Two public statements have once again brought Noah Wealth (also known as "Noah Holdings") into the spotlight.
On the noon of December 4, 2023, JD's official Weibo account released a statement stating that "Noah Wealth maliciously sued JD, misled investors and the public". The statement also pointed out that "Noah Wealth has experienced more than ten similar incidents in recent years... repeatedly warned and punished by regulatory authorities, indicating that it has serious risk control deficiencies for a long time."
On the evening of the same day, Noah Wealth issued a response, stating that the description in the above statement that "Noah Wealth has experienced more than ten similar incidents" is seriously untrue, "has infringed on our company's reputation, and will take legal measures to protect our rights."
Nandu reporters have noticed that in recent years, many halos of Noah Wealth have indeed hit many deep pitfalls, such as Huishan Dairy, LeEco, and Storm Group.
Several investors have also stated that in the criminal case of "Chengxing fraud", where JD.com has been found not to be responsible, Noah suing JD.com is delaying time and shifting responsibility. In contrast, after experiencing multiple platforms being deleted and banned, they are more eager to know what kind of company Noah is at the end.
1
"Mr. Key" Tan Wenqing
In some articles published by the official channels of Noah Wealth, Noah's birth is a typical inspirational story, and is painted with a hint of bitterness: during his pregnancy, Wang Jingbo faced the situation of being laid off by his former employer, Xiangcai Securities. Together with several colleagues, he was forced to establish his own business and quickly gained the favor and capital injection of capital giants such as Shen Nanpeng and He Boquan through his own efforts, soaring to the sky.
"Like many startups, Noah started hard in a small office of just over 100 square meters in Lujiazui, Pudong." "In order to gain customers, Wang Jingbo and her entrepreneurial partners set up stalls and distribute promotional materials at the entrance of the community, just like young people in real estate agencies today." That experience was described as follows.
However, it is obvious that a more than 100 square meter office in Lujiazui cannot be considered "small" for many mature companies; The vast majority of real estate agents do not have a spouse with a luxurious network, and the truth of the story is only told halfway here.
Wang Jingbo's husband, Tan Wenqing, once served as the General Manager of the Investment Banking Department of Beijing Securities (which has been restructured). Later, he joined Xiangcai Securities and met Wang Jingbo here.
During his tenure at Xiangcai Securities, Tan Wenqing not only facilitated negotiations between the company and Lyon Securities in France, leading to the birth of the first joint venture securities company in China - Huaou International, but also deeply participated in a series of capital operations of Shanghai Guobin Medical through Shanghai Dingfeng Technology Development Co., Ltd., a subsidiary of Xiangcai at that time. He, along with Le Bai Shi, He Boquan, founder of Today's Investment, and Zhang Ligang, founder of iKang.com at that time, Creating the current medical giant Aikang Guobin.
And He Boquan is the angel investor of Noah. After 45 minutes of communication with Wang Jingbo, he decided to spend $5 million on Shen Nanpeng, which also relies on He Boquan's guidance and Tan Wenqing's accidental introduction.
When Noah Wealth went public in the United States in 2010, the prospectus showed that Wang Jingbo held 25.2% of the company's shares (after the IPO), while Sequoia Capital and He Boquan's subsidiaries held 21.6% and 8.4% of the shares, respectively.
The early investment in Noah brought considerable returns to He and Shen. The former once revealed that investing in Noah would bring him a return of about 4000 times, "which is also one of the proudest investments for me." In October 2016, Sequoia Capital announced its strategic investment in Noah Wealth's wholly-owned subsidiary, Gefei Asset, further deepening the relationship between the two parties.
Invest in wooden peaches and repay with Qiong Yao. The investor of Noah's "Gefei China Special Opportunities Fund No. 7" once disclosed in an open letter that the fund invested in some old stocks of Douyu held by Sequoia Capital. However, after the lifting period and Douyu's stock price was around $20 per share, no reduction was made. Later, when the stock price dropped to around $1 per share, the fund cleared its position, causing the investor to lose over 75%.
According to the Open Letter, the manager of the fund, Noah Holdings, has repeatedly concealed from investors risk clauses such as "after Douyu goes public, Sequoia Capital can choose to distribute stocks to the fund, and subsequent management risks will be borne by Noah and Gefei investors", as well as key matters such as "Sequoia Capital has already distributed Douyu stocks to the fund by the end of 2020".
To pave the way for Noah's success, Tan Wenqing, who introduced two super investors, did not intervene too much in the company's affairs. Instead, while continuing to invest in the business, he founded "Enoch Education" and "Dingnuo Technology", engaged in personal and family education for high net worth individuals, as well as financial education, investment advisory and other businesses, which can complement Noah's business and provide extended services to high net worth individuals. Tan Wenqing also serves as the Chief Customer Experience Officer of Noah Wealth.
Of course, at the beginning of his entrepreneurship, Wang Jingbo was not an ordinary employee facing dismissal, but rather held the position of General Manager of the Private Finance Department of Xiangcai Securities. Under the wave of restructuring and layoffs, Wang Jingbo and several senior colleagues conducted a management buyout. The customer resources accumulated by Wang Jingbo over the years in Xiangcai, the rich network of Tan Wenqing, and the equity binding of He Boquan, Shen Nanpeng, and others have woven a strong network of relationships for Noah Wealth's success.
2
The ultra-high net worth population supports billions of assets
At the beginning of their birth, Wang Jingbo and her Noah Wealth targeted their clients towards high net worth individuals.
According to official WeChat, as of the end of the first half of 2023, Noah's cumulative asset allocation exceeded 980 billion yuan. According to the third quarter report, as of September 30, 2023, the company's asset management scale was 154.9 billion yuan, a decrease of 1.3% from the mid year.
According to the IPO prospectus of Noah Holdings in Hong Kong, based on four asset allocation amounts of 1 million yuan, 3 million yuan, 10 million yuan, and 50 million yuan, Noah divides its customers into "ivory, gold card, platinum, diamond card, black card" and other categories.
As of the end of 2021, the company had 42764 customers, of which 1722 were black card customers, accounting for 46.5% of the allocated asset size, and 6575 were diamond card customers, accounting for 37.8%. By the end of 2022, the total number of black and diamond card customers of the company reached 9689, an increase of 18.2% year-on-year.
These data mean that the ultra-high net worth customers who account for 19.4% of the population and have personal asset allocation exceeding 10 million yuan have brought 84.3% of Noah's asset allocation business scale.
It is interesting that as the head of Noah Wealth, Wang Jingbo not only emphasizes "serving" customers and "making friends with customers", but also often talks about "investor education" as a response to some products not meeting expectations or even stepping on landmines.
For example, in 2016, the Banyan Tree Fund, a hotel private equity project underwritten by Noah Wealth, was exposed as "unfinished". In response to this incident, Wang Jingbo stated in an interview that "Chinese investors are in a hurry. For example, hotels are a project that needs to be maintained, and from an international perspective, six years is not long.". In addition, when the Chengxing fraud case broke out in recent years and Gefei Fund was deeply involved, Wang Jingbo emphasized in an internal letter that the company "does not have rigid redemption", and at the same time, he advocated the importance of "breaking rigid redemption" on multiple occasions. Previously, when Noah stepped on Leihuishan Dairy, the company also issued a clarification, accusing "a very small number of investors of gathering and disseminating false information, wearing white clothes and banners to interfere with operations in order to achieve rigid redemption requirements.".
Breaking the rigid exchange is indeed a necessary path for the healthy development of the industry, but Southern Capital reporters have noticed that the focus of many investors' doubts is not on not conducting rigid exchange, but on the professionalism of Noah Wealth itself.
For example, the investors of "Noah Huishan" have a question as to why Noah disclosed the loan debt as an accounts receivable debt in the Fund Contract; Investors in the "Sequoia Douyu" incident want to know why Noah deliberately concealed key terms and information, and why as a "professional" investment team, he missed many excellent time points for reducing holdings; Investors of "Noah Chengxing" do not understand that as a wealth management expert and supply chain finance expert, Noah can easily be scammed of huge amounts of funds due to carrot badges and fake employees.
"If the underlying assets are true, it is indeed due to JD's situation that the product cannot be redeemed. If we accept it, we will accept it," said several investors. "This is not just a matter of whether we have just redeemed or not, but rather a problem with Noah's management and risk control capabilities."
These investors also revealed that their messages about Noah on some platforms are completely unavailable.
In recent years, Noah Holdings has experienced fluctuations in its performance. From 2020 to 2022, Noah Holdings achieved operating revenue of 3.306 billion yuan, 4.293 billion yuan, and 3.1 billion yuan respectively; Realized a net profit attributable to the parent company of 745 million yuan, 1.314 billion yuan, and 9766 million yuan. In the third quarter of 2023, the company's net income was 750 million yuan, an increase of 9.6% year-on-year; The total operating income was 248 million yuan, a year-on-year increase of 7.4%.
Looking at the breakdown, there is a downward trend in the domestic scale of some of Noah's businesses. As of mid-2023, the asset management scale of Noah Wealth reached 156.9 billion yuan, a year-on-year increase of 0.9%. However, the overseas asset management scale increased by 15.8%, and the company's net income increased by 13.8% year-on-year during the reporting period, with overseas net income increasing by 104.1%. In the third quarter, the net income of Noah's asset management business increased by 1.8% year-on-year, mainly due to the increase in real estate investment scale of the New York team.
3
Our products have been repeatedly hit by lightning, resulting in multiple fines for risk control and integrity
The most obvious manifestation that raises doubts among investors about the professional nature of Noah Wealth is the series of lightning strikes that have occurred.
First of all, as mentioned above, the first RMB hotel private equity fund in China, "Banyan Tree Noah Fund", was issued in 2010. The GP manager of this project is Banyan Tree Capital Tianjin, a subsidiary of Banyan Tree Group. The equity includes the operating income of two Banyan Tree hotels, Mount Huangshan and Yangshuo, the house sales income of two Banyan Tree property hotels, Lijiang and Mount Huangshan, and the management fee of 10% of other ten hotels in China.
With the signature of Banyan Tree, the fund quickly completed a fundraising of 1.07 billion yuan.
According to investor descriptions, as a sales agent, Noah had previously stated during the promotion of the product that it expected a return of 3.4 times, expected to recover the principal in 4 and a half years, and go public in 6 years. However, in the end, due to turbulence in the management of Tianjin Banyan Capital and other reasons, the fund suffered a 30% loss after 6 years of operation, and even had not yet completed filing when the product was about to end.
In response to this, Guan Qingyou's subsidiary, the Financial Research Institute, wrote an article analyzing that Wang Jingbo had responded to fund managers not wanting to spend more time communicating with investors. So, how did this irresponsible product of the manager pass the Noah product review and enter the consignment list? At the same time, regarding Wang Jingbo's investor's statement that he was "too anxious", the article asked in reverse, "Why is the product design 6+2, and did Noah reveal the risk of not being able to exit at maturity in the promotion?"
Another product that caused a breakthrough for Noah as a sales agent is the Noah Yongxuan Fund, managed by Lianchuang Yongxuan. The five products raised a total of 1.594 billion yuan, with investment targets including Western Mining, Hebei Taiheng Special Steel, Shaanxi Jianchaling Nickel Industry, and Baozuo Manga. Finally, according to feedback from investors at that time, there were issues with exaggerated advertising for products 1 to 4, and pricing issues with fund 5, which invested in the target Xin Guan gold mine in Wen County, Gansu Province. The promotional materials described that "the historical proven reserves of the gold mine were 15 tons, the geological work expanded the proven reserves to 30 tons in 2012, and the prospective reserves were 50-100 tons." However, as of the end of 2018, the recorded reserves of the gold mine were only 5 tons.
If Noah can still shift the responsibility to his "teammates" in the two cases where he appeared as a sales agent, then some of the projects he personally "pitted" on will have to find another way out.
In August 2014, Gefei Asset's equity holding company, Wanjia Win Win Asset Management Company, issued Jingtai Fund. Shortly after, a scandal of misappropriation of funds was exposed. The fund manager, Jingtai Company, was later found by the court to have committed intentional fraud, and the relevant participants were held criminally responsible.
On December 25, 2015, Storm Group announced a joint investment of 500 million yuan with Gefei Asset and Tianjin Pinglu E-commerce to establish the Storm Xinyuan Internet Investment Center (hereinafter referred to as "Storm Xinyuan"), with Gefei contributing 400 million yuan. The fund's investment targets include companies listed on the New Third Board, such as Jiuxing Entertainment and Storm Magic Mirror, as well as Storm Intelligence and other "Storm series" enterprises. At the end of 2019, due to the failure to achieve the agreed withdrawal, Storm Group was ordered to pay at least RMB 467 million to Gefei Asset, consisting of the transfer payment of Storm Xinyuan shares and liquidated damages. At that time, the Storm Group had already fallen into a quagmire.
On August 19, 2016, LeEco released an announcement stating that its wholly-owned subsidiary had partnered with Shenzhen Xingen Investment Fund Management Co., Ltd. to establish Shenzhen LeEco Xingen Merger and Acquisition Fund Investment Management Enterprise (hereinafter referred to as "LeEco Merger and Acquisition Fund"). As of the disclosure date of the announcement, Gefei Asset had subscribed to a priority share of 2.3 billion yuan.
On October 29, 2018, LeTV's acquisition fund invested in companies such as TCL Multimedia, Coolpad Group, Shenzhen Chaoduowei, and Shenzhen Huixin Network Bridge. LeTV announced that it had repaid 300 million yuan in principal to Priority (Gefei Asset) and stated that most of the projects it invested in were in a loss making state. According to the 2019 annual report, as of the end of the period, LeEco had a non current liability of 2.448 billion yuan for Gefei's assets.
In February 2017, a subsidiary of Tian Shen Entertainment (now known as "Tian Yu Shu Ke") subscribed to the inferior shares of Shenzhen Taiyue Investment Center (hereinafter referred to as "Shenzhen Taiyue") fund for 216.5 million yuan, and Gefei Asset subscribed to a preferred share of 1.0425 billion yuan. Later, Shenzhen Taiyue acquired 51% of the shares of Pocket Technology for 1.067 billion yuan.
Shortly thereafter, Tianshen Entertainment experienced a business crisis, and due to the triggering of relevant repurchase clauses, Gefei sued the former and successfully recognized a debt of 945 million yuan. Unlike LeEco and Storm, Tencent Entertainment ultimately succeeded in restructuring and avoided the fate of delisting. Gefei, on the other hand, obtained corresponding shares in debt during the restructuring and continued to reduce its holdings and exit.
Nowadays, it can be said that Noah entered the capital market with "precision" shortly before multiple "typical big mines" exploded. The reason for this may be revealed from the fines issued by the regulatory authorities.
In May 2018, Noah Hong Kong was condemned by the Hong Kong Securities and Futures Commission and fined HKD 5 million due to multiple non-standard behaviors from January 2014 to June 2016, including inadequate risk assessment, internal systems and monitoring deficiencies in the sale and distribution of investment products; In August 2018, Gefei Asset was issued a warning letter by the Jiangsu Securities Regulatory Bureau of the China Securities Regulatory Commission for failing to fulfill its "honest and trustworthy obligations" and "prudent and diligent obligations" in the Huishan Dairy incident.
In August 2023, the Jiangsu Provincial Securities Regulatory Bureau once again issued a warning letter to Gefei Asset, citing its violation of disclosing information to investors that did not match the actual situation during the management of the Chuangshi Dingxing Phase III No.1 M&A Private Fund and Chuangshi Dingxing Phase III No.2 M&A Fund.
The aforementioned company, combined with the 3.5 billion yuan hole brought by the "Chengxing Series", has raised a total of 10 billion yuan for Noah's Thunder Strike project.
Of course, some products such as Shenzhen Taiyue were able to exit. In 2019, Noah also issued a statement stating that Banyan Tree Fund had completed its exit by the end of 2017, achieving about 30% of its returns. At the same time, it stated that the Jingtai incident had been successfully resolved, the Yongxuan project had entered the exit period, and the Huishan debt was being disposed of, but did not provide detailed information.
Other projects are still in dispute or waiting.
Case Backtracking
The "Chengxing fraud case" refers to the case between February 2015 and June 2019, in which Chengxing Holdings and related companies fabricated supply chain trade with Suning and JD.com, and used it as underlying asset financing to defraud more than 30 billion yuan of funds from institutions such as Xiangcai Securities, Moshan Factoring, Shanghai Gefei, Yunnan Trust, Anhui Zhongxin, etc., ultimately resulting in a loss of over 8 billion yuan, Among them, Noah Holdings (6686. HK) and its subsidiaries involved an amount of approximately 3.5 billion yuan, mainly from the "Genesis Core Enterprise Series Private Equity Fund" initiated by Shanghai Gefei Asset Management Co., Ltd. (hereinafter referred to as "Shanghai Gefei").
At the end of 2022, the Second Intermediate People's Court of Shanghai made a judgment on the "Chengxing case", determining that the actual prosecutor of the "Chengxing clique", Luo Jing, was sentenced to life imprisonment for committing contract fraud and bribery against non-state workers. His sister Luo Lan and ten other individuals involved in the case were also sentenced.
The judgment also shows that companies such as JD.com and Suning, as well as their employees, were unaware of Chengxing's fraudulent behavior, and the relevant cooperation contracts, seals, and materials were all forged. On the contrary, Fang Jianhua, a staff member under Noah Holdings, provided convenience for Chengxing Company to engage in fraud in business communication, follow-up investigations, and other aspects while accepting bribes of over 2 million yuan.
On November 24, 2023, the case of Gefei Asset, a subsidiary of Noah Holdings, suing JD.com will be heard in the Shanghai Financial Court. Gefei Asset requires JD.com, Chengxing Holdings, Zhongcheng Industrial, Suzhou Shengjun and other companies to repay all the losses identified in the "Chengxing Series" criminal case of over 3.5 billion yuan.
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