EmergeVest faces legal action from LP

John Lau, founder of Cargo Services Group and JL Enterprises, said he had filed a writ of summons with the High Court of Hong Kong against Heath Zarin, EmergeVest’s founder, chairman and CEO, and EV Cornerstone. This marks the start of legal dispute and litigation proceedings between the parties, according to a statement.

Lau is demanding the return of his USD 45.5m investment in EmergeVest Logistics Fund, including all profits and proceeds. Three funds were involved in the creation of EV Cargo: Fund A (USD 70m, 2014 vintage); Fund B (USD 30m, 2015); and EmergeVest Logistics Fund (USD 205m, 2017). The logistics fund acquired a strip from Fund A and the entirety of Fund B.

EV Cornerstone is an evergreen separately managed account established in 2014 with a corpus of 2014. It has participated as an LP in several other EmergeVest funds.

Lau declined to give more details regarding his claim, including the grounds for demanding redemption from a fund that has yet to reach the end of its life. A spokesperson for Lau said he was unable to elaborate because the information pertains to the merits of the litigation. Zarin did not respond to a request for comment.

Lau established Cargo Services, a supply chain solutions provider, and JL Enterprises, a family office that invests in freight forwarding and logistics businesses. In February, the two entities announced plans to fully divest their positions in EV Cargo. This was driven by EV Cargo’s strategy to enter Greater China, which Lau said would put it in direct competition with his other interests.

“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,” Lau said in his statement. “My investment played a critical role in the creation of EmergeVest and subsequently EV Cargo, which operates in the industry that I have had a career in for the past 30 years.”

Zarin formed EmergeVest with Roger Moh following their departure from HSBC in 2012 where they led the Asia Pacific principal investments business. They raised a USD 50m fund that financed management buyouts by two Chinese companies – effectively taking out positions held by HSBC – and contributed growth capital. One of those companies was Cargo Services.

EmergeVest invested in Cargo Services a further three times as the technology-enabled logistics thesis gained traction. It ended up spinning out Allport Cargo Services, a UK freight forwarder Cargo Services acquired in 2010. EmergeVest also acquired Adjunco, Palletforce, CM Downton, and NFT Distribution, as well as making more than a dozen bolt-on acquisitions.

EmergeVest is unusual in that it is Asia-based but, through EV Cargo, it has a highly concentrated portfolio of non-Asia assets in one sector. Much of EV Cargo’s M&A activity focused on markets outside of Asia with a view to creating a global platform that reached into the region.

As of mid-2022, EV Cargo employed 2,800 people across 68 offices and served more than 3,000 customers globally. It moved 350,000 containers of sea freight, 75m kilograms of air freight, and 15m road pallets of goods per year, amounting to USD 32bn in gross merchandise value. There are plans for an IPO, though the timescale is unclear, with New York the preferred destination ahead of Hong Kong.

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• Topics
• Greater China
• GPs
• LPs
• Support services
• Europe
• Hong Kong (China)
• Europe
• Logistics
• EmergeVest