Huaxing Capital bets $100 million on Web3: from matching giants to becoming a new player in encryption.

Author: Fairy, ChainCatcher

Editor: TB, ChainCatcher

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

Huaxing Capital, which has previously 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 USD over the next two years for the expansion of its Web3 business and direct investments in crypto assets.

Stimulated by this news, Huaxing Capital Holdings surged 33% at the opening today. This investment bank, which once influenced the situation during the Web2 era, is now trying to reposition itself in the new round of financial paradigm shifts. Web2 was orchestrated into a "situation" by Huaxing; will Web3 be redrawn by it?

Increasing investment in Web3, Huaxing is not a "new player".

As one of the earliest and most knowledgeable local investment banks in China's 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 deeply participated in almost all key mergers, acquisitions, and strategic transactions during 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 also become the "behind-the-scenes driver" for many giants with its "investment banking + investment" dual-driven model.

Although it has recently made a high-profile decision to enter Web3 through the board of directors, in fact, Huaxing has quietly laid out its presence in the crypto world for many years, spanning multiple areas such as mining companies, stablecoins, and trading platforms.

As early as 2018, Huaxing Capital's new economy fund invested in Circle. In 2019, Huaxing helped Canaan Technology go public in the United States, making it the first blockchain mining company to be listed on NASDAQ.

In 2021, Huaxing invested in the cryptocurrency financial service provider Amber Group through its subsidiary fund. The project later completed a merger and went public in the U.S., with a valuation that once exceeded $3 billion, becoming one of the most well-known crypto unicorns in Asia.

In 2022, Huaxing Capital completed its investment in Matrixport and assisted its affiliated company Bitdeer in the merger and SPAC listing process, paving the way for its entry into the US stock market.

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

From IPO planning, equity investment, to mergers and acquisitions restructuring and financing advisory, Huaxing Capital precisely integrates into the cryptocurrency ecosystem with the hard-core capabilities of traditional investment banks and a localized network.

After the Bao Fan incident, Huaxing is undergoing a transformation.

At the beginning of 2023, the "disappearance" of Bao Fan, the founder of Huaxing Capital, shook the entire capital market and brought this giant to the forefront of controversy. However, even before Bao Fan's "disappearance," Huaxing Capital's performance had already shown significant decline. In the first half of 2022, revenue plummeted by 40% year-on-year, with a net loss of up to 23 million dollars, whereas the company was still in a profit state of 179 million dollars in the same period of the previous year.

After experiencing the dual impact of a leadership vacuum and capital fluctuations, Huaxing was forced to hit the brakes on expansion and began to reassess the group's core positioning. On February 2, 2024, Bao Fan officially resigned from all his positions as the company's executive director, chairman of the board, and CEO. The company is now led by a new management team, attempting to "de-Bao Fan" and proposing the "Huaxing 2.0" strategy, focusing on hard technology, industrial upgrading, and globalization, while downplaying the traditional consumer internet label.

Under this transformation concept, Web3 and crypto assets have begun to enter Huaxing's core vision. On June 5th of this year, stablecoin issuer Circle successfully went public, with its opening price soaring to nearly $300. As an investor that bet on Circle in 2018, Huaxing has also reaped rewards from this "long-term bet," with its company stock price soaring over 16% as a result.

Perhaps it is this long-awaited capital "linkage" that has given Huaxing more confidence to double down on Web3. Shortly thereafter, the company's board of directors officially passed a resolution to establish a special budget of 100 million USD to enter the Web3 and cryptocurrency asset field, focusing on stablecoins, RWA, and the cryptocurrency ecosystem, while simultaneously advancing the application and upgrade of related business licenses.

At this time in Hong Kong, the policies are warming up, and the licensing system is gradually improving. Hong Kong-listed companies are accelerating their cryptocurrency strategies: fintech company IDA is applying for a stablecoin license, Guotai Junan International has been approved to provide virtual asset trading services, and companies like Hong Kong BGE Limited have also obtained licenses for virtual asset trading platforms. Amidst the subtle warming of policy tailwinds and industry cycles, Huaxing has once again found the right entry point.

Huaxing has once used capital operations to facilitate the rise of a generation of giants, and has 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 leaving its signature in the new landscape of encryption.