Author: Ada, Deep Tide TechFlow
In the summer of 2025, Huaxing Capital once again became the focus of market attention as it signed a memorandum of cooperation with YZi Labs (formerly Binance Labs), planning to invest $100 million heavily in the Binance platform token BNB.
Just two months ago, the board had approved a similar scale of funds to enter the Web3 and cryptocurrency fields. Such intensive actions have led the outside world to speculate that Huaxing is planning a deep transformation, possibly even a self-revolution.
In China's investment banking landscape, Huaxing has always been a special presence.
It has neither the state-owned background of China International Capital Corporation (CICC) or CITIC, nor the century-long accumulation of Goldman Sachs or Morgan Stanley. Its growth path has almost completely aligned with the explosive rhythm of China's internet. Since its establishment in 2005, Huaxing has witnessed and orchestrated the merger of Didi and Kuaidi, the union of Meituan and Dianping, the integration of 58.com and Ganji... Behind almost every merger and acquisition that has determined the industry landscape, Huaxing's presence can be seen. Without that decade of the internet's wild growth, Huaxing might have found it difficult to ascend to the throne of 'King of Mergers and Acquisitions.'
However, when the tide goes out, and the internet economy shifts from an incremental era to a stock game, with the anti-monopoly stick raised high, the soil on which Huaxing depends for survival is undergoing fundamental changes.
This once-glorious boutique investment bank is facing unprecedented survival challenges.
Entering Web3, is it Huaxing's self-redemption or the collective fate of traditional investment banks in the digital age?
The Dilemma of the Merger King
In 2021, Huaxing Capital handed in an almost perfect report card: total annual revenue reached 2.504 billion yuan. The net profit for that year also achieved a year-on-year increase of 56.5%, reaching 1.624 billion yuan. That year, it completed landmark projects such as Li Auto's Hong Kong IPO and Kuaishou's listing. In the annual report, Bao Fan excitedly wrote: 'We are standing at the starting point of the next decade of the new economy.'
But peaks are often the beginning of a turning point.
In 2022, Huaxing Capital's revenue and net profit both declined, with total annual revenue of 1.533 billion yuan, down 8.36% year-on-year; annual losses reached 564 million yuan, down 134.71% year-on-year.
Behind all this is the sharp cooling of the macro environment.
According to the '2022 Review and Outlook of China's M&A Market', the total M&A transaction volume in the country dropped by 23.5% year-on-year, with the TMT sector experiencing an even steeper decline of 41%. For Huaxing, which relies on TMT M&A, this is almost equivalent to removing the soil necessary for survival.
However, the deeper crisis lies not in the data but in the model.
Huaxing's rise coincided with the golden age of China's internet from 0 to 1 and then to 100. It was a wild era: startups needed to grow rapidly, giants yearned to buy into tracks, and capital was eager to tell stories. Huaxing played the role of a 'super matchmaker' in this capital frenzy. Bao Fan's personal charm, network resources, and sharp intuition about industry trends formed Huaxing's moat.
As long as the market is in an incremental cycle and mergers and acquisitions remain the preferred script of the capital market, Huaxing will thrive. Almost every game-changing deal can find their shadow weaving through it.
However, once the environment reverses, the story takes a different turn. The market enters a period of stock competition, and 'strong alliances' gradually become the regulatory warning line, with the previously smooth model losing its stage.
This is Huaxing's real dilemma: it's not a business decline, but rather the model it relied on for success has been abandoned by the times.
Centralized networks, closed information channels, and relationship-driven value creation seem out of place in a new world that emphasizes transparency, openness, and disintermediation.
Especially in the culture centered around Bao Fan, it seems particularly difficult. Reuters quoted a person who knows Bao Fan commenting that Huaxing remains a one-man business, a key-person focus business model that is difficult to sustain in the new era.
The Secret Web3 Layout
Huaxing Capital's exploration of Web3 is not a spur-of-the-moment decision.
In May 2018, Circle announced the completion of a $110 million Series E financing. The investor list was filled with names of first-line institutions like IDG, Breyer Capital, and Bitmain. Hardly anyone noticed that Huaxing Capital was also among them.
If it weren't for Huaxing actively sending congratulatory messages in June 2025, the outside world would hardly know that it had already 'got onboard' the stablecoin track. A detailed look at Circle's prospectus shows that Huaxing is not listed as a major shareholder, indicating that its shareholding is limited or has been fully divested before going public.
Despite this, Huaxing, which invested in Circle, still excites investors.
After successfully entering the 'Circle concept stock', Huaxing Capital's stock price soared from HKD 3 to over HKD 6, an increase of over 100%. For a company that had long been on a downward trend after going public, this was undoubtedly a shot in the arm.
Huaxing's ability to invest in Circle stems from Bao Fan's foresight years ago.
In 2015, Huaxing Capital was at its peak. As the hottest investment bank in China's new economy, Huaxing was involved in nearly all major internet company mergers and financings. However, at the most glorious moment, Bao Fan unexpectedly threw out a judgment: 'We might be out of food in three years.'
That sentence became the starting point for Huaxing's transformation. Bao Fan was very clear that relying solely on consulting fees and commissions was too thin; new growth engines must be found. Thus, he chose to transition from 'service provider' to 'participant', from consultant to shareholder.
In Huaxing's investment map, Circle is not particularly eye-catching. During the same period, it invested in Meituan, JD Digits, Kuaishou, Li Auto, NIO, Pop Mart... In contrast, an American company engaged in crypto payments seems somewhat 'non-mainstream.' Moreover, Lei Ming, who led this investment, later admitted that being able to invest in Circle involved an element of luck. Huaxing entered the market late and with a small share, making it hard to say it truly made a lot of money.
In addition to Circle, Huaxing has also left multiple footprints in the crypto circle: directly investing in Amber Group and Matrixport; serving as a financing advisor for Canaan Technology, Bitdeer, and HashKey. It even invited Frank Fu Kan, who has years of blockchain experience and entrepreneurial experience, to serve as an independent non-executive director.
However, these efforts have not immediately translated into impressive performance. According to reports from 36Kr, Huaxing earns more from financing services in the crypto market than from excess returns on capital operations. The value of Circle for Huaxing exists more in the realm of imagination and market cap recovery.
The Gamble After Bao Fan's Era
In 2024, Huaxing Capital welcomes a new helmsman.
After Bao Fan went missing, his wife Xu Yanqing gradually stepped forward to take the steering wheel of this boutique investment bank. After former CEO Xie Yijing stepped down, Huaxing Capital formed a core leadership triangle consisting of Chairman Xu Yanqing, CEO Wang Lihang, and Executive Director Du Yongbo.
Xu Yanqing proposed the 'Huaxing 2.0' strategy: to reduce dependence on traditional internet businesses and place bets on hard technology, Web3, and digital finance.
This shift is not a whim but is precisely timed with policy nodes.
In May 2025, the Hong Kong Legislative Council just passed the 'Stablecoin Bill'; a month later, the government released the 'Digital Asset Development Policy Declaration 2.0'. Almost simultaneously, Huaxing announced that its board approved a $100 million budget to officially enter the Web3 and crypto asset field.
This decision made the outside world sniff a familiar scent. In the past, Huaxing was adept at hitting the right timing, helping Chinese internet companies outperform in a decade of wild growth; now, it seems to want to replicate the success of that time on a new track. Only this time, it lacks Bao Fan's presence.
In August, Huaxing Capital signed a memorandum with YZi Labs, planning to invest $100 million in BNB assets, becoming the first publicly listed company in Hong Kong to include BNB in its digital asset allocation. The market quickly provided a popular analogy: 'BNB micro strategy' in Hong Kong stocks.
Buying coins is just the first step; Huaxing Capital also plans to continuously empower the BNB ecosystem in two aspects.
First, develop fund products with Huaxia Fund (Hong Kong) and other partners to promote the listing of BNB on compliant virtual asset exchanges in Hong Kong. Coincidentally, on September 3, the compliant trading platform OSL opened BNB trading services for professional investors, becoming the first exchange in Hong Kong to support BNB trading.
Secondly, Huaxing Capital will establish an RWA fund with a scale of hundreds of millions of dollars with the assistance of YZi Labs, promoting the landing of BNB public chain stablecoins and RWA application scenarios in Hong Kong listed companies.
Behind these actions, Huaxing is trying to leverage the momentum of the largest trading platform, Binance, to climb into the ranks of core players in Web3.
On August 29, during the 5th anniversary celebration of BNB Chain, Xu Yanqing stated during a conversation with YZi Labs head Ella Zhang: 'Since Huaxing established strategic cooperation with YZi Labs, we have received a large number of inquiries from traditional financial institutions. They are no longer asking 'why they need to allocate digital assets,' but are instead focused on 'how to correctly allocate core assets like BNB that represent the future financial ecosystem.'
She further emphasized: 'Huaxing must not only become a bridge connecting the Web2 and Web3 worlds but also leverage our expertise in investment banking services, asset management, and wealth management to continue leading Huaxing to become the most iconic investment bank in the Web3 era.'
In summary, Huaxing's logic is very clear:
External logic: When traditional institutions want to enter the crypto market, direct investments often face higher risks, while investing in Huaxing's stock can indirectly gain exposure to crypto assets.
Internal logic: The integration of Web3 and Web2 will inevitably give rise to new financing and merger demands, allowing for a repeat of the 'ten years of internet mergers' story.
In other words, Huaxing wants to continue playing the role of 'the first investment bank' that can influence market dynamics in the crypto world.
The vision is grand, but the constraints during implementation are exceptionally realistic.
The Dilemma of Transformation
As a boutique investment bank built on TMT M&A, Huaxing's core advantage has always been its deep understanding of China's internet industry and founder resources.
In the world of traditional investment banks, the incentive mechanism is clear: commission sharing, short-term performance, and quick results. Investment bank employees are typical 'professional service providers', completing transactions and taking fees.
For Huaxing Capital, fully entering the crypto market means facing a harsh reality: many traditional top capital have previously failed in this emerging field.
First, the failure of the FA model is almost predetermined.
In the golden age of internet mergers, Huaxing became a 'super matchmaker' by relying on its network and information asymmetry: who is financing, who is selling, and how valuations are often only grasped by a few investment banks. In the on-chain world, capital flows, governance votes, and protocol data are almost completely transparent, and anyone can track them in real-time. Except for a few large Asian exchanges or asset management institutions that truly need FA assistance for financing, most projects' capital movements are closer to 'group investment', and even derivative platforms like Hyperliquid do not require external financing from start to finish, diminishing the bargaining and matchmaking advantages of investment banks.
Thus, to truly achieve excess returns, Huaxing Capital can only personally engage in investments.
'Being an FA is mainly about making friends and earning money through investments,' once said an FA practitioner who explored the crypto world with this mindset. After successfully making friends and starting investments, he ended up losing the money.
The primary market in the crypto world is extremely perilous; to make good investments, one must have a profound understanding of the underlying logic of the crypto market and be able to connect with the best entrepreneurs to continuously empower them.
However, the crypto market is often filled with short-term narrative traps: once a project hits the right trend, its valuation may skyrocket within a few months; but once the narrative recedes, the market value can be halved in an instant. The team lacks a business model and can only rely on selling coins for survival, leading to a continuous decline in market value. Moreover, the current market has lost faith in altcoins, with capital mainly concentrated in top assets like BTC, ETH, and SOL. Even the currently popular coin-stock linkage model may face disproof in the future.
For Huaxing, this means two layers of risk:
First, whether the investment vision is penetrating enough to avoid narrative traps; second, the risk of reputation.
The rapid turnover of crypto cycles far exceeds that of traditional markets; a protocol can be hacked, or a project can run away, potentially destroying market value within 48 hours. If Huaxing steps on a landmine, it not only suffers financial losses but may also lose the hard-earned reputation of being a 'boutique investment bank.'
Singapore's sovereign wealth fund Temasek not only lost about $275 million in FTX but, more seriously, as a state-backed investor, Temasek faced parliamentary inquiries and was forced to admit 'significant lapses in due diligence', which had a huge impact on its reputation.
From this perspective, Huaxing Capital's best path may not be to recreate a crypto version of the 'merger king' but to shift towards a large secondary market player. By strategically allocating core assets like BTC, ETH, and BNB, combined with quantitative strategies and risk hedging, to pursue stable returns.
But this path is equally perilous.
Deals mean competing with countless professional quantitative funds, crypto-native trading teams, and multinational market makers. Without deep technical capabilities, risk control systems, and on-chain data insights, it is almost impossible to establish a real advantage solely based on the brand and connections of a traditional investment bank.
Huaxing Capital is in an awkward position:
Being an FA, the information advantage is gone; being a VC, narrative traps abound; being in the secondary market, it lacks native genes.
This is also the predicament faced by many traditional FA/VCs in the crypto world: to establish a foothold in Web3, not only capital investment is needed, but also a thorough cognitive reconstruction.
It must answer a question: in this transparent, disintermediated world, what is Huaxing's value?
Looking back from 2025, Huaxing's Web3 transformation feels more like an experiment pushed to the table. It is not an active choice but rather a gradual push into a corner by the environment.
Twenty years ago, Huaxing rose by hitting the launch window of China's internet. At that time, Bao Fan carried a challenger’s spirit, using 'an investment bank that understands the internet' to tear open the seams of old finance.
Today's situation is different: Web3 does not simply bring offline business online but rather rewrites financial logic entirely: decentralization, permissionless access, and community governance directly shake the intermediary status that investment banks rely on for survival.
The shift in roles sharpens the issue. Huaxing was once a pioneer, able to charge forward lightly; now it is a vested interest, wanting to 'all in' on the new track means letting go and betraying. For an institution already written into the history of Chinese mergers and acquisitions, such a choice is more brutal than twenty years ago.
Looking globally, traditional financial institutions rarely achieve real breakthroughs in the transformation to digital assets. Goldman Sachs is among the earliest investment banks to test the waters, but so far, its digital asset business remains negligible in its revenue. The common dilemma in this industry is: can it undergo self-revolution, or is it destined to be replaced by new species?
But for Huaxing, there is no turning back.
