China Renaissance’s post-IPO recruitment spree will likely focus mainly on private equity rather than investment banking. But the boutique bank may still struggle to lure talent away from Western firms.
Renaissance, best known for its prowess in the technology sector, filed papers earlier this week to list on the Stock Exchange of Hong Kong, in a bid to reportedly raise about $800m. As well as helping to internationalise its business and fund investments in technology and infrastructure, the share sale “will provide a valuable currency to attract and retain top talent”, Renaissance chairman and founder Fan Bao wrote in the IPO application.
While Renaissance has not provided details of any new hiring (its IPO date is unconfirmed but early speculation suggests October), much of it is expected to occur within the firm’s private-equity focused investment management business, which has enjoyed more success recently than its investment bank.
Set up just five years ago, it is now rated among the top 10 Chinese PE funds that invest in the new economy and boasts $4.1bn in assets under management, thanks to recent investments in high-growth Chinese tech start-ups.
“Renaissance’s recent business trajectory suggests that it will look to add headcount in private equity. PE will be a, if not the, hiring priority,” says a Hong Kong-based headhunter. Similarly, Bloomberg describes investment management as the firm’s “real strength”.
By contrast, Renaissance’s poor recent financial results – it reported a net loss of $65.3m for first quarter – can be mostly attributed to its underperforming investment banking arm. Although Renaissance, which was set up by Bao in 2005, made its name by working on high-profile tech mergers and listings, its investment bank remains vulnerable to volatile Asian markets and regulatory changes such as China’s 2015 IPO ban.
“Fan Bao was a big rainmaker in my days working in Chinese private equity. While he is best known for the deals he brokers, I sense he’s an investment guy at heart, and the PE and fund management side of the Renaissance business continues to perform well,” says Hong Kong finance professional Matt Huang, whose novel Young China Hand is based on his experiences in mainland PE.
“The IPO will mean more IB hiring as well, but I believe fund management and PE will remain a big focus for Renaissance, generating higher recurring income for the business,” adds Huang.
Renaissance may, however, struggle to hire investment professionals from Western banks and buy-side firms in Hong Kong and China, despite the fact that Bao is a former Morgan Stanley banker. “It’s still a Chinese bank, so it’s still much more likely to attract people who are used to the culture of Chinese companies,” says the Hong Kong headhunter.
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