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 USD heavily in BNB Chain public chain token BNB.
Just two months ago, the board had just 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 the landscape of investment banks in China, Huaxing has always been a special existence.
It has neither the state-owned background of CICC or CITIC, nor the century-long accumulation of Goldman Sachs or Morgan Stanley. Its growth path has almost entirely stepped on the rhythm of the explosion of China's internet. Since its founding in 2005, Huaxing has witnessed and orchestrated the merger of Didi and Kuaidi, the marriage of Meituan and Dianping, the integration of 58.com and Ganji… Almost every acquisition that determines the industry pattern has their figure behind it. Without the barbaric growth of the internet over the past decade, it would have been difficult for Huaxing to ascend to the throne of the "king of mergers and acquisitions."
However, when the tide recedes, and the internet economy transitions from an incremental era to a stock game, with the big stick of anti-monopoly held high, the soil on which Huaxing survives is undergoing fundamental changes.
This once illustrious 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 era?
The dilemma of the king of mergers and acquisitions
In 2021, Huaxing Capital delivered an almost perfect report card: the total revenue for the year reached 2.504 billion CNY. The net profit for that year also achieved a year-on-year growth of 56.5%, reaching 1.624 billion CNY. That year, it successively 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 often mark 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 CNY, a year-on-year decrease of 8.36%; an annual loss of 564 million CNY, a year-on-year decrease of 134.71%.
Behind all this is the sharp cooling of the macro environment.
According to the "2022 Review and Outlook of China's Corporate M&A Market," the total value of nationwide M&A transactions fell by 23.5% year-on-year that year, with the decline in the TMT sector reaching a staggering 41%. For Huaxing, which relies on TMT mergers and acquisitions, this is almost equivalent to withdrawing the soil it relies on for survival.
However, the deeper crisis lies not in the data, but in the model.
Huaxing's rise coincided with China's internet golden age from 0 to 1 to 100. It was a wild era: startups needed to grow rapidly, giants wanted to acquire tracks, and capital was eager to tell stories. Huaxing played the role of the "super matchmaker" in this capital frenzy. Bao Fan's personal charm, network resources, and keen intuition regarding industry trends formed Huaxing's moat.
As long as the market is in an incremental cycle and mergers and acquisitions remain the preferred script in the capital market, Huaxing will thrive. Almost every major transaction that changes the landscape can find their figure weaving through negotiations behind it.
However, once the environment reverses, the story takes another turn. The market enters a competition for existing stock, and "strong alliances" gradually become a warning line for regulation, causing the once smooth model to lose its stage.
This is Huaxing's true predicament: it is not business decline, but the model that supported its success has been abandoned by the times.
Centralized networks, closed information channels, and relationship-driven value creation appear out of place in a new world that emphasizes transparency, openness, and disintermediation.
Especially in the culture centered around Bao Fan, it becomes particularly difficult. Reuters quoted a person familiar with Bao Fan commenting that Huaxing is still a one-man business, a key-person focus business model, which has become difficult to sustain in the new era.
The secret Web3 layout
Huaxing Capital's exploration of Web3 is not a temporary intention.
In May 2018, Circle announced the completion of a 110 million USD E round financing. The investor list was filled with names of first-tier institutions like IDG, Breyer Capital, and Bitmain. Almost no one noticed that Huaxing Capital was also among them.
If it weren't for Huaxing proactively sending a congratulatory letter in June 2025, the outside world might hardly have known that it had already "boarded" the stablecoin track. A closer look at Circle's prospectus reveals that Huaxing is not listed among the major shareholders, implying that its shareholding ratio is limited or has been cleared before the listing.
Nevertheless, investing in Circle has still excited investors after a long time.
After successfully entering the "Circle concept stock," Huaxing Capital's stock price soared from 3 HKD to over 6 HKD, an increase of over 100%. For a company that has long been in a state of oscillation after going public, this is undoubtedly a shot in the arm.
Huaxing's ability to invest in Circle comes from Bao Fan's foresight years ago.
In 2015, Huaxing Capital was at its peak. As the most sought-after investment bank in China's new economy, Huaxing was involved in almost all major internet company mergers and financing. However, at the most glorious moment, Bao Fan unexpectedly threw out a judgment: "Three years later, we might not have food to eat."
That statement became the starting point for Huaxing's transformation. Bao Fan understood that relying solely on consulting fees and commissions was too thin and that new growth engines must be sought. Thus, he chose to shift from a "service provider" to a "participant," from a consultant to a shareholder.
In Huaxing's investment map, Circle is not eye-catching. During the same period, it invested in Meituan, JD Digits, Kuaishou, Li Auto, NIO, and Pop Mart… In contrast, a US company engaged in crypto payments seems a bit "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 game late and held a small share, making it hard to say it truly made a lot of money.
In addition to Circle, Huaxing has left multiple footprints in the crypto circle: directly investing in Amber Group, Matrixport; serving as a financing advisor for Canaan Creative, Bitdeer, 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 did not immediately translate into impressive performance. According to reports from 36Kr, Huaxing earned more from the hard-earned financing services in the crypto market rather than excess returns from capital operations. The value of Circle for Huaxing exists more in the realm of imagination and market value repair.
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 and took control of the direction of this boutique investment bank. After the departure of former CEO Xie Yijing, Huaxing Capital formed a core leadership team of the iron triangle with Chairman Xu Yanqing, CEO Wang Lihang, and Executive Director Du Yongbo.
Xu Yanqing subsequently proposed the "Huaxing 2.0" strategy: to reduce reliance on traditional internet businesses and place bets on hard technology, Web3, and digital finance.
This shift is not a whim, but precisely timed with policy nodes.
In May 2025, the Hong Kong Legislative Council just passed the (Stablecoin Ordinance Draft); a month later, the government issued the (Digital Asset Development Policy Declaration 2.0). Almost at the same time, Huaxing announced that the board approved a budget of 100 million USD to officially enter the Web3 and crypto asset fields.
This decision made the outside world smell a familiar taste. In the past, Huaxing was good at seizing the nodes of the times, helping Chinese internet companies outpace the barbaric growth of the past decade; now, it seems to want to replicate the success of that year on a new track. Only this time, Bao Fan's figure is missing.
In August, Huaxing Capital again signed a memorandum with YZi Labs, planning to invest 100 million USD to allocate BNB assets, becoming the first Hong Kong listed company to include BNB in its digital asset allocation. The market quickly provided a common analogy: the "BNB Micro Strategy" in Hong Kong stocks.
Buying tokens is just the first step; subsequently, Huaxing Capital also plans to continuously empower the BNB ecosystem in two aspects.
The first step is to develop fund-like products in cooperation with Huaxia Fund (Hong Kong) and other partners, promoting BNB's listing on compliant virtual asset exchanges in Hong Kong. Whether it is a coincidence or not, 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 plans to establish an RWA fund with a scale of several hundred million USD with the assistance of YZi Labs, promoting the landing of BNB public chain in stablecoin and RWA application scenarios for Hong Kong listed companies.
Behind these actions, Huaxing attempts to leverage the momentum of Binance, the largest trading platform, to enter the ranks of core players in Web3.
On August 29, during the five-year anniversary celebration of BNB Chain, Xu Yanqing, in conversation with Ella Zhang, the head of YZi Labs, stated: "Since Huaxing established a strategic partnership with YZi Labs, we have received a large number of inquiries from traditional financial institutions. They are no longer asking 'Why should we allocate digital assets?' but are focusing 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 lead Huaxing to become the most iconic investment bank in the Web3 era through our professional capabilities in investment banking services, asset management, and wealth management."
In summary, Huaxing's logic is very clear:
External logic: when traditional institutions want to enter the crypto market, direct investment often faces higher risks, but investing in Huaxing's stocks can indirectly gain exposure to crypto assets.
Internal logic: the integration of Web3 and Web2 will inevitably create new financing and acquisition demands, replicating the story of the "internet merger decade" once again.
In other words, Huaxing wants to continue playing the role of the "first investment bank" that can influence the market pattern in the crypto world.
The vision is grand, but the constraints when landing are exceptionally realistic.
The dilemma of transformation
As a boutique investment bank that started with TMT mergers and acquisitions, Huaxing's core advantage has always been its deep understanding of the Chinese internet industry and its founder resources.
In the world of traditional investment banks, the incentive mechanism is clear: commission sharing, short-term performance, and quickly obtaining results. Investment banking employees are typical "professional service providers" who complete transactions and collect fees.
For Huaxing Capital, fully entering the crypto market means facing a harsh reality: Many top traditional capital have failed in this emerging field.
First of all, the failure of the FA model is almost predetermined.
During the golden age of internet mergers and acquisitions, Huaxing became the "super matchmaker" due to its network and information asymmetry: who is financing, who is selling, how valuations are, are often only grasped by a few investment banks. However, 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 exchanges or asset management institutions in Asia that indeed need FA assistance for financing, most capital actions of projects are closer to "piece-part investment," and even derivative platforms like Hyperliquid do not need external financing at all, diminishing the significance of investment banks' bargaining and matchmaking advantages.
Therefore, to truly achieve excess returns, Huaxing Capital can only personally enter the investment arena.
"Doing FA is mainly about making friends and earning money through investment," said a former FA practitioner who explored the crypto world with this mindset. After successfully making friends and starting investments, he ended up losing money.
The primary market of 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 continuously.
However, the crypto world is often filled with short-term narrative traps: once a project hits a hot spot, its valuation may soar in a few months; but after the narrative recedes, the market cap can be halved in an instant. Teams lacking business models can only rely on token sales to survive, and market capitalizations continue to decline. Moreover, the current market has lost faith in altcoins, with funds mainly concentrated in top assets like BTC, ETH, and SOL. Even the currently popular coin-stock linkage model may eventually face denial in the future.
For Huaxing, this means two layers of risk:
One is whether the investment vision is penetrating enough to see through narrative traps; the other is the reputational risk.
The turnover of the crypto cycle is far faster than the traditional market. A project being hacked or running away can destroy market value within 48 hours. If Huaxing steps on a landmine, it not only incurs financial losses but may also lose the hard-earned reputation of a "boutique investment bank."
Singapore's sovereign wealth fund Temasek not only lost about 275 million USD in FTX, but more seriously, as a state-owned background investor, Temasek faced parliamentary inquiries and was forced to admit that "due diligence had significant omissions," severely impacting its reputation.
From this perspective, the best path for Huaxing Capital may not be to recreate a crypto version of the "king of mergers and acquisitions," but to shift to being a large secondary market player. By strategically allocating core assets like BTC, ETH, and BNB, combined with quantitative strategies and risk hedging, it seeks to pursue stable returns.
But this path is equally perilous.
Trading means 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, relying solely on the traditional investment bank's brand and network makes it almost impossible to establish a real advantage.
Huaxing Capital is in an awkward position:
Doing FA, the information advantage is gone; doing VC, narrative traps abound; doing secondary, yet lacking the native gene.
This is also the dilemma faced by many traditional FA/VCs in the crypto world. To stand firm in Web3, it requires not only capital input but also a complete cognitive reconstruction.
It must answer a question: what exactly is Huaxing's value in this transparent, disintermediated world?
Looking back from 2025, Huaxing's transition to Web3 appears more like an experiment forced onto the card table. It was not out of proactive choice but rather was gradually cornered by the environment.
Twenty years ago, Huaxing rose by seizing the window of China's internet take-off. At that time, Bao Fan, with a challenger's spirit, used "an investment bank that understands the internet" to tear open the seams of old finance.
Today's situation is different: Web3 does not merely bring offline business online, but a complete rewriting of financial logic: decentralization, permissionless access, community governance. These concepts directly shake the intermediary position that investment banks rely on for survival.
The change of roles sharpens the issue. Huaxing back then was a pioneer, able to go light; today's Huaxing is already a vested interest, wanting to "all in" the new track, which means giving up and betrayal. For an institution that has already been written into China's merger history, such a choice is more brutal than twenty years ago.
Looking globally, traditional financial institutions have rarely made real breakthroughs in the transformation to digital assets. Goldman Sachs is one of the earliest investment banks to test the waters, but to this day, its digital asset business remains negligible in its income. The common challenge in this industry is: can it self-revolutionize, or is it destined to be replaced by new species?
But for Huaxing, there is no turning back.
