Shen Nanpeng, the king of venture capital, resigned as a director of Meituan, bought half of China's Internet, and now holds a Singapore green card

Tencent News Prism

2024-06-20 11:20Published on the official account of the "Prism" column of Tencent News in Beijing

Born in Zhejiang, Neil Shen, founding and managing partner of Shanhua China, grew up in Shanghai, "ordinarily resides in Hong Kong", and had applied for and obtained permanent residency in Singapore before the pandemic. Image source: Visual China  

Author | Wen Shijun  

Edit | Wang Weikai

Produced by | Prism Tencent Xiaoman Studio

After the shareholders' meeting of Meituan (Meituan-W, 3609.HK) on June 14, Shen Nanpeng officially withdrew from the board of directors of Meituan "due to other work arrangements" and stepped down as a non-executive director who had been appointed since the merger of Meituan and Dianping in October 2015.

According to the latest list of directors released by Meituan, in addition to the four independent non-executive directors who have no direct connection with the company, there are only two executive directors left on the board: Wang Xing, chairman of the board and CEO, and Mu Rongjun, an "old friend" who started a business with Wang Xing in 2007 and is also a powerful faction of Meituan.

Sequoia China and its key figure, Shen Nanpeng, were early investors in Dianping and Meituan, and had "strong support" of the merger. In September 2018, when Meituan (then known as "Meituan Dianping") was listed on the Hong Kong Stock Exchange, Sequoia China and Sequoia Global Fund and other Sequoia shareholders jointly held 10.437% of Meituan's equity (4.7% of the voting rights). In terms of shareholding ratio, it is infinitely close to Wang Xing's 10.438%.

Meituan's listing is a landmark event for China's equity investment. As a serial entrepreneur, Wang Xing finally became wealthy, and many investors who entered in previous financing rounds also made a lot of money.

With Shen Nanpeng stepping down as a director of Meituan for nearly nine years, the gears of history are turning again.

Some retreated too completely

A former employee of Sequoia China told the author of Prism that "if you enter early, you will rise more", and Meituan is not only the most successful case of Sequoia China's investment in the O2O (online-to-offline) track in the 2010s, but also in the past decade.

A former head equity investment institution practitioner told the author of "Prism" that in the years when China's equity investment was booming, "even the head institutions, many of them could not jump out of the vicious circle of 'investment courage basically depends on co-investment, and post-investment management basically depends on sheep herding'".   

In this sense, Sequoia China's involvement in the board of directors of key investment projects, participation in the decision-making of portfolio companies, and helping portfolio projects obtain resources, and even the way in which a core figure like Shen Nanpeng personally ends the game is actually a "value-added service" that Sequoia China has always advertised.

Sequoia Capital has invested in almost all entrepreneurial tracks, and Shen Nanpeng, who was born in the late 1960s, has undoubtedly firmly grasped the dividends of the times. From NIO to Xiaopeng, from Alibaba to Pinduoduo, from ByteDance to Kuaishou, from Lala to Shell, from SHEIN to Boss Zhipin, from BYD to Guazi second-hand cars, Sequoia China has invested in more than 1,500 enterprises since its establishment in 2005.

According to the analysis of the above-mentioned practitioner to the author of "Prism", there are two prerequisites for Shen Nanpeng to enter the invested projects of the board of directors, one is that Sequoia China must have enough voice in it, and the other is that it must be able to be looked down upon by Shen Nanpeng.

The status of a non-executive director of Meituan is almost the title that Shen Nanpeng retains until the end. Before stepping down from this position, the Chinese "king of venture capital", who was once known as "buying half of China's Internet", had carried out a round of retreat at the board level of listed companies:

In April 2024, he stepped down as a director of BTG Hotel (600258.SH); In December 2023, he stepped down from No. 9 Company (689009. SH) Non-Executive Director; In August 2023, he stepped down from Noah Holdings (NOAH.N; 6686.HK) Non-executive Director; In November 2022, he stepped down as an independent non-executive director of Pinduoduo (PDD.O) and in May 2020, he stepped down as a non-executive director of 360 (601360.SH......

According to a report by the Financial Times in early 2024, Shen Nanpeng had obtained permanent residency in Singapore before the pandemic for "personal reasons", and subsequently set up a Sequoia China office in Singapore. The report quoted sources as saying that "the first application was made more than a decade ago".   

Another background is that in June 2023, Sequoia China will become independent from Sequoia in the United States and use Hanyu Pinyin "HongShan" as the English name, replacing the previous "Sequoia China".

A person familiar with the matter shared with Prism that unlike the operation mode of many foreign funds, Shen Nanpeng has already obtained independent decision-making power from Sequoia in the United States, and investment decisions do not need to be approved by the US headquarters. And the investment outside of China, Sequoia China has also been doing.

With the resignation of Meituan's non-executive director, Shen Nanpeng has only one position left at the listed company level - Trip.com Group (TCOM.O; 9961.HK). After all, this is the starting point of his resignation from a foreign-funded financial institution to start a business, and it is also a prequel to the story of Sequoia China's capital.

On December 16, 2004, 37-year-old Shen Nanpeng became the executive director and chief financial officer of Ctrip.com. Image source: Visual China

Of course, from an investment point of view, in recent years, Sequoia China's reduction of Meituan's holdings and exit profits have also been underway. As of Meituan's latest annual report released in April 2024, the stake held by HongShan Funds (formerly Sequoia China Series Funds) and its controlled entities has dropped to 1.68%.

This is equivalent to the total sale of at least 8.757% of the equity of the entire Sequoia system after Meituan's listing, and the scale of cashing out is in the order of tens of billions of Hong Kong dollars.

Exits were mainly concentrated in the years after the epidemic, and at the end of 2019, Sequoia China and Sequoia Global Series Fund also combined to hold a 9.24% stake in Meituan.

For investment institutions, it is the basic business model to invest in the growth period of the enterprise and make a profit by exiting the enterprise during the maturity period. After all, a few years ago, Shen Nanpeng's name also appeared in the board of directors of Paipai Loan (now renamed Xinye Technology), Momo (now renamed Zhiwen Group), McCollin (delisted), Peak Sports (delisted), Hero Mutual Entertainment (delisted), and Feihe International (delisted).

But there are retreats and advances, and after leaving the old and then accepting the new, it is the gait of rising and climbing. For Shen Nanpeng at the moment, it seems that he has retreated too completely.

It is worth mentioning that at the beginning of 2018, when Meituan was listed, Shen Nanpeng was elected as a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) in the technology sector as the global managing partner of Sequoia Capital. At the two sessions of this year, he brought relevant proposals on the incubation and support of innovative and entrepreneurial enterprises in the process of the construction of the Guangdong-Hong Kong-Macao Greater Bay Area.

This proposal is a good match for his identity - Hong Kong, China, the only member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) in the field of VC/PE equity investment. In the Xinhua News Agency report, member Shen Nanpeng said: "Entrepreneurs should maintain their determination in the rapid changes in the industry and have the idea of pursuing a 'century-old store'. ” 

Earlier faded out of Huaxing Capital

As the "entrepreneur behind the entrepreneur", the century-old store should also be Shen Nanpeng's expectation for Sequoia China. But the century-old store must have passed through the cycle and dodged through many dangers.

Sometimes, it takes more than luck to move around at the right time, just as Sequoia Capital and Shen Nanpeng faded from behind Huaxing Capital.

Founded in 2005, China Renaissance Capital started as a financial advisor (FA) business and gradually developed into a private financial group covering private equity, investment banking and other businesses. The business model of FA business is to connect investors and invested companies with intermediaries, help funds find projects, and help entrepreneurs find funds. Sequoia China, as an investor, and China Renaissance Capital, as an FA, are business upstream and downstream partners with close interests.

In August 2015 and July 2016, Sequoia China participated in the second and third rounds of equity financing of China Renaissance Capital through Bamboo Green (and its financial predecessor, Bamboo Prime). Bamboo Green was wholly owned by Sequoia China Growth Fund Phase I, and after multiple layers of penetration, the final control belongs to SNP China, which is the sole shareholder of Shen Nanpeng.

In September 2018, Huaxing Capital (Huaxing Capital Holdings, 1911.HK) was listed on the Hong Kong Stock Exchange, and Shen Nanpeng went to the gong listing site to congratulate him. According to the prospectus, Bamboo Green holds 6.3% of the equity of Huaxing Capital after listing, and Shen Nanpeng also appears on the board of directors of Huaxing Capital as a non-executive director.

According to a statistic from IT Orange in 2022, from 2014 to 2021, among the 727 investment institutions "leveraged" by Huaxing Capital as a capital intermediary, the largest partner in the first place was Sequoia China. 

At the listing ceremony of China Renaissance Capital in Hong Kong, there was also a jungle of then chairman of ICBC International. In 2020, Cong Cong left ICBC International and joined China Renaissance Capital.   

Huaxing Securities, formerly known as Huajing Securities, was established and controlled by Huaxing Capital in April 2016 through 49% of the shares held by Hong Kong Wancheng Securities, becoming a scarce private domestic full-license brokerage.

In September 2022, the Shanghai Regulatory Bureau of the China Securities Regulatory Commission issued the "Decision on Issuing Corrective Measures against Huaxing Securities Co., Ltd." and "Decision on Adopting Regulatory Talk Measures against Conglin". In the same month, Cong Cong was taken away for retention in custody by the Supervision Agency of the Commission for Discipline Inspection for the cause of his work at ICBC.

In February 2023, Bao Fan, the soul of Huaxing Capital, lost contact, and was later confirmed to be "cooperating with the investigation of relevant Chinese authorities". A year later, in February 2024, China Renaissance Capital officially announced that Bao Fan would resign from his positions as executive director, chairman of the board of directors, and CEO "due to health reasons and the desire to devote more time to family affairs".

The author of "Prism" learned from relevant people that Shen Nanpeng and Bao Fan are very familiar with each other. In fact, the backgrounds of the two are also very similar, Bao Fan was born in Shanghai, and Shen Nanpeng was three years old. Shen Nanpeng started at the age of 7 and went from primary school to university in Shanghai. They attended two of Shanghai's best universities, Bao Fan and Shen Nanpeng, who graduated from Shanghai Jiao Tong University. Before making waves in China's financial world, the two also had overseas study experience and foreign financial institutions.

On April 3, 2023, shortly after Bao Fan lost contact, the shares listed on the Hong Kong Stock Exchange of Huaxing Capital began to be suspended. In July 2023, Sequoia China partner Liu Xing also resigned as a non-executive director of China Renaissance Capital.

Liu Xing joined the board of directors of China Renaissance Capital in June 2020 after Shen Nanpeng left as a non-executive director of China Renaissance Capital. According to the Financial Times, at this point in time, Shen Nanpeng has obtained permanent residency in Singapore.

In the 2020 financial report of China Renaissance Capital released in April 2021, Bamboo Green, which represents Sequoia China and Shen Nanpeng, is still more than 5% shareholder, holding 6.49% of the shares. However, in the 2021 semi-annual report of Huaxing Capital released in September 2021, Bamboo Green is no longer in the list of shareholders of Huaxing Capital that needs to be disclosed.   

Liu Xing does not have his own "successor". Long after Liu Xing's departure, the position of non-executive director, which originally belonged to Sequoia China, was vacant for a long time.

It was not until February 2024, along with the announcement of Bao Fan's resignation, that the board of directors of Huaxing Capital appointed Sun Qianhong, a "post-90s", as a non-executive director. After graduating from university in 2014, Qianhong Sun joined China Renaissance Capital in 2015 as Vice President of the CEO Office of China Renaissance Capital before becoming a non-executive director, "assisting the CEO in the strategic investment and development of the Group".

Including Conglin, four chairmen of ICBC International have been investigated so far. So far, there is no news that the investigation of Bao Fan has ended.

"Yi Chuan" has a saying: The middle of the day is bright, the moon is eclipse, the heaven and the earth are empty, and the news of the times, and the situation is human.

(Chow also contributed to this article)

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