Investment Strategy
Investment Principal
The Partnership seeks to achieve significant long-term capital appreciation through actively managed investments in various industries in China, including a focus on domestic consumption-oriented, knowledge-intensive services, high-end manufacturing and clean technology sectors.
The Partnership expects to acquire, by itself or in cooperation with others, controlling or minority positions in target companies with substantial potential for value enhancement. We only invest in companies with positive cash flow, positive earnings, significant market share and high growth potential with unique product and/or proprietary technology.
| Active Investor | Leverage extensive contacts and resources to be an active investor, rather than just a financial investor |
| Relational Investment Strategy | Sourcing deals from key government partners and alliance partners, rather than from generic third-parties |
| Key Sector Focus |
Focus on key sectors such as clean energy, knowledge-intensive services, high-end manufacturing, and consumer-oriented companies |
| Key Company Characteristics | Focus on enterprise earning quality, rather than just financials on paper. Look for companies with high growth potential, unique products, significant market share, and proprietary technology and intellectual properties |
Sector Focus
The Partnership will focus on consumer-oriented sectors, knowledge-intensive services, high-end manufacturing, and clean technology sectors.
| Consumer Sector |
Retail, advertising, consumer banking, interior decoration, healthcare, education Current Deal Initiatives: JM Care |
| Knowledge Intensive Services |
Financial information services, logistics, retail distribution, value added telecommunication services Current Deal Initiatives: Gillion Technologies; DZ Financial Information Prior Investment Examples: Wind Info |
| High End Manufacturing | IC design, consumer electronics, auto electronics, telecommunication equipment Current Deal Initiatives: Dingheng Ship Industry; Pinao Optic Sensors Prior Investment Examples: Actions Semiconductor; Siwei Specialty Vehicle; HuayaMicro |
| Clean Technology |
Alternative energy, energy efficient technology, environmental technology |
Deal Sourcing
The Partnership sources its deals through multiple channels which include: (1) Mainland China investors and strategic partners; (2) Domestic and foreign industrial and financial investment funds and service providers; (3) Portfolio companies; and (4) Industry analysis and extensive relationships and contacts.
Mainland China investors and strategic partners have established tight connections between the Partnership and central and local governments in China such as Shanghai Zhangjiang Hi-Tech Park and Beijing Z-Park. They also provided the Partnership with many investment targets involving private enterprises, pre-listed companies, and small- and medium-size enterprises.
Domestic and international industrial and financial investment funds have brought the Partnership joint-venture partners and investment projects in China. Service providers such as law firms, accounting firms and securities companies have supported the Partnership to promote domestic and overseas IPOs, and to introduce new potential investment projects.
The Partnership also leverages its portfolio companies’ network to find new opportunities. In addition, the Partnership conducts industry analysis on all potential targets in the selected sectors and then selects the best ones to initiate contact via existing relationship.
Investment Process
The cornerstone of our research philosophy is in-depth company level fundamental research. This involves extensive analysis of the company’s business model, market position, competitive strengths and vulnerabilities and how these may evolve over the life of the financing transaction.
Our sixteen professional analysts will employ detailed financial analysis so that we can understand the key profitability and cash flow drivers. Analysts are placed with the project companies for a period of three to six months. The analysts will delve into not only the management and its philosophies, but also into their marketing strategy, the company’s suppliers, competitors and clients. On the ground teams perform and walk through every step of our due diligence process. This is followed up with a detailed written investment proposal which is prepared for review with the Investment Committee.
At the macro level, we will assess the economic drivers of financial and market fundamentals and adjust the portfolio composition to capitalize on emerging opportunities.
The Investment Committee consists of the four principals of the Investment Manager. In addition, we have a Business Advisory Committee comprised of individuals selected by the Investment Manager who have significant experience in the various industries or geographic regions in which the partnership will invest.
The Investment Committee reviews and approves all investment opportunities presented to the Partnership. All decisions regarding the acquisition and disposition of Partnership Investments will be made by the Investment Committee.
