Hong Kong tycoon John Lau is suing a buyout fund managed by private equity firm EmergeVest and its CEO over its portfolio company EV Cargo’s alleged plan to operate in Greater China, where it would be rivalling Lau’s own Cargo Services Group.
The buyout vehicle, EV Cornerstone, and its chief Heath Zarin were served with a writ of summons in the Hong Kong High Court on June 19, which demanded that Lau’s investment of $45.5 million in EmergeVest Logistics Fund be returned to Lau, including the profits accrued and proceeds.
EmergeVest Logistics Fund raised $205 million through a special purpose vehicle, according to its filing with the US Securities and Exchange Commission (SEC) in 2017.
The company’s website shows that EmergeVest created EV Cargo in 2018 by combining six UK-based logistics companies in its portfolio. The Hong Kong-based provider of global freight forwarding and supply chain service has over $1.5 billion in annual revenue with a global network spanning more than 150 countries.
“I was the anchor investor in Heath Zarin’s formation of EmergeVest in 2013. Without my help and financial backing, there would have been no EmergeVest today,” said Lau in a statement. “My investment played a critical role in the creation of EmergeVest and subsequently EV Cargo Holdings Limited, which operates in the industry that I have had a career in for the past 30 years.”
Lau announced in February that he would divest his stake in EV Cargo. “It does not make any commercial sense for me to continue with our investment in EV Cargo whose strategy is to compete with our business in China,” Lau added in the statement, referring to the Hong Kong- and China-headquartered Cargo Services Group which specialises in supply chain solutions and freight forwarders.
“I am prepared to pursue this legal path until my rights are vindicated… As the Chinese saying goes: ‘When you drink the water, remember the spring as the source of the water’,” said Lau.