Ex-Headland partner joins China growth investor CRE Alliance

Shen departed Headland – now known as HPEF Capital Partners – in 2016 after more than a decade with the firm. Before that he had stints at Vertex Ventures China and Shanghai Industrial Holdings. He is now responsible for the deployment of a $500 million US dollar-denominated China growth capital fund.

Investments will be in the $30-150 million range and focus on fast-moving consumer goods, retail, consumer services, education, and leisure. The fund will also work with foreign brands that want to expand in China, leveraging the distribution networks of CRE and its parent. Assets under the China Resource Group umbrella include grocery chain CR Vanguard and beer brand Snow.

“One of the mandates of the fund is to explore new areas within the big scheme of consumption that CRE isn’t currently involved in but could become involved in. The fund could be seen as the innovative end of leading CRE into new consumption-related areas,” Shen said.

Mixed ownership reform – the process by which state-owned enterprises (SOEs) bring in private sector investors to enhance operations but the government remains in overall control – is another area of interest. Two sizeable deals involving COFCO Group and China Unicom have been completed in recent months, and Shen expects to see more activity among smaller SOEs as well.

“There are a lot of provincial-level SOEs that are looking to attract qualified investors to help them grow their businesses and make them more efficient,” he said. “Given the CR Group and CRE’s experience in retail and consumer we will clearly have an edge on some of those deals.”

CRE and Great Wall are the sole LPs in the fund. The plan is to bring third-party institutional investors into the next vehicle, which will most likely be launched towards the end of 2019. Shen wants to use the first fund to reassure prospective LPs that their financial interests can co-exist with CRE’s strategic considerations.

“We need to prove through our investment decision-making process and our returns that the relationship with CR Group and CRE is a competitive advantage. If we can do that then we can reach out to investors for Fund II.”

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• Topics
• Greater China
• Growth
• People
• Consumer
• China
• Headland Capital Partners
• CRE Alliance
• Growth capital