US private equity fund Lone Star fires majority of Asian employees -sources

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HONG KONG/NEW YORK — Texas-based private equity firm Lone Star Funds has laid off most of its investment team in Asia outside Japan in a major pullout from the region, three people familiar with the situation told Reuters.

The company released about 25 investment professionals from its offices in mainland China, Hong Kong and India on July 8, two of the people said, who declined to be named due to the sensitivity of the matter.

The people accounted for almost 60% of the total workforce in the affected offices, one of the people said.

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The pullout was mainly due to the company not finding many investment opportunities in Asia outside of Japan, the people said.

It comes at a time when private equity dry powder in the region hit an all-time high of $384.9 billion in June, according to data provider Preqin, with global and local firms raising ever-larger funds, showing some of them are struggling. to operate the funds due to increasing competition and regulatory uncertainty.

Lone Star, which focuses primarily on distressed opportunities, has retained a small number of wealth management people in its Asian offices who manage the company’s current portfolio, they said.

A full pullout would take place after the company ends all its investments in the region, they said.

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A Lone Star spokesperson referred to the company’s July 8 announcement about global business consolidation and reorganization in Asia. Under the new structure, Donald Quintin and André Collin, who are responsible for the company’s opportunity and commercial real estate funds in Europe and America respectively, would assume responsibilities for Asia.

Lone Star said in that announcement that it had made other changes to streamline operations in Asia and realign workforces in the region, without specifying details.

The spokesperson declined to comment further.

First founded in 1995, Lone Star has only recently set up its Asian offices outside Japan with its regional headquarters in Hong Kong, one of the people said. It manages three types of funds: the Commercial Real Estate Fund, the Opportunity Fund, and the U.S. Home Mortgage Fund.

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It raised $4.6 billion in 2019 worldwide Lone Star Real Estate Fund VI and $8.1 billion in Lone Star Fund XI. Most recently, it closed a $759 million value-adding fund in August 2020, according to the company’s website.

In an internal July 9 email viewed by Reuters, Bill Young, president and chief legal officer of Lone Star, also announced that Tony Messina, the former president of Asia, will take on a new role as senior managing director, origination, on its commercial real estate platform.

Young did not mention the layoffs or the reason behind the reshuffle in the email. (Reporting by Kane Wu in Hong Kong and Chibuike Oguh in New York; editing by Sumeet Chatterjee and Muralikumar Anantharaman)

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