Harvest Capital Partners, the Hong Kong-based private equity real estate firm, is plotting a major expansion that would see it launch and build private equity and infrastructure platforms to compliment its current real estate business, PERE can reveal.
It is understood that the strategy to expand, led by Jiang Wei, chairman of China Resources Capital, part of the state-owned conglomerate which is a majority shareholder in Harvest Capital, is one factor behind the resignation of the firm’s founder and chief executive officer Rong Ren. His resignation was announced by Harvest Capital yesterday.
While it is early days in terms of executing its strategy for private equity and infrastructure investments, it is expected that, in due course, Harvest Capital would introduce funds for both asset classes into the marketplace.
Ren founded the company in 2005 and has built it into one of Hong Kong’s most recognisable brands in the private equity real estate space. Under his tenure, it grew into a platform with more almost $2 billion of equity under management, $3.5 billion of assets and a team of about 40 staff.
Up to his resignation, Ren owned a 10 percent stake in the firm and China Resources Group owned the remaining 90 percent. It is believed that, following his resignation, the state conglomerate acquired Ren’s stake.
Ren is now on gardening leave which will last for at least three months after which time he is expected to seek backing from other groups to lead another private equity real estate fund management platform focused on China.
During the gardening leave period, he is subject to a non-compete agreement with Harvest Capital however PERE understands that there are at least three groups, including one domestic and one international firm that are in discussions to sponsor him and a team. Should one of these discussions crystallise into something concrete then it is thought that further Harvest Capital employees could leave to join him.
In the meantime, Harvest Capital must now seek a replacement chief executive officer as Ren’s departure has resulted in a key-man event being triggered for the firm’s current China opportunity funds. While it is thought that the key-man term differs between Harvest Capital’s funds, the firm has up to 12 months in certain instances in which to appoint a replacement deemed acceptable to its investors. In the event that does not happen, then, generally speaking, investors can vote to dissolve the fund.
Harvest Capital and China Resources were not available for comment and Ren could not be reached either at press time, however in yesterday's statement the firm said over the course of the “next few weeks” Ren and its board would put together a “transition plan to ensure a smooth handover of his responsibilities and to minimise impact to the funds under the company’s management.”
Ren said in the statement: “Harvest Capital is entering an exciting new phase of growth and I wish the board and my colleagues all the very best.”
Gerald Yung, head of transaction management and acting chief operating officer of Harvest Capital added: “We have the full confidence that under the leadership and guidance of Mr Jiang the impact to the operations of the company and the funds we manage will be minimal. It is very much business as usual for us.”
In expanding its horizons to include other asset classes, Harvest Capital joins a growing list of fund managers in Asia including firms like Baring Private Equity Asia which last year bolted a real estate division onto its existing private equity business.