Shan Weijian recalled China’s golden era of economic reforms from 2000 to 2010, and the eye-watering growth evident in this period. In 2005, he led the only foreign takeover of a Chinese bank to date, and had to navigate the twists and turns of a country that was eager to change, but only wanted foreign capital that would come in on friendly terms. Shan was the co-managing partner of San Francisco-based private-equity firm Newbridge Capital when it took over a controlling stake in Shenzhen Development Bank. It acquired non-tradeable shares held by various government units that amounted to an 18 per cent stake in the lender. “I could not deny it: the opportunity to buy control of a bank in China, home to the fast economic growth in the world, was certainly appealing,” Shan, who has also worked with JPMorgan in Hong Kong, said in his new book, Money Machine: A Trailblazing American Venture in China , recalling his excitement at being approached by the Chinese bank. That was in April 2002, a few months after China joined the World Trade Organization in December 2001 and started actively playing a role on the international stage. Its economy would grow more than six times to US$6.1 trillion between 2000 and 2010. “We weren’t the only ones who believed, in April 2002, that a bet on growth in China was as smart wager as one could make anywhere on the horizon of global finance,” Shan said in the book, which is scheduled for release on February 7. In Money Machine, his third book in five years, Shan recalls countless meetings and negotiations with Chinese regulators and entrepreneurs, including Prime Minister Zhu Rongji, Zhou Xiaochuan, the then governor of the People’s Bank of China (PBOC), and Peter Ma, the founder of Ping An Group. He and Newbridge Capital would eventually conclude the hugely profitable deal. “At the time, in the early 2000s, China was going through a phase of economic reforms, led by Zhu Rongji, whose boss, of course, was Jiang Zemin. And that administration was very much responsible for many of the major reforms that took place in China in early 2000s,” Shan said in an interview with the Post. Jiang Zemin died in November 2022. Newbridge received a preliminary go-ahead from the State Council, which was chaired by Zhu, Shan says in the book, pointing to the ease of dealing with China’s top authorities. This paved a path for a foreign investor to become the controlling shareholder of a Chinese bank. Newbridge tapped Frank Newman, Bill Clinton’s former US deputy treasury secretary, to run the bank in 2005. Newman, as chairman and CEO, successfully turned the bank around – cleaning up bad loans in what was essentially an insolvent institution – into one of China’s best run banks that won awards for its innovative financial products. Newman retired in 2010 after the bank merged with Ping An Bank. “Tell your partners that, in case of any emergency, like a bank run, the PBOC and the CBRC [China Banking Regulatory Commission] will be on standby to provide liquidity support,” Liu Mingkang, CBRC’s chairman, told Shan in fluent English on December 23, 2004, a week before the Shenzhen Development Bank deal was sealed. “When we clean up the banking system, everyone will be happy,” Shan said in the book. Shan’s team at Newbridge would, however, encounter snags throughout its involvement with Shenzhen Development Bank, until Ping An Group’s eventual buyout of the private-equity firm’s stake in 2010. Newbridge eventually sold Shenzhen bank for US$2.27 billion to Ping An, more than 14 times its original purchase price of US$150 million six years earlier. The bank itself did well under Newman’s management, with its assets nearly quadrupling, while its net profit soared 20 times. Its non-performing loans fell from 11.4 per cent in 2004 to 0.6 per cent in 2010, and its capital ratio grew to 10.2 per cent from 2.3 per cent. In fact, the Shenzhen Development Bank deal was Shan’s last major involvement at Newbridge. He would go on to establish the private-equity business of PAG Asia Capital in Hong Kong in 2010. Academic tells students to talk to parents about Mao era to understand ‘facts’ He currently serve’s as the firm’s executive chairman, CEO and managing partner. PAG managed US$50 billion in capital as of June last year. Newbridge was originally set up by TPG and two other firms as a Asia focused private-equity firm. TPG took sole ownership of Newbridge in 2009 and rebranded it as TPG Newbridge Capital, before it gradually became a unit of TPG Asia capital. PAG owns stakes in businesses ranging from The Cheesecake Shop in Australia, to Paradise Group in Singapore, famed for its soup dumplings, Universal Studios in Japan, and Yingde, the largest independent supplier of industrial gases. Born in 1954 in Beijing, Shan was sent to the Gobi Desert to be re-educated by the peasants in 1969. He was to “help turn the countryside into a proletarian paradise with their labour”, as he notes in Out of the Gobi, his first book published in 2019 . The book recounts his story as an untrained, barefoot medical worker dispensing medical services during the Cultural Revolution, a period of political and social chaos that lasted from 1966 to 1976. Towards the end of the Cultural Revolution, Shan managed to gain approval to study languages at the Beijing Institute of Foreign Trade. It was his ticket out of the Gobi. In 1980, while in Beijing, he met representatives from the San Francisco-based Asia Foundation and was awarded one of three scholarships to study in the United States. He would take advantage of the scholarship to earn an MBA, plus a doctorate in economics, from the University of California in Berkeley, eventually becoming a professor at the University of Pennsylvania’s Wharton Business School before he tired of teaching and joined Wall Street bank JPMorgan in Hong Kong in 1993. When burnt rice, sent or carried to China by relatives, was a lifesaver Shan recalls meeting Jiang Zemin as a JPMorgan banker in 1995, and sensing that the then Chinese president and his government “were serious about driving market-oriented reforms and industrialisation”. “They considered foreign investment and participation in the Chinese economy as critical to their reforms and growth agenda. “The talk in China was about bringing foreign banks and investors into China’s banking industry to modernise the industry, and following international practices in making changes to the economy. It seemed that Newbridge had arrived at the right place at the right time,” Shan told the Post.