Headland Capital loses half investment team after fund scrapped

[HONG KONG] Headland Capital Partners Ltd, the Asian buyout firm spun out of HSBC Holdings Plc, lost nearly half its investment professionals after scrapping a fundraising.

The Hong Kong-based firm, which manages US$1.5 billion of assets, decided to focus on managing and improving its existing portfolio companies in the next 18 months, according to Chief Executive Officer Marcus Thompson. The shift in strategy resulted in the size of its investment team falling to 11, Thompson said in a Jan 14 phone interview.

Headland suspended efforts in September to raise a new US$1 billion fund, which it started marketing in October 2014 and would have been its seventh, according to Mr Thompson. Departures include Paul Kang, a senior partner and head of Southeast Asia, as well as partner Brian Chang and principal Chris Lee.

"We do have some exposure in the oil and gas services sector, and were also hit by the deteriorating market sentiment," Mr Thompson said, citing the decline in Chinese stock prices. "We are not actively selling any of our portfolio companies, right now."

The firm merged its investment groups in greater China, Southeast Asia and South Korea into one portfolio management team late last year, Mr Thompson said. Overall headcount has shrunk to 26, from more than 40 in 2015.

Headland now has two active funds with stakes in 11 companies, according to Mr Thompson. Its latest fund, raised in 2008, was US$1.3 billion.

The firm has managed six Asian funds since it began in 1989 as HSBC Private Equity (Asia) Ltd.

The London-based bank spun off the unit in 2010 as part of a management buyout and it took the Headland name. Senior executives acquired HSBC's minority interest in May.

Headland enjoys the operational aspect of its business, and "will continue to work with the remaining portfolio companies to drive value," Mr Thompson said.

BLOOMBERG