In 2006, Beijing was immersed in the excitement of having won the bid to host the Olympic Games and the fervent preparations for the 2008 Olympics. Among the city's business and fashion elite, hosting guests often meant dining at South Beauty. A typical meal would end with a fusion dessert—red wine–poached pear—after savoring the classic dish "Rock-Simmered Fatty Beef." Evenings often continued at Lan Club, where guests sipped red wine under Philippe Starck’s artistically arranged ceiling paintings and enjoyed jazz performances. At the time, this club, under Zhang Lan’s ownership, was a trendy nightlife destination for affluent and tasteful returnees, business elites, and socialites. Around 2008, Zhang Lan and her son Wang Xiaofei reached the peak of their business reputations in Beijing.
Like many successful private entrepreneurs of that era, their next ambition was to take the company public.
But with peaks come valleys. In the case of going public, South Beauty lacked the right timing, favorable conditions, and solid groundwork.
A significant portion of procurement and revenue involved cash transactions, while irregularities in employee tax and social security contributions, along with broader management issues, led regulators to stop approving new catering company IPOs after the listing of Xiang-E-Qing. This directly caused South Beauty’s failed attempt to go public in mainland China.
The company then turned to Hong Kong. In December 2012, South Beauty passed the listing hearing for a Hong Kong IPO. However, just as the Eight-Point Austerity Policy was introduced, it severely impacted South Beauty’s mid-to-high-end positioning, dampened market valuation, and ultimately derailed its Hong Kong listing plans.
The successive IPO failures triggered both the "share repurchase clause" and the "drag-along rights clause" in the financing agreement with CDH Investments. Zhang Lan was compelled to sell a majority stake to CVC, a private equity buyer, in coordination with CDH.
Facing the collapse of strategic plans and the loss of her life’s work, Zhang Lan sought to preserve her realized wealth. In 2014, she established her offshore family trust, SEFT, under which a BVI company named SETL was created. SETL opened accounts with Deutsche Bank and UBS. Between March and November 2014, Zhang Lan transferred approximately USD 140 million in personal funds and securities into the accounts held by the BVI company under the trust. In the trust structure, Zhang Lan served as both the settlor and the director of the underlying BVI company.
On May 26, 2015, CVC filed for arbitration with CIETAC (China International Economic and Trade Arbitration Commission), seeking to rescind the acquisition agreement and recover damages. CVC alleged that Zhang Lan had fraudulently manipulated the company’s financial data during the acquisition, leading CVC to overvalue the company and pay an inflated price. Following CIETAC’s favorable ruling, CVC sought enforcement in Hong Kong, Singapore, and the U.S., applying for asset freezes, tracing fund flows, and appointing receivers.
On April 28, 2019, CIETAC ruled that the acquisition agreement could not be rescinded and ordered Zhang Lan to pay USD 140 million in damages to CVC. In May 2020, a Hong Kong court recognized and enforced the CIETAC ruling. In November 2022, the Singapore High Court ruled that Zhang Lan was the true beneficial owner of the funds in SETL’s accounts and appointed receivers over the SETL accounts to satisfy the prior judgment owed to CVC.