China Renaissance, an investor in numerous prominent Chinese tech companies, scored another success when shares of stablecoin company Circle Internet Financial surged over twofold upon their launch on the New York Stock Exchange.
The Chinese investment firm disclosed in a filing to the Hong Kong Stock Exchange on Friday that it had invested in Circle via its Huaxing New Economy Fund in 2018. Circle was established in 2013.
The investment demonstrated their "firm belief in the expansion potential of the digital asset sector," according to the statement.
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China Renaissance has not revealed the size of its investment in Circle. Additionally, Circle did not mention this particular stake in its IPO documents, indicating that it probably amounted to less than 5 percent.
The company Circle is responsible for issuing USDC, the second-largest stablecoin, which made up almost 30 percent of the market by the end of March. Stablecoins are a form of digital currency aimed at maintaining a steady worth by being linked to a benchmark asset, usually a traditional money like the United States dollar.
The firm's stock price jumped up to 235 percent but finished the day 168 percent higher at US$83.23 when it started trading on the New York Stock Exchange on Thursday.
China Renaissance dropped by 2% on Friday following an increase of 8.5% the previous day. The company’s stock has been surging since Tuesday, fueled by excitement over Circle and positive policies regarding digital currencies in both the U.S. and Hong Kong.
China Everbright, a Hong Kong-based financial services firm which had invested in Circle back in 2016 via its Everbright-IDG Industrial Fund, dropped by 17 percent on Friday following a significant increase of almost 27 percent solely on Tuesday.
On Friday, the Hong Kong authorities announced that a regulatory framework for stablecoins approved on May 21 will come into force on August 1. This development allows issuers to secure licenses and make these digital assets available to the general public.
Industry experts think that stablecoins might turn into a key instrument for international transactions, which would be advantageous for issuers based in Hong Kong as well as for Chinese companies on the mainland aiming to grow their presence abroad.
Founded in 2005 by the prominent dealmaker Bao Fan, China Renaissance has been instrumental in numerous significant transactions—from JD.com to Meituan—that have fueled China’s technological advancement.
Since Beijing initiated a clampdown on major technology companies towards the end of 2020, this specialized financial firm has encountered significant challenges. Subsequently, in early 2023, Bao vanished from public view; subsequently, China Renaissance stated that the financier was assisting investigators working for the Chinese government.
In April 2023, the firm halted its share trading as it did not release its yearly financials, attributing this delay to Bao’s absence which impeded the audit process. Bao stepped down in February 2024, and subsequently, the business restarted trading in September following the submission of the necessary annual statements.
The company's stock price fell by 66 percent when trading resumed.
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