Where have we invested and What are we looking for TBLI in China?

Tsinghua Venture Capital Management

May 25, 2006

Dr. Catherine Cao

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China Economy Continues Fast Growth…

GDP: RMB18.2 trillion (US$2.3 trillion) at a pace of 9.9% in 2005 with GDP US$1,750 per capita

Foreign Trade: US$1.4 trillion for 2005 jumped by 23% year-on-year with trade surplus of US$101.9 billion

FDI: US$60.3 billion in 2005 (slightly lower than 2004 for US$60.6 billion) and has been the largest recipient in the world since 2003

Source: China Statistics Bureau, January 2006

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World Factory vs. World Polluter

More Resources Consumption Energy consumption per RMB10,000 GDP in 2004 was 4 times more than

world average and 14 times more than Japan

Raw materials consumption also increased: Rolled steel up 15.1%; Alumina: 12.84 M tons of, up 9.7%; Cement: 960 M tons, up 12.4%

Higher Environmental Cost 4-6% of 10% GDP growth only 43.6% of wastewater was treated 58.6% of cities air is below “the standard”

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“Green” GDP on Agenda

Conventional GDP failed to take into account the actual scarcity of natural resources and the cost of environment

SEPA together with the National Bureau of Statistics works on an environmentally adjusted domestic product system that underlines the synergy between the economy and the natural environment

Central government: 2004: “Recycling Economy”, “Green GDP” 2005: “Harmonious Society” 2006: “ Renewable Energy Law”

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Source: Yearly Report on China Environment by SEPA, 2005

0

200

400

600

800

1000

1200

1400

8th 5Y 9th 5Y 10th 5Y 11th 5Y

(In billion RMB)

8th 5-Year (1991-1995)

9th 5-Year (1996-2000)

10th 5-Year (2001-

2005)

11th 5-Year (2006-

2010)

Total Govt. Inv.

RMB 131 Billion

RMB 450 Billion

RMB 750 Billion

RMB 1,350 Billion

% GDP

0.73% 1.3% 1.5% 1.5%

Government Investment

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REEE Promotion in China

The first Renewable Energy Law has been promulgated in February 2005 and became effective in January 1, 2006

Boost the use of renewable energy capacity up to 10% of total energy consumption by the year 2020

Promote energy saving to 20% in terms of energy consumed per RMB Yuan of GDP in 2010

By more detailed implementation rule, incentive program and industrial standard, the renewable energy market will grow dramatically, especially in the following sub-sectors:

Wind farm and related equipment manufacturing Solar PV related wafer, module, panel manufacturing Biofuels

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Global Alliance

LESS Limited is a strategic fund of funds focused on investing in environmental sector that are beneficial for China

With CEF as corner stone, LESS also acts as sponsor and lead investor for Asia West Environment Funds in North America and for the ALOE Fund in Europe.

CEF benefits from alliance for global deal sourcing, management and technology expertise. CEF also acts as business developer for portfolio companies invested by sister funds.

ENVIRONMENT FUNDS

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Investment Philosophy

“Triple bottom line” private equity fundswhose goal is to generate

venture-like financial returns while achievingimportant environmental and social returns

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Investment Criteria

Service-oriented vs. manufacturing-oriented business model

Economic-driven vs. regulatory-driven

Private-led vs. state-owned

Proven and well-rounded senior management team

Willingness to accept Fund’s financial reporting and corporate governance requirements that ensure transparency and accountability

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Cleantech Market

CEF priority sectors

Electronic

Channels

CEF Investment

Pool

Energy

Environment

Biomass

Green Civilization

Water

Industrial Solid

Waste

Waste WaterTreatment

Municipal Solid

Waste

Water Management

Energy Management Solid

Ozone Protection

Clean Energy

Toxic Treatment

Air

Desulphurization

Renewable EnergyEnergy

Generation& Storage

Sustainable

Agriculture

Green Substitute

SmartTransportation

EnergyEfficiency

Cleaner Production

Recycling &

Recovery

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Investment Focus

Primary Targets Pollution Prevention and Clean Production Energy Efficiency Renewable Energy New Materials (environmental friendly)

Secondary Targets Resource Recovery and Recycling Industry Outsourcing of Environmental Services Green Products and Sustainable Agriculture Waste Treatment

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What have we invested?

Industrial Hazardous Waste (IHW) treatment & waste detoxification

Ticker: 8230

Nanopam

Proprietary micro-emulsion technology of polyacrylamide (PAM) for water

treatment

Enmetek

catalyst supporting materials for

automobile emission control over Euro IV+

The leading private EMC player in water

cooling system in China

Outsourcing cleaning, pest control service in

HK and China with over 30 branches

Giant Hemu

Black liquor solution to small & medium pulp

mills, to turn it into lignin, organic fertilizer

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What are we looking for?

Deal Flow Breakdown in Industry Segment

REEE, 37%

WasteRecovery, 11%

WasteTreatment, 10%

CleanProduction,

11%

Others, 31%

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Investment Pipeline (selected)

Candidates Business Security

Solar PV Renewable Energy Convertible Preferred

Thermal Energy Efficiency Energy efficiency Common Shares

Waste Water Recycle Waste water treatment Convertible preferred

Biofuel Renewable Common Shares

MBA Polymer E-Waste recovery Convertible Preferred

Wind Turbine manufacture Renewable Common Shares

LED Manufacturing Energy Efficency Common Shares

Biodegradable Materials New material Common Shares

Solar thermal Energy Renewable Common Shares

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For Further Information

Dr. Catherine Cao Partner

caohua@cefund.com

Tsinghua Venture Capital Management Co., Ltd.RM 1301, Innovation PlazaTsinghua Science ParkBeijing 100084China

Tel: 8610-6270 5921Fax: 8610-6270 5920

www.cefund.com