1) The document discusses opportunities for private equity investment in China's rapidly growing tourism and leisure industry between 2014-2020. 2) Three core factors are driving growth: the economy prioritizing tourism, a large consumer class with travel as a favored activity, and increasing digital penetration. 3) Multiple investment themes are proposed around Chinese outbound travel, thematic/business travel, and domestic entertainment/cultural activities that can generate attractive returns for private equity investors.

1. China PE Opportunities till 2020
Investing in the Rapidly Emerging Leisure & Tourism
Industry as the Chinese Economy Transitions into the
Next Phase of Consumption Growth
Investment Hypothesis
White Paper
(Brief Version)
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SEPT 2014
PRIVATE & CONFIDENTIAL

2. 2
STORYLINE
China’s Tourism & Leisure Industry Enters Stage of
Rapid Growth Supported by Three Core Factors
ONE: ECONOMIC
Government Identifies Cultural,
Travel & Tourism Industry as Key
Pillars Driving Future Economy
TWO: CONSUMER
Large Base of Wealthy Consumers
(HNWI+ Middle-class); Travel as
Favored Lifestyle
THREE: TECHNOLOGY
Globalization & Digitization
Creating Interest & Driving
Penetration of Travel Services
Key Market & Industry Trends Creating
Potential Investment Themes
A: Chinese Outbound Travel
Creates Multiple Global
Opportunities
B: Emerging Attractive Travel
Segments- Thematic &
Business Travel
Attractive &
Broad
Investment
Opportunities
for PE
C: Growth in Travel-related -
Cultural, Entertainment &
Outdoor Sports Industries
Market Situation
Value for China PE
Investment Strategy

3. 3
Market: China’s Travel & Tourism Market Continues Growth
Momentum through 2014 on Base of 3 Core Factors..
2004-2010
Forming
Foundation
Stages of China’s Travel & Tourism Market
2011-2014
Breaking Out
Forward to 2020
Rapid Growth &
Globalization
Core Foundation Factors
Technology Consumer Economy
2013 2014(E) Growth CAGR
(2014-2020)
Tourism Revenues RMB2,947bn
(US$477bn)
RMB3,190bn
(US$517bn)
7.4%
% GDP 2.6% 2.6%
Outbound Trips 98M 115M 14%
Outbound Spend US$120bn US$141bn 18%
Inbound Tourists 133M 140M 5%
Foreign-exchange
Income
US$52bn US$53bn 5%
Domestic Tourists 3.3bn 3.6bn 10%
Domestic Travel
Spend
US$430bn US$528bn 15%
Growth of
Consumer
Economy
Large Wealthy
Consumer Class
Penetration &
Leverage of
Digital
Technology

4. Market: Factor 1-China’s Consumer-focused Economy Needs a
Strong Tourism Industry to Sustain Next Phase of Growth
2004-2010
Forming
Foundation
Stages of China’s Travel & Tourism Market
2011-2014
Breaking Out
Forward to 2020
Rapid Growth &
Globalization
Economy
Infrastructure
* Infra- Investment
in tourism facilities
* Open to foreign
investors
* Build Tourism
Support Services
Travel Service
Intermediaries
* Reform to allow
Foreign market
entry
* Raise Quality &
Standards in
Tourism Service
Consumers
* Increase demand
through worker
vacation law
changes
* Encourage
Outbound Travel
• Feb 2013: New Tourism Policy “Outline for National Tourism & Leisure (2013-2020)”
• July 2014: Financial and other supporting measures to develop Tourism industry
Tourism Targeted
to Contribute up to
5% of GDP by
2020
Policies, Reform &
Funding to Address
& Drive Positive
Changes to Key
Components of
Tourism & Travel
Industry Structure
4

5. Market: Factor 2- Travel becomes China’s Large Middle-class &
HNWI Consumers’ Preferred Lifestyle Activity
2004-2010
Forming
Foundation
Stages of China’s Travel & Tourism Market
2011-2014
Breaking Out
Forward to 2020
Rapid Growth &
Globalization
Consumer
>300M Middle-class
& above
Consumers by
2020
Travel becomes the
Most-Desired
Lifestyle Activity for
Wealthy Chinese –
Driving Potential
Spend of US$700bn
by 2020
5
Large Base of High Spend
Consumers
* Affluent & Upper Middle
consumers major driving force
of consumption
Travel No.1 Leisure
Pursuit
* Travel reigns supreme as
desired pursuit for wealthy
Chinese- rise in Luxury travel

6. Market: Factor 3- Penetration of Internet, Digital Media & Rise in
3G Mobile Usage Increase Access to Online Travel
2004-2010
Forming
Foundation
Stages of China’s Travel & Tourism Market
2011-2014
Breaking Out
Forward to 2020
Rapid Growth &
Globalization
Technology
Over 630M Chinese
Internet Users &
700M Active Smart
Devices (2014)
2014 Penetration of
Online Travel at ~8%
(RMB270bn) but
Growing at CAGR
30% annually
6
Online Travel Still
Significant Room to Grow
*Increased growth rates till
2020 with online travel
revenues reaching US$140bn
Mobile Driving Online
Travel
* Mobile travel has grown 20X
faster than online travel from
2012-2015

7. Market: China Entering “Rapid Growth & Globalization” to become
the Largest Global Tourism Market by 2020..
7
2004-2010
Forming
Foundation
Stages of China’s Travel & Tourism Market
2011-2014
Breaking Out
Forward to 2020
Rapid Growth &
Globalization
World’s Leading Tourism Destination -Largest
Share of International Arrivals @130M+
Chinese Leisure Travelers will be Primary Driver
of Domestic Tourism Market (US$800bn)
Chinese Business Travel Market Overtakes US
to be No.1 Globally
Chinese Outbound Travelers Reach 200M
(No.1) Spending US$300bn

8. Market: Rise of China’s Travel & Tourism Eco-system Positively
Impacts Other Related Industries Globally
8
China’s Travel & Tourism Ecosystem
Hotels &
Resorts
China’s
Tourism
Industry
Transport
Entertainme
nt & Leisure
LLuuxxuurryy HHootteellss
BBuuddggeett HHootteellss
Other Travel
Activities
Travel
Services
RReessoorrttss
BBuuddggeett AAiirrlliinneess
AAiirrlliinneess
RRaaiill
CCaarr RReennttaall
TThheemmee PPaarrkkss
Musical &
Cultural
Performances
SSppoorrttss
Offline
Agents
OOTTAAss
Other Online
sites- Blogs,
Metasearch
MICS 7
Business
Cultural,
Historical,
Natural sites
EEdduuccaattiioonn
Real
Estate
SShhooppppiinngg
Luxury
Brands
CCrruuiissee
Travel
Retail
Chinese Travelers
Foreign Travelers
Fashion

9. 9
Value to PE – Rise of Leisure, Cultural, Travel & Tourism Markets
Offer China PE Investors Attractive Proposition
PE Investment Value-Chain
SSttrraatteeggyy
Winning
Investment
strategy
Identification
& Screening
Strategic &
Commercial
Due Diligence
Value
Creation &
Performance
Improvement
EExxiitt
Identify & Access
Right Deals
Reject or Execute
at the Right Price
Execution of
Operational
Improvements
Maximize Value
Extraction on Exits
China’s Tourism
Industry on Rapid
Growth Path- as
“Strategic Pillar
Industry”
- Right Strategic
Direction for
Investments
Multiple related
market segments
both in China and
Global as potential
deal sources
- Broad-base for
Deal flow
High growth of
various travel &
related consumer
segments
- Attractive
Valuations
Potential buy-out/
M&A
opportunities as
industry expands
- Multiple Exit
Options
Consolidation :
Over 5,000 GPs will see
“shake-out”
Key Value
Creators
Positive Factors for
Investments
China PE
Trends Specialization :
Specialization emerging with
industry-focus funds
Convergence:
Combining of RMB/USD Funds
to facilitate outbound/
domestic investments

10. Value to PE – Domestic Mega-Travel Groups Creating Competitive
but Healthy Environment for Potential Exit Transactions
• New Players from industry i.e.
Fosun, Wanda
10
Emerging Domestic Groups (with Global Ambitions)
• Major Online Players /OTAs investing
& forming larger travel entities
Invested &
Groomed by PE
Fund to size
suitable for exit
• Traditional travel agents & services
companies forming new groupings
Portfolio of Niche Leisure, Cultural + Travel & Tourism
companies invested by PE Fund – Exit through transactions
(M&A; Buy-out,etc) to be part of the above large travel groups

11. 11
Investment Strategy: New Emerging Trends Driving Investment
Themes & Opportunities till 2020
Technology Consumer Economy
Growth of
Consumer
Economy
Large
Wealthy
Consumer
Class
Penetration
& Leverage
of Digital
Technology
6
Government
1
Increase in Leisure +
Entertainment Spend
Significant Growth of Luxury &
Travel Spend
Upper Middle & Affluent Class
Dominates
Fastest Growth of Wealthy
Consumers in Inner Cities
Digital Consumers become the
Norm
Tourism & Cultural Industries
“ Strategic Pillars”
MMuullttiippllee IInnvveessttmmeenntt TThheemmeess
Target Potential
Opportunities from
Each Investment
Theme
Target Potential
Opportunities from
Each Investment
Theme
Target Potential
Opportunities from
Each Investment
Theme
Changing Traveler Segments &
Characteristics

12. Investment Strategy: Themes Arising from Emerging Trends in
Chinese Tourism Market
Emerging Impacting
Chinese Tourism Market
Increase in Leisure +
Entertainment Spend
Significant Growth of
Luxury & Travel Spend
Upper Middle & Affluent
Class Dominates
Fastest Growth of Wealthy
Consumers in Inner Cities
Digital Consumers become
the Norm
Focus on Tourism &
Cultural Industries
CAPTURING NICHE BRANDS & SERVICES AROUND
OUTBOUND TRAVEL’S VALUE CHAIN
Rapid Growth of Affluent Chinese Outbound Travel vs.
Domestic ;Demand for Range of Travel & Consumer-related
Services & Brands, especially Luxury category
RISE OF THEMATIC & BUSINESS TRAVEL
Chinese businesses grow domestically as well as
globalize; demand for business travel & MICE will
significantly increase; so will corporate education &
training
SHORT BREAK ATTRACTIONS - ENTERTAINMENT,
CULTURAL , OUTDOOR & SPORTS
Consumer Spend on Sports, Music & Cultural
entertainment Rising ; Domestic Tourism with shorter
breaks will increase & drive demand as leisure
becomes part of lifestyle
1
2
3
12
Changing Travellers
Segments & Characteristic

13. Investment Strategy : Broad Range of Attractive Potential
Opportunities (Domestic & Global)
13
1
2
3
Investment Themes Screening Criteria
OUTBOUND
TRAVEL
THEMATIC &
BUSINESS
TRAVEL
ENTERTAINMENT,
CULTURAL &
LIFESTYLE
LLaarrggee MMaarrkkeett
HHiigghh GGrroowwtthh
Defensible
Niche
Attractive
Margins
Branded Travel Luggage
Hotel Brands- Global
Luxury/Resorts;
Travel Retail
Domestic Car Rental
Govt.
Support
Incentives Travel
Services
Cruise Market
• China’s tourism market & Chinese travellers
will have significant impact & be major
spenders in these segments
US$28bn
->US$60bn
US$138bn
->US$221bn
US$75bn
US$150bn
US$45bn
-> US$118bn
Branded Travel Apparel &
Swimwear
US$74bn
->US$145bn
US$3bn
->US$10bn
Cultural & Entertainment
Theme Parks
US$3bn
->US$12bn
US$16bn
->US$32bn
Market size
2013 to 2020

14. Investment Theme : Capturing Brands & Services around
Outbound Travel’s Value Chain
1
Travel Planning &
11AA 11BB 11CC
Booking
Outbound
Journey
Travel-related
Activities &
Products
Chinese Outbound Tourism Value-Chain
INVESTMENT
RATIONALE
Outbound Services
fragmented; need to
evolve with
changing needs
Multiple related
market segments
can be targeted
Opportunity to
invest into Global
brands & services
Outbound Travel
closely linked to
HNWI & Luxury
Travel & Spending
*Domestic Outbound
Packaged Tour Services
*Foreign Travel services
(OTAs)
*Travel businesses serving
“luxury consumers”
*Global hotel/resort brands
(Target countries with high
Chinese tourists numbers.)
*Asia-based Cruises
*Travel activities- Fine Dining
*Travel Retail/Duty-free
shops
* Travel Accessories &
Vacation fashion (Inc.
Luxury category)
Recent Investment/M&A Activities in Value-Chain Segments
• Ctrip investing US$100M
in Toursforfun – offering
overseas tours
• Beijing Toread Outdoor
acquired Asiatravel (Asian
–based hotel booking)
• China’s HNA has become a
strategic investor in NH- 3rd
largest group EU hotel group
• L Capital Asia recently
acquired a majority stake in
Singapore-based Crystal Jade
Culinary Holdings
• Largest consolidation of
the travel retail industry
when Dufry acquired
Nuance at US$1.7bn
• Singapore’s Temasek has
invested in the region’s
largest chocolate travel;
retail chain- Cocoa Tree

15. Investment Theme: Focusing on Targeted & Niche Segments-
Thematic Travel, Niche Travelers & Business Travel
2
INVESTMENT
RATIONALE
Emergence of
Sophisticated
Travelers
Growth in Thematic
Packaged Tours
MICE Demand as
China becomes a
Key Market for
Global Businesses
Globalization Driving
Chinese to Learn
New Knowledge
Chinese Consumers’ Segmentation
Chinese Travellers
22AA Business 22BB Leisure
MICE Education Niche Travellers Thematic Travel
• Domestic MICE & Incentive Travel
• Executive Education (Inbound &
Recent Investment/M&A Activities
Outbound)
• Mid-Scale Business Friendly Hotels
• Corporate Travel Management
• Ctrip investing US$100M in Toursforfun –
offering overseas tours
• Alibaba invested US$427m in hotel
management technology company
• Global Business Travel Specialists
American Express & Carlson Wagonlit
Travel (CWT) entering China’s lucrative
corporate event market
• Specialist Themed Packaged Tours
eg. Beach & Dive , Adventure, Eco-tourism,
Medical
• Targeted Customer Segments-
Honeymooners, Elderly, Solo
• Online packaged tours specialist TUNIU
files for US$120M US IPO
• Globally, nations preparing domestic
tourism markets to meet the demands
of next generation Chinese travelers for
thematic travel agenda.

16. Investment Theme : Fast-Growing Domestic Destinations &
Activities in Entertainment/Culture/Lifestyle
3
INVESTMENT
RATIONALE
Increased Leisure
Time for Recreation
& Entertainment
Upgrade of
Transport & Tourism
Site Infrastructure
Destinations &
Activities for Short
Breaks Benefit from
Leisure Trend
Increased Health
Awareness Driving
Outdoor & Sporty
Lifestyle
Domestic Destination & Leisure Activity Breakdown
Leisure Activity
33AA 33BB 33CC
Activities in the Market
Nature &
Scenic Sites
Historical/
Culture
Musical &
Concerts
Theme
Parks
Outdoor &
Sports
• Cultural & Entertainment Parks
• Chinese Theatre & Musical
Productions
• Outdoor Sports & Leisure Park
• Founder of China’s Wanda Group
announced plans for a US$8bn “motion-picture
city” in Qingdao to be completed in
2017.
• Over 225 joint Chinese-international
Theatre-cultural projects signed during the
Theatre VC Trade Fair in Shanghai 2013
• Outdoor Fashion & Gear
• Domestic Car Rental
• Live concerts & music festivals
• China’s largest auto rental firm launches
US$70M IPO on HKSE
• Investments into “Beach Culture and
sports park” in Guiyang

17. Investment Theme: Combination of Themes into a Niche
Travel Eco-system Creates Multiplier Effect on Value-Added
33++II
Incentives
Planners
Online
Travel
Planners
CCrruuiisseess
Luxury
Resorts
Vacation
Fashion
Travel
Planning
Travel
Booking
Travel
Packing
Trip On trip
Activities Post Trip
Chinese Traveler Value-Chain
Cruise, Sun & Sea Island Resort Eco-system
Spa
Services
Sea sports
& Dive Gear
Seafood
Dining
Sun & Sea
Packaged
Tours
Island
Real Estate
Resort
Management
Travel Booking
Technology

18. POSSIBLE INVESTMENT FUND FRAMEWORK
• Fund Type
• Investment Strategy
• Investment Stage
• Investors/
Limited Partners
 Dual-Currency Fund (RMB & USD-denominated )
 Onshore registered in Shenzhen; Offshore in Caymans (or equivalent)-
allowing investments in both Chinese & global businesses
 Invest into non-listed private companies either operating in China or
overseas; whose businesses are directly or indirectly engaged and
impacted by the rapid growth of the Chinese Leisure, Cultural, Travel &
Tourism industries (Following the Investment Themes identified)
 Investments could be made as lead investor; co-investor; strategic
investors will be invited to co-invest where possible
 Exits will be through trade /strategic sale as a principle (i.e. selling out
our niche investment to a larger travel/tourism group)
 Flexible- with primary focus on growth/expansion stage companies
 Both domestic and global investors will be targeted
Overall
Assessment of
Fund Opportunity
 Robust Investment & Exit Strategy
 Broad range of segment opportunities
 Meets Government goals to drive Culture & travel Industry
 Aligned with Coming Market Reality of Chinese Tourism Market