Company founded by son of Chinese financial tsar invests heavily in technology
An investment firm founded by the son of China’s most powerful financial manager has invested heavily in technology companies, including units of major Chinese internet groups Tencent and JD.com.
Liu Tianran, son of Vice Premier Liu He, was appointed chairman of Tianyi Ziteng Asset Management, also known as Skycus Capital, when the company was established in Zhejiang Province at the end of 2016, according to the reports. company records consulted by the Financial Times. Ten people, five of whom worked with Liu Tianran, confirmed that he was Liu He’s son.
According to documents filed by the companies, Liu Tianran stepped down as chairman of Skycus in April 2017, six months before his father was promoted to the 25-member Chinese Communist Party political bureau. He also transferred his shares in Skycus to another executive a year later, shortly after his father was appointed deputy prime minister responsible for the financial sector.
Liu He was previously a low-key figure who nevertheless wielded enormous influence as President Xi Jinping’s most trusted advisor on financial and economic matters. His rise confirms his place among the Chinese political elite.
Under Chinese government rules, children of senior officials are not allowed to run companies in industries regulated by a parent, but can be employed by those companies in lower-level or advisory positions.
Several people familiar with Skycus operations told the FT that Liu Tianran, who also uses the English name Andy, continued to work on deals for the company after stepping down as chairman and transferring his shares. They added that he played a central role in the lucrative deals involving the Tencent and JD.com units.
Since its inception five years ago, Skycus has grown rapidly, quickly establishing itself as an aggressive trader and amassing over 10 billion rmb ($ 1.6 billion) in assets under management, according to the records of the company.
It has more than 30 employees working in offices in Beijing and Shanghai, and public records capture some of the company’s activity, showing it has made at least a dozen investments in internet start-ups. , health and logistics in recent years.
The investment arms of Tencent, JD.com and the China Development Bank, the country’s largest political lender, have also invested money in one of Skycus’ largest funds, company records show. .
Most of Skycus’ most profitable investments are in companies associated with Tencent and JD.com. According to prospectus documents, in 2019 Skycus invested $ 40 million in the JD.com healthcare spin-off – a stake worth nearly $ 230 million today. Company records show it paid $ 70 million in March 2018 for shares in the logistics spin-off of JD.com, which are expected to be worth at least double after the company makes an initial public offering. on the Hong Kong Stock Exchange later this month.
Skycus also benefited from a $ 5 million investment in Tencent Music in January 2018, according to a U.S. securities filing. The stake is estimated at almost double what it is today.
The “princely” sons and daughters of key Chinese leaders have generally sought to keep the profiles low. But they continue to be drawn to the financial sector. “Princelings need to be extremely careful in everything they do because it is easy for them to gain attention,” said one industry executive. “But they’re not going to go away.”
Christopher Johnson, a former CIA analyst in China, said the princelings were still an influential group in the country despite growing pressure from Xi, whose father was a senior party and government official under Mao Zedong.
“Like many other members of the party’s elite, the princelings thought Xi Jinping would be ‘their guy’ because he is one of them,” said Johnson, chief executive of China Strategies Group, a consultancy firm. .
“Instead, he has diminished the scope of their influence – especially those of upper elite families – but they remain an important constituency within the system that Xi must manage with care.”
Liu Tianran’s career has had an unusual trajectory. Before entering the financial industry, he was a reporter for the Economic Observer, a Chinese business newspaper. He edited his lifestyle section and wrote articles on football and economics.
He then joined the marketing department of CCB International, an investment arm of one of the country’s “big four” state banks. He then joined an investment fund backed by the Shanghai government before creating Skycus in 2016.
A person named Tang Meng replaced Liu Tianran as Skycus chairman when he stepped down in 2017. According to the China Asset Management Association, Tang entered the financial industry six months earlier, after 17 years of service to the Municipality of Beijing. the government state security office and the People’s Liberation Army.
In May 2018, two months after his father became one of China’s four vice prime ministers, Liu Tianran’s name was removed from Skycus business records entirely. Two companies under his control transferred their shares in Skycus to companies owned by Tang and others.
After his promotion to the post of vice premier, Liu He’s portfolio was expanded to include trade talks with the United States and the EU. He also heads the Chinese government’s powerful Financial Stability and Development Committee, a coordinating body that oversees the central bank as well as Chinese banking and stock regulators.
This role made him one of the main culprits in Xi’s crackdown on Ant Group, Jack Ma’s fintech company, and his e-commerce group, Alibaba. The crackdown has hit Ma’s businesses the hardest, but has also been extended to other internet platforms, including Alibaba rival JD.com and at least one unit of Tencent, the biggest payments competitor. online from Ant.
In November, regulators blocked Ant’s planned $ 37 billion IPO in Shanghai and Hong Kong. Had she continued, Ant would have been valued at over $ 300 billion, bigger than even the biggest banks in China and the United States.
The State Council Information Office, Liu He’s office and Skycus did not respond to requests for comment. Liu Tianran could not be reached for comment.