(Yicai) Nov. 20 -- Police in China have launched an investigation after Zhang Yinghao, chairman of private equity Lock Capital, allegedly made off with about CNY1.2 billion (USD166 million) belonging to more than 400 investors.

Police in the southern city of Dongguan confirmed that they have started an investigation into the matter and a former employee of Lock Capital told Yicai that Zhang had absconded with the funds.

“I’m leaving, you should go too,” Zhang said in the Shenzhen-based company’s staff chat group on Nov. 14 and after that he has been out of touch, according to the ex-staffer. 

The investors launched a petition that shows that the funds were worth around CNY1.2 billion, per a document circulating online. Yicai discovered a related WeChat group of over 400 people. The chances of these investors recovering their money remains uncertain.

The likelihood of full repayment is generally low, a partner at a law firm said, even if the public security bureau prosecuted Lock Capital and considered the case fundraising fraud.

Lock Capital’s employees began to pack up and leave on Nov. 15, payday, another person familiar with the matter told Yicai. At that point, even last month's salaries were overdue so some had already resorted to labor arbitration. 

The firm rented an office in Shenzhen’s new Qianhai business district last year, with no more than 10 staff members stationed there, and Zhang never went to the office, an on-site source told Yicai. Yicai visited the office twice on Nov. 16 and 17 and found it empty.

Lock Capital targets mainly high-net-worth individuals. It had assets under management in excess of CNY17 billion (USD2.4 billion) as of last year and has successfully invested in many companies listed on the Nasdaq and Shanghai’s tech-heavy Star Market, according to the firm.

“My family invested over CNY2 million (USD278,840) because its annual interest rate was relatively high at about 10 percent,” a person who went to Lock Capital’s office to defend his rights told Yicai. He first encountered the company three or four years ago, and previous returns were cashed out normally, the person added.

According to its brochure, Lock Capital has had over 40 investment projects, with an average return of more than 20 percent a year for past projects.

Founded in 2012, Lock Capital is run by Qianhai Lock Investment, according to corporate data platform Qichacha. Zhang has represented the firm in many public activities. 

Before April, Lock Investment was known as Lock Fund Management, according to a filing with the Asset Management Association of China. The firm had its qualifications canceled as a private securities investment fund manager in May 2022. The company is registered in Shenzhen but its main office is in Dongguan.

Editors: Shi Yi, Emmi Laine