the country’s economy. It wants to leverage its history in the sector to become the wealth manager of choice for founders, executives, and employees of the country’s most successful firms. The wealth management division will receive 20% of the proceeds from the IPO.

“We have several advantages to build a wealth management business targeting new economy wealth,” said Fan Bao, founder and CEO of China Renaissance (pictured). “Through our banking and investment management business we have already built a trusted relationship with top new economy entrepreneurs who are also keen to invest in our deal flow and investment products. Our brand resonates well with the new economy crowd.”

The firm will offer various wealth management solutions to clients depending on their circumstances. For company founders, China Renaissance will open family offices allowing for personalized approaches, while for high net worth executives the bank will match them with top investment firms to identify optimal financial products. China Renaissance is also planning a technology platform to provide cost-effective wealth management solutions to a broader base of affluent individuals.

As of March 2018, China Renaissance had advised on about 700 transactions worth over $100 billion. Through its investment banking division, the firm connects early-stage technology companies with investors, provides advisory services to growth or later-stage companies to help with executing private placements and M&A transactions, and underwrites IPOs in Hong Kong and the US.

The investment management business was launched in 2013 and had $4.1 billion in assets under management across five growth capital funds and a dedicated healthcare vehicle as of March 2018. It has supported several leading Chinese technology platforms, including Meituan-Dianping and Didi Chuxing. China Renaissance plans to use 20% of the IPO proceeds to grow this division by adding more investment strategies, including mezzanine, fund-of-funds, and buyout strategies.

China Renaissance will use the largest share of the proceeds, about 40%, to expand its investment banking division, which it sees as the largest engine of growth in its other strategies due to the connections it provides in the technology sector. The remaining proceeds will go to develop its technology infrastructure and its recently launched onshore securities platform Huajing Securities.

For the year ended December 2017, China Renaissance reported $139 million in revenue, up from $134 million in 2016. Over the same, period net profit dropped from $31.8 million to $32,000, which the firm attributed to investments in growing Huajing Securities.

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• Topics
• Greater China
• IPO
• Growth
• Technology
• Healthcare
• China
• China Renaissance
• Exit
• TMT