Co investment fund

A Partnership Proposal:
Recruiting Chinese Investors/LPs &
Establishing a Co-Investment Fund

Co-Win Venture Resources
• Established in China, Co-Win is a co-investment service firm
with stellar track records. Co-Win specializes in identifying
venture capital and private equity opportunities for top-tier
GPs.
• Co-Win co-invests with GPs and assists their portfolio
companies in:
– Next-round financing
– Merge & acquisitions
– Cross-border business development and collaboration
• Co-Win also provides co-investment solutions to high net
worth Chinese investors.
• Recently, Co-Win switched its focus to the U.S.

Agenda
• Opportunities and Challenges with Chinese
Investors
• Why a Partnership can Help Achieve Your Goal
• A China-round Co-investment Fund Proposal
• Profile of an Ideal Partner
• Action Plan
• Appendices
– An Introduction to Co-Win Venture Resources
– Recent Reformation to China’s Capital Market

Opportunities and Challenges
with Chinese Investors

The Big Picture
• U.S.
– The economy has recovered from a long recession, leading to increased
level of investment activities (CNBC, 2014).
• China
– Despite loads of problems, the economy in China is still growing fast at
an annual rate of 7%, exceeding most Western countries (Fortune,
2015)
– Restructuring is expected.
• Manufacturing is slowing down.
• But service industries are growing fast.
– Leading Chinese companies are investing heavily at the global scale.
– Wealthy Chinese investors seek to allocate a large portion of asset
overseas.

Opportunities to U.S. Financial Institutions
• Client recruitment
– U.S. financial institutions can recruit Chinese high net worth
individuals (HNWIs) as clients.
• Significant amount of capital
• Great investment opportunities
– Particularly, U.S. private equity funds can enjoy great return if they
invest in a company that
• operates in a fast-growing service industry;
• possesses advanced technologies, leading brands, unique
products/services;
• can succeed in China’s huge market.

U.S.-China Collaboration Success Stories
• China Auto Rental (www.zuche.com, HK: 0699)
– Hertz spent years searching for a success formula in China.
– In 2012 Hertz chose to invest $200 million in China Auto Rental (CAR) for a
20% stake. CAR went public at Hong Kong in 2014, bringing at least three
times return to Hertz.
– Co-investors such as Warburg Pincus also enjoyed investment success.
• eHi (www.1hai.cn, NYSE: EHIC)
– Enterprise was late to China’s car rental market, so it chose to invest in eHi for
a 15% stake. eHi went public at New York in 2014.
– Co-investors such as Ctrip ($100 million) enjoyed investment success.

China Investors’ Requirement
• We were asked by a large Chinese asset management firm to seek
investment opportunities in the U.S. and Europe.
– Preference is given to convertible bonds of listed companies.
– Deal size at about $100 million.
• In 2014, this investor has invested $530 million in U.S. stock markets,
$730 million in Europe stock markets, and $3 billion in Asia stock
markets.
• The sectors of interest include:
– healthcare service, pharmaceutical, food;
– healthy and happy lifestyle products/services: movie, media, culture, leisure, sports, tourism, vacation,
and education;
– fashionable consumer products for the middle class;
– environment and energy saving, public utility;
– high-technology;
– financial service.
• Particularly interested in those companies who plan to expand
their businesses in China.
– This Chinese firm can strongly support their expansion in China in terms of commercial resources,
public relations, and quality talents.

How many HNWIs are there in China?
• According to Hurun Report (2013) and Wealth-x and UBS
billionaire census (2014), the number of Chinese HNWIs
(asset value in USD) is as follows:
– Over 1 billion: 150
– Between 750 million and 1 billion: 75
– Between 500 and 750 million: 250
– Total above: 11475
– Over 16 million (CNY 100 million): 64500

Characteristics of Chinese HNWIs
• The population size of “China Ultra High Net Worth” is
estimated to be 17,000, with an average net worth of 1.82
billion (CNY), or USD 293 million.
• The population size and net worth are still increasing over time.
• The majority of these individuals are entrepreneurs in
manufacturing, real estate, and technology, media &
telecommunications industries.
– Average age is 51.
– Most of them reside in large cities along the east coast line of China.
– Confident in China’s economy development.
Source: China Ultra High Net Worth Report 2014-2015 (China Minsheng Bank & Hurun Report, 2015)

Chinese HNWIs Investment Requirements
• More than 70% of Chinese HNWIs have financing needs. The main purpose includes
supporting enterprise growth, M&A, and liquidity. 77% of them use bank systems for
financing.
• 60% of Chinese HNWIs invest in the name of their enterprises, with the main goal of
maintaining or increasing asset value. 85% of them use their own investment team.
• 75% of Chinese HNWIs use M&A for vertical integration, expansion, and diversification.
• 80% of Chinese HNWIs are interested in overseas investment for the purpose of enterprise
internationalization and risk mitigation through diversification.
• Some Chinese HNWIs invest in art work. Majority of them choose jewelry, and ancient
paint/drawing.
• Chinese HNWIs are interested in holding large-amount insurance policies for the purpose of
wealth succession planning, risk mitigation.
• 60% of Chinese HNWIs would like private healthcare service
• 70% of Chinese HNWIs face wealth succession problems.
• 75% of Chinese HNWIs want to manage their own charity fund, which on average is about
1.6% of their total assets.
• 70% of Chinese HNWIs want private banker service.
Source: China Ultra High Net Worth Report 2014-2015 (China Minsheng Bank & Hurun Report, 2015)

Chinese HNWIs and Private Equity Investment
• Chinese HNWIs have a strong desire to allocate assets
overseas.
– But face the challenge of an unfamiliar environment: legal system,
financial markets, investment products…
– Some were forced to invest in what they are familiar with, which not
necessarily led to high return on investment.
• For example, residential real estate investment in poor areas.
• Private equity investment has attracted much attention.
– Most Chinese HNWIs are entrepreneurs. They want to acquire U.S.
companies with advanced technologies and leading brands to support
the growth of their enterprises.
– Many of them accumulated their wealth through private equity
financing. They are familiar with private equity as one of the best
types of investment vehicle.

Challenges: Recruiting Chinese HNWIs
U.S. Financial Institutions Chinese Financial Institutions
Challenges a U.S. financial institution
faces in recruiting Chinese HNWIs as
clients:
• Strong connections are vital to
effectively find the targets.
• Trust is a pre-requisite.
• Understanding a Chinese HNWI
client’s requirement takes
tremendous amount of time and
effort.
• Does the U.S. financial institution
have the right product that will be of
interest to Chinese HNWIs?
Can a Chinese financial institution
satisfy Chinese HNWIs’ asset
management requirement overseas?
• Advantage of knowing more Chinese
HNWIs.
• But investment products are mostly
domestic.
• Not many have overseas presence.
Generally, they lack the expertise to
manage asset overseas for Chinese
HNWIs.

Challenges: Investment Opportunities – 1
U.S. Funds Chinese Funds
If an U.S. fund invests in an American
company and the company would like to
succeed in China:
• Strong support to the investee is vital.
Such support includes but is not limited
to: suppliers, distribution channels,
government relations, media, and bank
loans.
• It requires in-depth expertise to leverage
the exit channels in China. Such channels
include the stock markets in China, and
acquisition by a Chinese buyout fund or a
large corporation.
If a Chinese fund invests in a Chinese
company:
• Usually the fund can support the
investee’s growth in China rather
easily.
• It is challenging to help the investee
acquire advanced technologies
overseas, or expand business
overseas.
• Leveraging exit channels in the U.S.
is difficult because it requires strong
connections to U.S. financial
institutions and large corporations.

Challenges: Investment Opportunities – 2
U.S. Funds Chinese Funds
If a U.S. fund invests in a Chinese company
directly:
• It requires tremendous knowledge of
China to correctly identify the right
investment target. Assessing a company
that operates in a different culture and
business practices is an extremely difficult
task.
• Supporting the investee growth in China
requires strong connections in China.
• Competition from Chinese domestic funds
is intense.
• Winning the trust of investee Chinese
companies is also a daunting task.
Some Chinese funds want to invest in an
American company:
• Due to limited international expertise
and connections in the U.S., most
Chinese funds do not have the ability
to invest in American companies
beyond the angel investment stage.

Why a Partnership can Help
Achieve Your Goal

Successful Recruitment of Chinese HNWIs
• Although numerous HNWIs in China, recruiting them as clients
by a U.S. financial institution alone can be difficult.
• We have strong personal connections to many Chinese HNWIs
who want to allocate their assets to the U.S.
– Most of them are our past or current clients. We have their trust.
– Unfortunately we do not have an asset management or investment
platform in the U.S. to directly satisfy their requirement.
– But we can refer 50~100 Chinese HNWIs to our partner as future clients,
with an average investment of $5 million (USD).
• A mutual beneficial proposition
– We can satisfy client requirement through our partner.
– Our partner can save huge marketing cost in business development.

Identify Investment Targets
• Our U.S. partner
– knows the best American companies as potential investment targets.
• We have expertise in selected industries that are growing
rapidly in China, for example:
– Medicine/Healthcare services
– Happy lifestyles
– Brand name consumer products
– Business/financial services
– Together we can find the best American companies that can succeed in
China.
– Such investment opportunities can lead to a high return rate (25%+)

Help Investee Grow in both U.S. and China
• Our U.S. partner can utilize its connections to help an investee
American company grow in the U.S.
• We can support the investee grow in China.
– We have connections to hundreds of private equity funds and large
corporations in China, who can provide necessary resources and
support to the investee.
– We are expert in international collaboration and M&A. We have
successfully facilitated multiple projects in the past.
– Together we can support the investee to grow in both U.S. and China.
– Business success at both ends ensures investment success.

More Exit Channels
• In most cases, the exit channels for a U.S. fund are largely
restricted to the U.S. stock markets, buyout funds, or
acquisition by large U.S. companies.
• Our connections can bring additional exit channels.
– China’s stock markets
– Chinese private equity/buyout funds
– Acquisition by large Chinese corporations
– Working together, we can have exit channels in both the
U.S. and China, ensuring a successful exit of the
investment with a much higher return.

Major Reformation to China’s Stock Markets
• List mechanism switched to registration-based.
– No longer requires a lengthy approval process.
– Speedy IPO becomes a reality!
• New markets with much lower IPO threshold
– Growth Enterprise Market (GEM), hosted at the Shenzhen
Stock Exchange
– Over-The-Counter-Bulletin-Board (OTCBB, more
commonly referred to as the “new third board”), hosted at
the National Equities Exchange and Quotations, NEEQ,
Beijing.

More about the “New Third Board”
• Caters to small to medium sized businesses.
– Greatly welcomed by Chinese enterprises.
– Embraced by investors with huge enthusiasm.
– Potentially may become the largest market in the world in a few years.
• Provides new and promising opportunities for American
businesses in China.
– One of our current deals, Top1 Auto, is a good example. An
international car rental company brings its capital, brand, and advanced
technologies for a 20% stake in Top 1 Auto. Top 1 Auto will then go
IPO at the “New Third Board” for both parties to enjoy great financial
returns.

A China-round Co-Investment
Fund Proposal

Establish a Co-Investment Fund – 1
• Chinese LPs
– We are confident to raise the capital with a target of $200 million
(USD).
• Operate as a regular fund under our partner’s administration.
– Saves operating cost and promotes our partner’s brand in China.
• Invest in the best American companies who are interested in
succeeding in China
– Our connections will support the investees to explore the market in
China.

• Invest in four broad areas/service industries, which
are booming in China:
– medicine/healthcare services
– happy lifestyles
– brand name consumer products
– business/financial services

• Adopt a low-risk co-investment strategy, following U.S. top-
tier funds and large Chinese corporate investors.
– Our connections, and international collaboration and M&A expertise
contribute to co-investment qualifications.
• More exit channels
– Regular U.S. exit channels
– IPOs in China
– Chinese buyout funds
– Acquisition by large Chinese corporations

U.S. Service
Businesses
(Investee)
Leverage our
connections in ChinaCo-Investment
Fund
U.S. Leading Funds
or Chinese Large
Corporate Investors
Succeed in
China
U.S. Stock Markets Stock Markets in China
Acquisitions or buyouts

Netflix Announced its China Plan
See how the market reacts
to the news!

Ideal Partners…
• With good track records and leadership
• Strongly motivated to explore opportunities
presented by or related to China.
• Open to innovative investment ideas.
• Specialized in selected service industries.
• Connected to American businesses, private
equity funds, late-stage venture capital funds
and hedge fund.

Action Plan
• Meetings to discuss the details of the
partnership proposal.
• Partnership opportunities are not limited to the
proposed co-investment fund.
• We could start from client recruitment, and
work on raising a new fund, facilitating your
portfolios’ exit and their business development
and next-round financing or M&A in China.

In summary:
• The Co-Win team can bring high quality relational
capital and real money to the proposed partnership.
• The Co-Win team is full of energy and entrepreneurship.
• Working together, we can create innovative and feasible
investment products to achieve a high return, with a
small risk.

Co-Win’s Value to a U.S. Partner
Return
Risk
Proposed
co-investment
fund
Conservative
PE funds, or
Fund of funds
Aggressive PE
funds
Comparable return & riskCo-Win’s value: Help our partner
achieve a high return rate, while
minimizing risk.

Appendix – 1
An Introduction to Co-Win Venture Resources

Co-Win Track Records – 1
Industry Company Invested Investors Current Status
Supply Chain,
Logistics
Eternal Asia (www.eascs.com, SZ002183),
a supply chain service company based in
Shenzhen.
SAIF, May 2006 The company went IPO at
Shenzhen in 2007, bringing 10
times of return to investors.
Garment,
Footwear
Longhao (www.longhao.com.cn), a garment and
footware manufacturer and distributor based in
Shenzhen.
Hony Capital,
January 2008
The company was partly
acquired.
Medical Devices Edan Instrument (www.edan.com.cn, SZ300206),
an electronic medical device manufacturer and
distrubtion based in Shenzhen.
Matrix, Softbank,
and WI Harper,
December 2007.
The company went IPO at
Shenzhen in 2011.
Auto Parts Liancheng (www.lmc-ind.com), a precision
machinery iron casting manufacturer located in
Shandong.
Hony Capital,
February 2008
Pre-IPO
Energy
Equipment
Gross Tubes (www.gross-tubes.com), a large
diameter seamless steel tube manufacturer located
in Zhejiang.
CDH, September
2008
Pre-IPO
Gym Chain Store Shenzhen Catic Wellness
(www.physicalclub.com), a gym chain
headqaurtered in Shenzhen.
Dacheng Fund,
2008
Pre-IPO
Pharmaceutical Shenzhen Hepalink Pharmaceutical
(www.hepalink.com, SZ002399), a
pharmaceutical company.
Goldman Sachs,
November 2007.
IPO in 2010, bringing 180
times of return to investors
within 3 years.
Environment
protection
Ocean Power Industrial (www.oceanpower.com), a
multi-business group company headquartered in
Shenzhen.
Pre-IPO

Co-Win Track Records – 2
Industry Company Invested Investors Current Status
Toy design and
animation
Audi Toy and Aumei Culture, Guangzhou. IPO in 2010
Ultrasound
diagnostic
systems
SonoScape (www.sonoscape.com), a high
standard diagnostic ultrasound systems and
transducers manufacturer located in Shenzhen.
China International
Capital Corporation
(CICC), 2011
Pre-IPO
Mobile phone
wholesale
Aisidi (www.aisidi.com, SZ002416), a mobile
phone and digital products distributor
headquartered in Shenzhen.
The company went IPO at
Shenzhen in 2010.
Decorative stone
manufacturing
Universal Marble & Granite Group
(www.umgg.biz), a decrotive stone material
manufacturer located in Dongguan.
China International
Trust and Investment
Security fund
Pre-IPO
Serviced offices Capital Inernational Business Centre
(www.wybgs.com), a commercial office leasing
and servicing company headquartered in
Shenzhen.
Sequoia Capital, Trust
Bridge
Pre IPO
Commercial real
estate
Wanda Group (www.wanda.cn), the largest
commercial real estate group company of
China, headquartered in Dalian.
Several private equity
funds
Dalian Wanda Commercial
Properties went IPO at Hong
Kong in 2014.
Car rental TopOne Auto (www.top1.cn), a car rental
company headquartered in Shenzhen.
Current deal In deal talk with global car
rental companies
Human resources Shanghai KNX (www.knx.com.cn), a human
resources services provider headquartered in
Shanghai.
Current deal In deal talk with global human
resources service companies

Co-Win Positioning
Co-Win strives to
establish a platform to
serve U.S.-Sino investors,
enterprises, and wealthy
families
• Our core competence is
international collaboration,
investment, and M&A.
• Our goal is to help Chinese
clients manage assets in the
U.S., and help American
clients manage assets in
China.
Small to Medium Sized
Enterprises
• PE financing to support growth
• Collaborate with international companies
to enhance competitiveness
• Acquire by international companies
Large Corporations
• Internationalization through investment
and M&A
• Global supply chain optimization
• Acquire advanced technologies & brands
• Diversification for risk mitigation and
better return
Entrepreneurs and wealthy
families
• International M&A to improve
competitiveness
• Asset management, succession planning,
next generation education and
development
Private Equity Funds
• Invest in best enterprises, exit for profit
• International capital raising
China U.S. & Europe
Small to Medium Sized
Enterprises
• PE financing to support growth
• Acquired by Chinese large corporations
• Working with Chinese companies,
business development in China
Global Companies
• Identify Chinese companies as partners,
business development in China
• Acquire Chinese companies to support its
China strategy
• Invest in Chinese companies and support
their IPOs for huge strategic and financial
returns
Family Offices
• Provide one-stop professional service to
investors and wealthy families
• Develop Chinese wealthy families as
clients
• Internationally invest in projects with great
potentials, particularly, co-invest with
leading funds.
Private Equity Funds
• Invest in best Chinese companies for great
return
• Raising capital from wealthy Chinese
investors and families

Co-Win Service Offerings – 1
• In China:
– Small to medium sized enterprises
• Support their PE financing;
• Recruit international partners to support accelerated growth, leading to a
future IPO or acquisition.
– Large corporations
• Facilitate collaboration with American businesses, and acquisition of
American businesses
• Help them manage overseas investment
– Private equity funds
• Support their investment effort in China
• Identify American businesses as partners or acquirers for the investees
• Help with raising capital in the U.S.
– Investors and wealthy families
• Help them manage assets in the U.S.

Co-Win Service Offerings – 2
• In the U.S.:
– Small to medium sized enterprises
• Connect them with Chinese PE funds
• Identify Chinese partners for collaboration
• Identify Chinese companies as acquirers
– Large corporations
• Help them find Chinese companies as partners
• Facilitate acquisition of Chinese companies
– Private equity funds
• Raise capital from Chinese investors
• Co-invest projects in China
– Family offices
• Business development in China, recruit clients
• Help Chinese investors and wealthy families manage assets in the U.S.

Co-Win in the Ecosystem
Collaborate with large corporations / Grow into a large corporation
/ Successful IPO / Acquired
Collaborate with SMEs, or acquire them
Co-invest in excellent companies
Invest in alternative assets
InvestinSMEs
Obtainreturn
Investtoobtainreturns
Entrepreneursorexecutivesbecomewealthy
Private
Equity Funds
SMEs
Large
Corporations
Investors and
Wealthy
Families
Co-Win serves different types of customers. Investment success will make many
“old” customers “new” investors, hence forming a dynamic ecosystem.

Co-Win Advantages – 1
Co-Win is an integral part of the private equity and
venture capital ecosystem, widely connected to the
community both in China and globally.
• Connections in China
– Growing companies
– Corporate investors/acquirers
– Emerging LPs
– Existing GPs and emerging fund managers
• Connections outside of China
– Global LPs
– U.S. corporate M&A departments, and corporate venture
capital funds
– U.S. technology ventures and SMEs
– U.S. GPs

Co-Win Advantages – 2
International collaboration and M&A expertise
• Please refer to the track records earlier.
These connections and industrial expertise enable
Co-Win to make a variety of deals:
• Direct and secondary deals in China
• Co-investment deals both in China and U.S.
• Fund deals both in China and U.S.
• Portfolio exit through M&A

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