Hong-Kong based private equity veterans launch logistics platform

Launched in 2013 by Hong-Kong-based private equity veterans Heath Zarin (pictured) and Roger Moh, EmergeVest, now has more than USD450 million of cumulative capital commitments, and a current portfolio that includes businesses that generate more than USD1.5 billion of revenue annually.

The new EV Cargo platform has been formed from the six UK logistics businesses acquired by EmergeVest in the last five years consolidating ownership into one of the UK’s largest providers of transport, logistics and freight-forwarding services and logistics technology, and a global supply chain company operating in more than 120 countries. EV Cargo has GBP850 million of revenue annually and is now the largest privately-owned logistics business in the UK.

EV Cargo’s logistics brands include Adjuno, Allport Cargo Services, CM Downton, Jigsaw, NFT and Palletforce. The new firm will feature a core asset-based UK logistics network totalling nine million square feet of warehousing space and 20,000 delivery vehicles; a team of 5,000 UK based logistics professionals including 2,200 truck drivers; 175 UK operating centres and 18 overseas operations; and international logistics operations managing 200,000 containers of sea freight annually and six million kilograms of air freight monthly.

Zarin, who is the former head of private equity in Asia for Credit Suisse and HSBC, says: “We formed EmergeVest in 2013 after having spent the bulk of our careers in an institutional background. Our other founder, Roger Moh, and I, have worked together since 2006 and we are entrepreneurial by nature.”

From the outset, the launch was to focus on specific investment opportunities where the pair felt they could add value, or have some particular advantage.

“This led us to focus on specific industry sectors and companies that we have had some history with previously,” Zarin says

Opportunities that would have a secondary dynamic were also part of the driving force from the outset as they had decided that instead of launching EmergeVest and raising a traditional client fund pool, they would have an active investment pipeline of opportunities that were attractive so they could raise capital specifically for investment opportunities they had already lined up.

“Having been a generalist private equity investor, until the formation of EmergeVest, my experience was across a wide range of different geographies and companies in different stages of development including the logistics sector and we find it continues to be attractive. It’s a highly fragmented industry and the leaders have small market share which lends itself to buy and build platform opportunities.”

Zarin says that his firm also likes the fact that specialist logistics service providers have a high degree of recurring revenue because of the critical nature of the services they are providing.

“Many of these logistic businesses enjoy network dynamics,” he says. “Managing a global network or a domestic distribution network is something we believe we understand and can add value to.”

EmergeVest has an internal proprietary operating system, EVOS, which includes specific frameworks that their portfolio businesses follow.

“We follow these to be a growth orientated value adding investor in logistics,” Zarin says. “These frameworks span business strategy, people development, execution, corporate governance and mergers & acquisitions.”

EmergeVest also has an integrated team of investment professionals and operating executives working together, with more operating executives than investment professionals.

“The creation of EV Cargo represents the culmination of five years of EmergeVest so far,” Zarin explains. “We invested in a series of what we thought would be attractive high-quality logistics businesses that would complement each other.”

EVOS is embedded inside each of the sub-companies on the platform. “Key executives across our portfolio companies all identified with each other through EVOS - our code of conduct and values are a common language and the basis for how we drive business growth.

“EV Cargo is a natural evolution of what we had put in motion already and all done with the support of our LP base which comes from institutions, funds of funds, and family offices internationally.”

The structure is one master holding company with subsidiaries underneath it.

EV Cargo has four operating divisions, including four main operating segments: Express, Global Forwarding, Logistics and Technology, the software business that services the six subsidiaries and the top executive board.

“For right now EV Cargo is our top priority and marks the next stage of development in the business driving the growth and advancing it in the future for new platforms and opportunities,” Zarin says, emphasising that logistics, technical services and international supply chains will continue to be the firm’s main areas of interest.

Reference: https://www.institutionalassetmanager.co.uk/2018/12/24/271698/hong-kong-based-private-equity-veterans-launch-logistics-platform