China’s Top Tech Dealmaker Ramps Up Push Into IPO Underwriting

(Bloomberg) --

China's top technology dealmaker is ramping up its push into investment banking, as markets from Shanghai to Hong Kong prepare for another booming year of initial public offerings.

Over the past decade, China Renaissance Holdings Ltd. has made its name advising and investing in the country's hottest startups. Now, the Bejing-based group is looking to land top positions in blockbuster listings alongside Wall Street banks.

The group is currently working on 13 IPO deals globally, including two mandates for Shanghai's Nasdaq-like STAR Market, said Wang Lixing, China Renaissance's head of investment banking. It is also looking to expand its team of about 30 bankers by 50%.

“I don't think anyone today will bring us on board in an IPO simply because we helped them fundraise in previous rounds,” said Wang. As latecomers to the sector, “we need to set ourselves apart to earn a spot,” he said.

The group had a lead role in Kuaishou Technology's February listing, the biggest Internet deal since Uber Technologies's debut in 2019, adding to the nine IPOs it was on in Hong Kong and the U.S. last year. As souring relations between Beijing and Washington prompt more Chinese firms to consider listing closer home, bankers in the region expect a bumper year from some of China's brightest new-economy stars.

As it builds its investment-banking bench, China Renaissance is luring management from top Chinese banks. Former ICBC International Holdings Ltd. Chairman Cong Lin, a 30-year industry veteran, joined as group president in July.

The group expects a 310% surge in annual profit in 2020 from a year earlier, reaching 1.01 billion yuan ($155 million), according to a Hong Kong Stock Exchange filing on Monday. That leap is largely down to its investment banking and private equity business.

The firm has invested heavily in its research and sales teams over the past three years to build relationships with institutional investors in China and beyond, Wang said.

“As a tech bank, we are good at telling Chinese new-economy stories to global investors, and we are willing to sell hard shares of our top clients the way we sell our private fund products,” he said.

China Renaissance climbed 49 spots to reach 59th place in Bloomberg's global IPO league table last year. But it may face headwinds as the world's second-largest economy fights against monopolistic behavior among its Internet giants -- some of them created in mergers facilitated by China Renaissance.

However founder Bao Fan sees a positive side to the crackdown for venture capitalists and founders alike, as major players' first-mover advantage at home is diminished.

Bao, a well-connected financier known for his lively personality, said he always has capacity to take on good employees who can maintain relationships with young entrepreneurs now that his own circle of friends is getting old. He is less interested in building a long client list than supporting the growth of China's most successful firms over the next decade both as a dealmaker and an investor.

“Clients pick us, we pick them too,” said Bao in an interview at his office in Beijing. The bank emphasizes entrepreneurs' integrity and value over mandates and will walk away from deals that don't feel right, he added.

China Renaissance has a total of 39 billion yuan under management across its seven private equity funds.

Bao said the group is currently raising money in both yuan and dollars for its flagship Huaxing Growth Capital fund, without giving details of size or time frame, as it continues to scout for promising startups to challenge the leading players and prompt industry shakeout.

“We are more a trouble maker than a deal maker for tech giants today,” Wang said.

©2021 Bloomberg L.P.

With assistance from Bloomberg