SHANGHAI— Guo Guangchang became a billionaire by investing where China’s economy was going over the past two decades, pouring money into steel, property and finance while turning his gaze increasingly overseas.
On Friday, Mr. Guo indicated authorities are holding him in connection with an investigation, a stark illustration of how Chinese business and finance is coming under intense scrutiny.
After nearly two days of mystery over the whereabouts of the man who styles himself a Chinese Warren Buffett, a vague statement near midnight issued by his flagship investment conglomerate, Fosun International Ltd., said he is “assisting in certain investigations” by Chinese judicial authorities. The statement, which was signed by Mr. Guo, didn’t divulge his location but said he is still able to participate in “major matters” before the company.
There was no indication of what the investigations were about or whether Mr. Guo could be implicated himself. Chinese investigators have broad powers to detain both suspects and potential witnesses even when they don’t face accusations of wrongdoing. A Chinese Foreign Ministry spokeswoman said Friday she had no information.
Since a midyear stock-market crash exposed weaknesses in China’s financial system, authorities have detained senior stockbrokers, fund managers and bankers from a handful of the country’s top firms, saying little about the progress or findings of their investigations. About a dozen of the most senior people at the biggest brokerage, Citic Securities Co., have been held for questioning by authorities for months, and the firm says it is cooperating with investigations.
Jitters are particularly high in Shanghai, China’s largest city, where the biggest markets are based.
In addition, the Communist Party’s antigraft agency put a vice mayor in Shanghai under official investigation last month, then named certain local brokerages, insurers, a private-equity firm and business schools as targets of its next inspections.
With a proud mercantile tradition that has produced the largest regional economy in China, Shanghai has long celebrated business champions. And few stand taller than Mr. Guo, a 48-year-old with a steely focus on building asset values.
A standard-bearer for private entrepreneurs, Mr. Guo’s personal fortune was estimated this year at $7.8 billion by Shanghai research firm Hurun Report, putting him at No. 17 on its list of China’s wealthiest people.
But as China’s economy slows after three decades of furious expansion, conspicuous wealth has become suspect. Just as rumors began to spread on social media that Mr. Guo had gone missing around midday Thursday, the Communist Party secretary in Shanghai, Han Zheng, gathered top cadres to admonish them to stop chasing profits and maintain a strong “sense of responsibility and dedication,” according to an official account.
Fosun spokesmen declined to comment beyond the corporate statements. A mobile phone with a number Mr. Guo has used was turned off, according to a message heard when the phone was dialed.
Uncertainty about his situation has added to a chill in finance circles. “This news is akin to an earthquake of sorts to the business community,” Rupert Hoogewerf, founder of the Hurun Report, said in a video commentary.
Operating from a riverfront tower in downtown Shanghai, Fosun is highly diversified in China. It owns a major steelmaker in Nanjing; a development unit is building office towers in downtown Shanghai; it runs one of the country’s biggest drugmakers; it is involved in private equity, insurance, and banking as well as tourist sites including Shanghai’s Yu Gardens, a remake of an ancient Chinese city.
Mr. Guo also has dispatched investment teams around the world. It built a private-equity operation with Carlyle Group LP, property and insurance investments with Prudential Financial Inc. plus banking in operations in Europe. It added to its prominence by buying into recognizable names, from French resort chain Club Méditerranée SA and Greek jeweler Folli Follie to the Canadian performing group Cirque du Soleil and One Chase Manhattan Plaza, a choice property in lower Manhattan.
While Mr. Guo has assembled a professional team of deputies, analysts say that like many Chinese entrepreneurs he has retained more power for himself than is common in big Western companies. That could make Fosun vulnerable should something go wrong, a point illustrated in trading Friday when its trading halt for its primary business triggered selling in related stocks and bonds.
During his three years in power, President Xi Jinping has cast a more critical eye toward private-sector wealth than his predecessors, especially Jiang Zemin, who is strongly identified with Shanghai and its business-minded political leanings. Mr. Xi has engineered an anticorruption campaign that has regularly exposed links between politicians and executives in oil, mining, and other industries.
“The financial sector is the newest target of this strategy and is being pursued with great intensity,” researchers from Eurasia Group said in a report published Thursday that concludes that Mr. Xi’s campaign, rather than winding down, is intensifying.
Mr. Guo hasn’t evaded public scrutiny. In August, the tycoon was named during the sentencing for corruption of a former senior Communist Party member in Shanghai who had run a government-owned dairy company. Mr. Guo had granted the man favors for unspecified benefits, according to China’s official Xinhua News Agency, which said that Mr. Guo wasn’t accused of wrongdoing. Fosun issued a statement at the time, saying Mr. Guo supported China’s anticorruption push.
Mr. Guo’s success story is widely known in China where he personified the nation’s fast rise and its embrace of entrepreneurialism. He grew up on a farm in Zhejiang province, studied philosophy at Shanghai’s top university, Fudan, and with three fellow alumni founded a business in the early 1990s that soon accumulated vast assets.
The business was listed as Fosun International on the Hong Kong stock exchange in 2007, and today is capitalized at nearly $15 billion. According to mid-2015 filings, Mr. Guo effectively controls about 71% of the listed company. He said in an online commentary this year that the Fosun group manages assets worth $160 billion.
Mr. Guo has repeatedly named Mr. Buffett as his inspiration. He said he seeks to mirror the famed U.S. investor’s focus on fundamental asset values, rather than market fluctuations. “At most, we are Warren’s apprentice in China,” Mr. Guo told The Wall Street Journal early this year.
Like many other entrepreneurs in China, Mr. Guo has also remained close to Chinese leaders with positions on numerous official bodies, while some of Fosun’s businesses have overlapped with government priorities.
He has served as a deputy to China’s legislature, the National People’s Congress, as well as represented Shanghai on a high-level government advisory body called the Chinese People’s Political Consultative Conference. Mr. Guo has often been asked to speak on behalf of private business owners at government-sponsored events, such as an October visit to China by German Chancellor Angela Merkel.
Possible political problems have always been a worry, said one fund manager whose firm holds Fosun shares. The investor described Mr. Guo as the ultimate “red capitalist,” equal parts private entrepreneur and government official.
It isn’t known how close Mr. Guo’s ties to the party are; he has said the party is represented within Fosun. In 2001, he told a gathering of the party-affiliated Shanghai Federation of Trade Unions, according to the organization’s website, “Although I’m not a party member, those around me are all party members.”