Pursuit of China’s soccer dream turns into nightmare for internet tycoon
- Shenzhen-listed Baofeng Group says chairman has been detained, triggering a plunge in its share price
- Sources said the investigation was triggered by the unravelling of a 2016 deal to acquire UK sports agency MP & Silva
The founder of a Chinese internet company has been detained by police as they investigate a botched overseas acquisition.
Although Baofeng Group said in a filing on Sunday night that its chairman Feng Xin was arrested by police, sources close to Feng said that the investigation and informal interrogation had started a few weeks ago, stemming from the failed takeover of London-based sports agency MP & Silva Holding in 2016.
The failure of the deal also highlights how a U-turn in national policy can prove to be the undoing of a star company in China after Beijing abruptly tightened its control on capital outflows, reversing an earlier policy that encouraged companies to pursue overseas assets. China’s central bank, foreign exchange regulator, economic planning body and the ministry of commerce issued joint guidelines in 2017, blacklisting investment in sectors including sports, entertainment and property.
Baofeng, which means “storm” in Chinese, was a high-profile company. The online video service provider’s share price jumped 4,232 per cent within two months of listing on Shenzhen’s ChiNext board in March 2015, making Feng a billionaire.
In late 2015, Feng decided to capitalise on the company’s stock market success and support its valuation by making a move to acquire MP & Silva, according to two people worked for him.