An investment company founded by the son of China’s most powerful financial official has made significant investments in technology companies, including Tencent and JD.com, units of China’s leading Internet groups.
Liu Tianran, the son of Deputy Prime Minister Liu He, was also known as Tianyi Ziteng Asset Management (Skycus Capital) when the firm was formed in late 2016 in Zhejiang Province, according to corporate records viewed by the Financial Times. Ten people, five of whom have worked with Liu Tianran, have confirmed that he is the son of Liu He.
According to corporate presentations, Liu Tianran resigned from the Skycus chair in April 2017, six months before his father rose to the 25-member political chairman of the Chinese Communist Party. He also transferred his shares in Skycus to another executive a year later, shortly after his father was appointed deputy prime minister in charge of the financial sector.
Liu was previously a low-profile character, however, who used to tremendous impact President Xi Jinping as the most trusted adviser on financial and economic affairs. His height confirmed his place among China’s political elites.
Under Chinese government rules, children of senior civil servants are prohibited from managing companies in industries regulated by their parents, but they may work in lower-level positions or in advisory roles.
Several people close to Skycus ’operations told FT that Liu Tianran, who also uses the English name Andy, continued to work on agreements for the company after leaving office on the bench and transferring his shares. They added that he played a key role in transactions involving Tencent and JD.com units.
Since its inception five years ago, Skycus has grown rapidly, quickly established itself as an aggressive seller, and has accumulated more than Rmb10bn ($ 1.6 billion) in management assets, according to corporate records.
It has more than 30 employees working in Beijing and Shanghai offices, and public records cover part of the company’s activity, which has made at least a dozen investments in recent years in internet, healthcare and logistics start-ups.
Investment weapons Tencent, JD.com and the Development Bank of China, the country’s largest policy makers, have also put money into one of Skycus ’largest funds, according to corporate records.
Many of Skycus ’most profitable investments are in companies affiliated with Tencent and JD.com. According to prospective documents, in 2019 Skycus invested $ 40 million in the JD.com health spin-off, a stake of nearly $ 230 million today. Corporate records show that it paid $ 70 billion in shares of JD.com’s logistics spin-off in March 2018, which is expected to be worth at least twice as much after the company’s completion. initial public offering On the Hong Kong Stock Exchange later this month.
According to the U.S. Securities Exchange, Skycus has invested $ 5 million in Tencent Music in January 2018. The stake is currently estimated to be worth almost double.
The sons and daughters of China’s top leaders have tried to keep the low profile of “princes” in general. But they continue to attract the financial industry. “Princesses need to be very careful in everything they do, because it’s easy to attract attention,” an industry official said. “But they won’t go.”
Christopher Johnson, a former CIA chief analyst in China, said the princes are still an influential group across the country, with growing pressure from Xi, whose father was Mao Zedong’s ruling party and a government official.
“Like many of the other elite in the party, the princes believed that Xi Jinping would be“ their type ”because he was theirs,” said Johnson, chief adviser to China Strategies Group.
“Instead, it has narrowed the scope of their influence – especially the highest elite family – but they remain an important area of the system that Xi needs to manage carefully.”
Liu Tianran’s career has been an unusual one. Prior to entering the financial industry, he was a journalist for the Economic Observer of a Chinese business newspaper. He edited the lifestyle section and wrote articles on football and economics.
He later joined the marketing department of CCB International, an investment branch of one of the country’s “four” state-owned banks. He then moved to a government-backed investment fund in Shanghai before starting Skycus in 2016.
A person named Tang Meng replaced Lyc Tianran when Skycus president resigned in 2017. According to the China Asset Management Association, Tang entered the financial industry six months earlier after 17 years with Beijing City Council. the government’s state security office and the People’s Liberation Army.
In May 2018, two months after his father became China’s deputy prime minister, Liu Tianran’s name was completely removed from Skycus business files. The two companies under his control transferred shares of Skycus to companies owned by Tang and others.
After his appointment as Deputy Minister, Liu He’s portfolio was expanded to include trade negotiations with the US and the EU. He also chairs the Chinese government’s strong financial stability and development committee, a coordinating body that oversees the central bank and China’s banking and securities regulators.
This role has made Xi one of the top officials repressing the Ant Group, Jack Ma’s financial technology company and its e-commerce group, Alibaba. Clampdown has hit Ma companies hard, but it has also spread to other Internet platforms, including rival Alibaba’s JD.com and at least one unit from Tencent, Ant’s biggest online payments competitor.
In November, regulators Ant has blocked the planned $ 37 billion IPO Shanghai and Hong Kong. If it had progressed, Ant would have been valued at more than $ 300 billion, larger than the largest 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 comment.