Co-Investment ChinaOutbound PE (Potential Investments) June2012

7/30/2019 Co-Investment ChinaOutbound PE (Potential Investments) June2012

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GlobalChinaCapital (GCC) Co-Investment Fund -Potential Investment Deal Flow

(Supporting Document)

BY KC YOON & M BRANDTBY KC YOON & M BRANDTBY KC YOON & M BRANDTBY KC YOON & M BRANDTGLOBALCHINACAPITALGLOBALCHINACAPITALGLOBALCHINACAPITALGLOBALCHINACAPITALSHENZHEN, CHINASHENZHEN, CHINASHENZHEN, CHINASHENZHEN, CHINA

June 2012


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Our Deal Sourcing ProcessOur Deal Sourcing ProcessOur Deal Sourcing ProcessOur Deal Sourcing Process----

Research & DeliberateResearch & DeliberateResearch & DeliberateResearch & DeliberateIdentification of PotentialIdentification of PotentialIdentification of PotentialIdentification of PotentialTargetsTargetsTargetsTargets

2


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3

DomesticBrand

CompetitivenessI

dentify High Growth Chinese ConsumerSegments

I

dentify High Growth Chinese ConsumerSegments

Screen to Select Segments that would Benefit-most from Global Brand/Tech/Service

Screen to Select Segments that would Benefit-most from Global Brand/Tech/Service

Match Segments with Best Possible RegionalSource of Deal flow

Match Segments with Best Possible RegionalSource of Deal flow

Screen for Potential Target Companies from

Region (work with partners where relevant)

Screen for Potential Target Companies from

Region (work with partners where relevant)

Work with Partners in Platform to reach-out to keystakeholders in Target Company

Work with Partners in Platform to reach-out to keystakeholders in Target Company

Build Relationship Sharing China MarketInsights & Providing Advisory

Build Relationship Sharing China MarketInsights & Providing Advisory

Secure Preliminary Interest from TargetCompany for Chinese Investment

Secure Preliminary Interest from TargetCompany for Chinese Investment

Market +Industry

Knowledge

Pre-ExistingRelationship

Lack of

Competition

Match RightStrategicPartners

Drivers of Deal Success GCCs Deal Sourcing Process

Leverage our domestic market &industry insights

Combine global & domestic industry

knowledge

Identify Globally Competitive regionsfor targeted segments eg. EU forFashion

Screen companies with best potentialfor China market + understanding

company expansion strategy

Reachout to top management orsignificant shareholders

Build trust & develop deeper insightsinto company

As part of the deal prelim DDprocess- considerations of

potential China market entrystrategy; domestic partners &exit options are also factored


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Identifying AttractiveIdentifying AttractiveIdentifying AttractiveIdentifying Attractive

Consumer Segments toConsumer Segments toConsumer Segments toConsumer Segments toTargetTargetTargetTarget---- PremiumPremiumPremiumPremiumPositioning due to Brand,Positioning due to Brand,Positioning due to Brand,Positioning due to Brand,Technology or Unique ServiceTechnology or Unique ServiceTechnology or Unique ServiceTechnology or Unique Service

4


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>US$800 Bn Outbound Investments by 2016;Increasing No. Consumer-related Deals

Global ConsumerBrands

Consumer Technology

Consumer ServiceCapability

Industry Talent

Increasing Firepower of Outbound M&A(Corporates + PE Funds)

Government Support

Meet Domestic Demand

Cash-Rich Chinese Co.

Friendly Target

Countries

Outbound Drivers M&A Objectives

EUR 1 Bn

US$ 900M

US$ 2 BnUS$2.4 Bn

US$ 500M


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Marketsize

DomesticBrand

Competitiveness

ForeignBrandValue-added

M arketGrowth

Potential

MarketSegment vsScreenCriterion

FashionApparel

PersonalCare

Food &Beverage

PersonalDevice

ConsumerAppliance

Edu &Knowledge

Service

FoodService

HospitalityService

Mobile &Web

Service

Healthcare

service

Market Size 4 3 4 3 4 4 3 4 4 4

GrowthPotential

4 3 3 4 3 4 3 3 4 3

OpportunityW DomesticCompetition

4 3 4 3 3 4 4 4 2 4

ForeignBrandValue-add

5 5 5 5 3 4 5 5 3 5

17 14 16 15 13 16 15 16 13 16

Assessment Rating : 1 to 5 (5 being strongest)

Most Attractive

Segments


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MassMassMassMass AffluentAffluentAffluentAffluentConsumptionConsumptionConsumptionConsumption

SegmentSegmentSegmentSegment

RationaleRationaleRationaleRationale PotentialPotentialPotentialPotentialMarketMarketMarketMarket

DomesticDomesticDomesticDomesticIndustryIndustryIndustryIndustry

Value of ForeignVa lue of ForeignValue of ForeignVa lue of Foreign

BrandsBrandsBrandsBrands

RemarksRemarksRemarksRemarks

Fashion Apparel,Accessories &SportswearBrands & Retail

Trade up strong Willingness to try new brands Large share of spend

Increased casual time; nicheactivities

RMB 1.3 trillion(2020e)

Fragmentedmarket No clear leader;

Few luxury-statusdomestic brands

Estab lished Globalluxury brands Global distribution

AttractiveSegment forforeign b rands

Personal Care &Cosmetics

3rd largest & growing market Trade-up strong Chinese men also big

consumers of personal care

RMB 255 billion(2015e)

Limited localbrands

TCM-based

products

upcoming

Strong marketing R&D & Hi-tech in

products

High safety

standards

Regulatoryhurdles keyobstacle to

mark et entry

ProcessedFoods, (snacks,diary, healthfood & drinks,organic food),Vitamins &Nutraceutical

Increased concerns about foodquality &safety makes foreignbrands attractive

Wealthy consumers willingnessto spend on healthy well-being

Snacking is increasing

Largest globalmarket fordietarysupplements(2020e)

Fragmentedindus try- manysmall food

processing co. Food safety

issues

Advancedprocessing tech

High QC & safety

standards Premium branding

eg, wines, healthsupplements

Chinese Govtencouragingforeign co help

upgradedomestic

industry

PersonalDevices recreational,entertainment,communications

Display of personal wealth &status

Younger generation tech savvy

Music, online gaming, onlineentertainment integral part of

Chines e social live

Fast cheap copy-cats

Increas ing

innovativenesse.g. mobile phone

Global b rand status Worldwide service

support

Leading edgetechnology

Applesiphone/ipadgood case of

foreign b randwinner

Consumerappliances

Urban living- seek convenience Strong domesticbrands exist forgeneral appliance

New technology Cutting edge

appliance design

Consumer Goods & Products

List is not meant to be exhaustive but represents major opportunities


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MassMassMassMass AffluentAffluentAffluentAffluentConsumptionConsumptionConsumptionConsumption

SegmentSegmentSegmentSegment

RationaleRationaleRationaleRationale PotentialPotentialPotentialPotentialMarketMarketMarketMarket

DomesticDomesticDomesticDomesticIndustryIndustryIndustryIndustry

Va lue of ForeignValue of ForeignVa lue of ForeignValue of Foreign

BrandsBrandsBrandsBrands

RemarksRemarksRemarksRemarks

Education &KnowledgeServices

Chinese traditional focus &willingness to pay foreducation

Significant spend size

RMB 900+billion (2015e) Fragmented &open market Strength in

distribution andoperations

Educationtechnology Innovative

teaching methods

Chinese Govtkeen on

improving

education

standards

Food Services& QSR Brands

Urbanisation trend 750Mmiddle-class consumers2020 dining-out rate still

low vs. global Clean dining & safe food

Fast Foodmarket RMB400 billion

(2015e)

Fragmentedmarket; fewnationwide

domestic QSRchains

Brand & Marketing Consistency Strong QC &

managementsystem

Foreign QSR

i.e. KFC are

leading brands

Hospitality,Leisure & TravelServices (Hotels,AmusementParks, Carrentals, sportingevents, etc)

China top tourismdestination by 2020

Chinese spending moretime on leisure activities

2X Number ofhotel rooms(2020e)

Service quality &standards not yetglobal par

Fragmented,dominated bynon-branded 2-3star operators

Establishedhospitality brands

Strong serviceculture, talent &

management

system

Potential for

mid-scale brand

Mobile & Web-based Services(inc.eCommerce)

Internet-savvy population eCommerce market rising

exponentially Online gaming

eCommerceRMB 1.5trillion (2013e)

Dominated bydomestic industryleaders

Access to globalsupply chain &

source of goods

Combination of

foreign network

with domestic

operations

ConsumerHealthcare

Upgrade of healthcaresystem

Increasing elderly

population

Upgrade ofservice inprogress

Advancedhealthcare mgt

Hi-tech

Consumer Services



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Establishing Platform toEstablishing Platform toEstablishing Platform toEstablishing Platform to

Access DealsAccess DealsAccess DealsAccess Deals---- PartneringPartneringPartneringPartneringwith Right Parties inwith Right Parties inwith Right Parties inwith Right Parties inRespective SegmentsRespective SegmentsRespective SegmentsRespective Segments

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Combination of Relationships with Global PEFunds, Investment Firms, Senior Advisor Network

Senior Advisor 1

Senior Advisor 2

EU-Deals; Fashion + F&BBrands

US-Deals; Education + QSRBrands+ Hospitality Services

Asia-Deals; Healthcare Services

Senior Advisor 1

Brazil-Deals; Agro-Food Deals

Senior Advisor 2

Asia-Deals; F&B Brands; Agro-Food + Leisure Deals

*

**

*Senior Advisor- ex-Macau Banker sits on Boards of Portuguese-leading banks withdeep connections through Portuguese-speaking**Senior Corporate Leader with wide connections across Asia esp. HK, Singapore,

Thailand & Indonesia- Potential to be Senior GP in Fund( Both are KCYs ex-bosses from HK- Multi Family Office Fund)

Our Platform will bring from each region/partner deal flows ofproprietary & globally competitive brands, technology & services

most suitable for Chinese domestic market

Global Consumer-focused PE Funds

Global PE

Global PE


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Identified Potential Brands within Global PEFunds Portfolio with Potential for China

Leverage onGlobal Fund

StrongerDomestic

Market

Knowledge

BringsGlobal

Consumer

Expertise &Network to

China

Partial ExitOpportunitythrough sale

of Partialequity to

Chinese

Fund

Opportunityfor StrongGrowth &

ValueCreation

with ChinaMarket Entry

WIN for Global Fund WIN for GCC Fund

We will also seek to partner with activesector-focused Corporate Investors

(1) Pearson Education(2) (2) Parkway -Healthcare


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Pipelineof Potential Deal flowPipelineof Potential Deal flowPipelineof Potential Deal flowPipelineof Potential Deal flow

---- Leveraging Our GlobalLeveraging Our GlobalLeveraging Our GlobalLeveraging Our GlobalPlatformPlatformPlatformPlatform

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Co-Investment Fund Potentially can Investbetween US$500-800M

Education, HospitalityBrands

Fashion, F&B Brands

F&B, Hospitality,Healthcare Services

Strong pipeline of Fashion

deals from the EU

F&B Deals focused on healthfood & supplements

Singapore-based HealthcareServices Attractive for China

Global QSR Brand Strongpotential for China

Consumer Products &QSR Brands

Assumption: Chinese PE Funds take a Significant Minority stake in TargetCompanies i.e. 30% and Co-Investment Fund has Option to Invest upto 1/3 of the

total amount invested on average.


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BrandBrandBrandBrand OriginOriginOriginOrigin CompetitiveCompetitiveCompetitiveCompetitive

StrengthsStrengthsStrengthsStrengths

ValueValueValueValue totototoChinese MarketChinese MarketChinese MarketChinese Market

OwnershipOwnershipOwnershipOwnershipStatusStatusStatusStatus

CoCoCoCo----InvestInvestInvestInvestAmt. Est.*Amt. Est.*Amt. Est.*Amt. Est.*

DesireDesireDesireDesire forforforfor

ChineseChineseChineseChineseInvestmentInvestmentInvestmentInvestment

Superdry UK Dynamic youth-

target premiumbrand with UK-

Japaneseheritage

Carve premium

brand niche

SGP: LSE

US$355M

US$40M Seeking China

Market Entry Share price at

low- need growthmarkets

Etam France Establishedbrand &

distributionchannels inChina

Etam brandestablished in

China market

CAC US$150M

US$30M Under-valuedBUYOUT

Re-lis ting onHKSE

Barbour UK/Global

HistoricalOutdoor clothingbrand

Brand withsignificant his tory

Private US$150M

US$20M No presence inChina

Needs cash

infusion to grow

Fashion Consumer Segment



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Kenra/Sexy

Hair

US Professional

Hair Salon brand

Premium

haircare brand

PE-owned

TSGConsumer

US$200M(E)

US$20M Potential to

developconsumer-

premium brand

CoverFX US Global cosmeticbrand &

distributionnetwork

Safe globalcosmetic brand

PE-owned Catterton PE

US$300M(E)

US$40M No presence inChina

Cosmetic growthat 40-50%CAGR in China

Consumer-care Products Segment



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Cerebos SG/

SE Asia

Strong

Brands-Brands

Essence

SE Asia/Aust+NZ

Distributionnetwork

SGX:

US$1.2BN

US$150M No significant

success in Chinamarket

Low P/E 8-9X

Glanbia Ireland Global healthsupplement

brand

Etam brandestablished in

China market

CAC US$150M

US$30M Under-valuedBUYOUT

Re-lis ting onHKSE

TexasChicken

US/Global

Global Brand Lack of leadingChinese QSRbrand

Learn from bestglobal QSR

know-how

PE Owned Friedm an,Fleischer & Lowe

Est.US$2BN(P/S 1.0 Ind)

US$200M China entry onstrategicexpansion plans

after successesin SE Asia

F&B/QSR Consumer Segments



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Banyan Tree SG/

SE Asia

Premium

Asian ResortBrand

Strong growth in

premium resort &spa services

Improvehospitality

servicestandards

SGX:

US$300M

US$50M No

Hospitality Consumer Segments



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Eu Yan

Sang

SG/Asia Leading Asia-

TCM Brand

SE Asia/Aust+NZ

Distributionnetwork

SGX:

US$220M

US$30M Chinese market

demand for high-quality

healthfoods

SingaporeMedical

Group

SG Specialtyclinics

Demand for high-quality

healthcare

SGX US$120M

US$20M Expansion inChinese market

HealthwayMedicalGroup

SG Singaporeslargest retailclinic chain

Clinicdevelopmentnext segment of

China healthcareindus try growth

SGX US$150M

US$30M China marketexpansion

Healthcare Products & ServicesConsumer Segments


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Blackboard US/

Global

Leading

Global highereducation

technology &systems

provider

Platform for

improvingUniversity

educationinfrastructure

Higher educationin China needsupgrade in

learninginfrastructure

PE-owned

Providence US$1.6BN

US$150M Blackboard

already presentin China with

close to 250+Universities on

its platform-includingprominent

Universities likePeking U.; Sun

Yat-sen U;

Rep in China

Cerbibo

Education Segments



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Additional DatapointsAdditional DatapointsAdditional DatapointsAdditional Datapoints

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O Fashion houses start to build & own portfolio ofbrands

O Closer interaction and collaboration between brands

within Chinas domestic fashion industry

O Chinas fashion industry slowly integrates into

global fashion ecosystem as original brands

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Fashion Apparel,Fashion Apparel,Fashion Apparel,Fashion Apparel,

Accessories & SportswearAccessories & SportswearAccessories & SportswearAccessories & Sportswear

Attractiveness & Value of ForeignBrands Market Opportunity

Impact on Domestic Market

BCGs Analysis of brands with niche market potential

Brand story & history (esp. European brands)

Strong design and material technology content

Bring brand management skills

Established fashion design & output cyclelinked to global fashion trends

Established global marketing & distributionnetwork

Strong links to global media and entertainment

industry

1

Global brands continue to enter theChinese market- Recent cases- GAP(2011), A&F (2012), IZOD (Licensed)

Brand


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Female lingerie Female/male office wear

Female/male premium casualwear

Sports performance brands Board, surf and street wear brands Fast Fashion Premium Mass-premium accessories- Fashion jewellery

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Fashion Apparel,Fashion Apparel,Fashion Apparel,Fashion Apparel,

Accessories & SportswearAccessories & SportswearAccessories & SportswearAccessories & Sportswear

Target Market Segments

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Market Opportunity

Deloitte market analysis 2010

1Food & Food IndustryFood & Food IndustryFood & Food IndustryFood & Food Industry----

related Productsrelated Productsrelated Productsrelated Products

O Consolidation of domestic food processing industryO Demise of weak brands

O Upgrade in overall food industry technology, QC &Food safety standards

O Consumers gain access to wider choice of packaged

& processed food

Attractiveness & Value of ForeignBrands


Global branding brings consumer confidencein China

Advanced food processing technology

Higher quality control & food safetymanagement standards

Access to foreign food production resources

Established global marketing & distributionnetwork

Chinese companies have beenactively investing in agro-productionresources, food brands esp. in the

diary sector

Food 2020 Report

Brand

Technology


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Dairy products esp Milk Powder Organic food

Nutraceutical food supplements

Health, Energy Drinks & Juices Snacks- chocolate; nut-related snacks Wine & Premium Beers

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2Food & Food IndustryFood & Food IndustryFood & Food IndustryFood & Food Industry----

related Productsrelated Productsrelated Productsrelated Products


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Kindergarten-pre-school + K-12 Tutoring Service-industry focused higher & professional

education

Creative Media & IT training Business Management Education & Seminars Education Tools & technology + e-learning

platforms

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2Educational & KnowledgeEducational & KnowledgeEducational & KnowledgeEducational & Knowledge

ServicesServicesServicesServices


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O Consolidate non-branded fragmented players intolarger nationwide branded chains

O Upgrade overall industry service standards

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Hospitality & LeisureHospitality & LeisureHospitality & LeisureHospitality & Leisure

ServicesServicesServicesServices



Global hotel management knowhow &technology

Strong service & talent grooming culture

Global marketing & distribution network

Brand familiar to foreign visitors/tourists to

China

1

Recent several cases of acquisitionsof foreign hotels & resort brands by

domestic companies

Hospitality , RecreationalHospitality , RecreationalHospitality , RecreationalHospitality , Recreational& Leisure Services& Leisure Services& Leisure Services& Leisure Services

Thayar Lodging Group Report 2010

ServiceExpertise

Brand


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Mid-scale Hotel Brands Themed Resort Chains

Theme Parks

Beauty & Spa Brands Service providers/Media platform in the global

travel ecosystem Fitness Clubs & Sports Academy

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2Hospitality, Recreational &Hospitality, Recreational &Hospitality, Recreational &Hospitality, Recreational &

Leisure ServicesLeisure ServicesLeisure ServicesLeisure Services

S


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O Improve overall standard and accessibility tohealthcare

O Bring mobility to healthcare

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Consumer HealthcareConsumer HealthcareConsumer HealthcareConsumer Healthcare



Hi-tech Innovative technology

Significant R&D invested

Well-designed & ergonomically superior

High quality and reliability

Better service level provider

Global after-sales support

1

Investment interests from foreignplayers in Chinese healthcare

industry

ServiceExpertise

Technology

Target is that by 2020 Universal healthcare will

be available to all Chinese citizens


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DIY Healthcare personal devices In-home Monitoring/Homecare Network

Online healthcare services

Lifestyle health services i.e. cosmetic surgery, TCMacupuncture, massage therapy, dental

OTC Drug retail Mobile healthcare eg. iphone-based apps

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2Consumer HealthcareConsumer HealthcareConsumer HealthcareConsumer Healthcare


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Co-Investment ChinaOutbound PE (Potential Investments) June2012

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