Huaxing Capital invests $100 million in Web3: From a matchmaking giant to a new crypto market operator

Author: Fairy, ChainCatcher

Editor: TB, ChainCatcher

The king of mergers and acquisitions of Web2 is trying to become a planner of Web3.

Huaxing Capital, which has led epoch-making mergers such as Didi Kuaidi, Meituan Dianping, and 58 Ganji, has officially set its sights on the crypto world. Yesterday, the board of directors of Huaxing Capital Holdings formally passed a strategic resolution to invest $100 million in the next two years to expand the group's Web3 business and directly invest in crypto assets.

Stimulated by this news, Huaxing Capital Holdings opened up 33% today. This investment bank, which once dominated the situation in the Web2 era, is now trying to take a position again in the new round of financial paradigm change. Web2 was once "gamed" by Huaxing, will Web3 be redrawn by it?

Huaxing is not a "new player" in Web3

As one of the earliest local investment banks in China that best understands the new economy, Huaxing Capital has long been at the forefront of the restructuring of China's Internet industry. Since its establishment in 2005, it has been deeply involved in almost all key mergers and acquisitions and strategic transactions in the rise of China's new economy, including iconic cases such as Momo's acquisition of Tantan and Tencent's strategic investment in JD.com. In the primary market, Huaxing has become the "behind-the-scenes promoter" behind a number of giants with its "investment banking + investment" dual-wheel drive model.

Although Huaxing is entering Web3 with a high-profile resolution of the board of directors, in fact, its layout in the crypto world has been quietly laid out for many years, and has run through multiple fields such as mining companies, stablecoins, and trading platforms.

As early as 2018, the New Economy Fund managed by Huaxing invested in Circle. In 2019, Huaxing helped Canaan Inc. go public in the United States, making it the world's first blockchain mining machine company to be listed on Nasdaq.

In 2021, Huaxing invested in Amber Group, a crypto financial services provider, through its fund. The project later completed a merger and listing on the U.S. stock market. Its valuation once exceeded US$3 billion, making it one of the most well-known crypto unicorns in Asia.

In 2022, Huaxing Capital completed its investment in Matrixport, and in the same year assisted its affiliated company BitDeer to complete the M&A and SPAC listing process, paving the way for its listing on the US stock market.

In 2023, Huaxing helped Bitmain complete the merger and acquisition. At the same time, Huaxing Securities (Hong Kong) also served as the financial advisor of Hashkey Group and was deeply involved in multiple rounds of financing of the company.

From IPO planning and investment to mergers and acquisitions, restructuring and financing consulting, Huaxing Capital has accurately embedded itself into the crypto ecosystem with the hard-core capabilities and localized network of traditional investment banks.

After the Bao Fan incident, Huaxing is transforming

At the beginning of 2023, the "disappearance" of Bao Fan, the founder of Huaxing Capital, shocked the entire capital market and pushed this giant to the forefront. But long before Bao Fan "disappeared", Huaxing Capital's performance had already declined significantly. In the first half of 2022, revenue plummeted by 40% year-on-year, and the net loss was as high as 23 million US dollars, while the company was still in a profitable state of 179 million US dollars in the same period of the previous year.

After experiencing the double blow of high-level vacancies and capital fluctuations, Huaxing was forced to step on the brakes of expansion and began to re-examine the core positioning of the group. On February 2, 2024, Bao Fan officially resigned from all positions including executive director, chairman of the board and chief executive officer of the company. The company is led by a new management team, which attempts to "de-Bao Fan" and proposes the "Huaxing 2.0" strategy, focusing on hard technology, industrial upgrading and globalization, and weakening the traditional consumer Internet label.

Under this transformation idea, Web3 and encrypted assets began to enter Huaxing's core vision. On June 5 this year, the stablecoin issuer Circle was successfully listed, and the opening price soared, once approaching $300. As an investor who bet on Circle in 2018, Huaxing also used this "long-term bet" to usher in returns, and its company's stock price soared by more than 16%.

Perhaps it was this long-awaited capital "linkage" that gave Huaxing more confidence to bet heavily on Web3. Shortly afterwards, the company's board of directors formally passed a resolution to set up a special budget of US$100 million to enter the Web3 and crypto asset fields, focusing on the layout of stablecoins, RWA and the cryptocurrency ecosystem, and simultaneously promoting the application and upgrade of relevant business licenses.

At this time, Hong Kong is experiencing a period of policy warming and the licensing system is gradually improving. Hong Kong-listed companies are accelerating their crypto layout: financial technology company IDA is applying for a stablecoin license, Guotai Junan International has been approved to provide virtual asset trading services, and companies such as Hong Kong BGE Limited have also obtained virtual asset trading platform licenses. At a time when policy support and the industry cycle are quietly warming up, Huaxing has once again found the right entry point.

Huaxing once used capital operations to facilitate the rise of a generation of giants, and also reshaped the industry landscape with strategic vision. Its mature approach and deep resources made it invincible in the Web2 era, but will all this still work in Web3?

In any case, it is making its mark in the new crypto landscape.