Private bank keen to spread its wings
China Renaissance Partners has launched its first office outside the mainland, opening an office in Hong Kong as the country's largest privately held investment bank braces to expand overseas and meet Western rivals head on.
Bao Fan, chief executive of Beijing-based China Renaissance, told the South China Morning Post it was time to transform the firm he founded in 2004 as a boutique financial advisory firm into a full-service investment bank to cater to clients' needs.
This ambitious move follows a year of high-profile deals in 2011 for the company, which was involved in the billion-dollar merger of China's two largest video sites - youku.com and tudou.com.
Bao said those deals earned China Renaissance some significant advisory fees, giving it a strong capital base to support business expansion.
'China's investment banking business has been dominated by big Western banks like Morgan Stanley for a long time. I think Chinese investment banks should also have opportunities to compete with them,' said Bao, who was born in Shanghai and later studied in Europe.
He said China Renaissance's deep knowledge of its clients' needs was a strength, and it had a clear growth strategy.
'We target different types of clients - companies that may look relatively small but have big growth potential - and we want to grow with our clients,' said Bao, citing Tencent as an example. Tencent, which provides the popular QQ messaging service in China, has become one of the world's largest internet companies in less than 10 years.
To kickstart its foray offshore China Renaissance poached two executives from the Asia division of US investment bank Cowen Group to run its Hong Kong unit, which will provide a full range of services, including sales, trading and research.
The hiring of Thaddeus Beczak, former chairman of Cowen Asia and a former South China Morning Post executive, and Frank Au, former chief executive of Cowen's Asian business, to lead China Renaissance Securities are the latest signs that Chinese investment banks have been more aggressive in hiring talent, particularly senior people, from Western rivals since the 2008 financial crisis, which weakened many Western institutions and presenting an opportunity for deep-pocketed Chinese companies.
'We don't want to compete with investment banks like Goldman Sachs on scale. We want to focus on what we are good at. For example, when you read those research reports from foreign investment banks, you may find many of them lack insight about China,' said Bao, who worked for Morgan Stanley and Credit Suisse before launching his own firm.
'Frankly speaking, I don't think someone who works in Silicon Valley and follows companies like Google or Facebook in the US will be an expert and have insights into a Chinese company like Tencent.'
Au, the firm's president, said they wanted to boost headcount to 25 this year from about 10. It is hiring institutional sales staff and traders, research analysts and investment bankers.
'We think we are more similar to business models like Lazard and Allen & Co,' said Au, adding he was now working on plans to help China Renaissance open offices in New York and San Francisco.
