But within a year of CVC’s investment, the relationship soured. In 2015, a Hong Kong court granted the Luxembourg-based private equity firm’s application to freeze Zhang’s private property.
CVC exited South Beauty in 2017, taking a massive hit by selling its stake for just $10 million, court documents showed. Since then a lengthy legal battle has ensued. In 2019, the China International Economic Trade Arbitration Commission awarded the private equity firm’s investment vehicle for South Beauty more than $142 million. The same year, a related effort in Hong Kong saw a judge sentence Zhang in her absence to jail for contempt of court after the businesswoman failed to comply with a court order to reveal her assets.
Zhang, who has a Beijing address and holds a St. Kitts and Nevis passport, according to court documents, has yet to surrender to Hong Kong authorities.
And now the battle has moved to New York.
The two artworks CVC is after are held in storage by Christie’s in New York. Lawyers for CVC want a New York judge to rule on who can take possession of the assets, arguing that Zhang has a history of hiding her wealth and may sell the paintings ahead of the tribunal appeal verdict.
Any seizure has been complicated by the art pieces’ ownership being in the name of a Seychelles-registered company owned by Zhang’s son, a structure CVC lawyers argued was “used to hide her ownership.” The PE firm is also after a Manhattan condominium apartment it says belong to Zhang.
The apartment and two artworks were bought soon after the South Beauty stake sale to CVC, and Zhang may have as many as 400 pieces of art held in storage, according to a media interview she gave, which was submitted as evidence. CVC said in its claim that it wants to take possession of all art held at Christie’s on Zhang’s behalf, just in case the Warhol and Kippenberger are not the only ones.
This article was provided by Bloomberg News.