Managing Through & Taking Managing Through & Taking Advantage of Crisis Advantage of Crisis

““The Asia Experience”The Asia Experience”

K. O. ChiaK. O. Chia

Managing DirectorManaging Director

kochia@waldenintl.comkochia@waldenintl.com

IFC Annual Global Private Equity Conference

May 5-7, 2004

2

Walden International BackgrounderWalden International Backgrounder

• Established in 1987

→ U.S.: San Francisco & Palo Alto

→ Asia: Greater China; Japan, India, ASEAN

• US$1.5 billion in funds under management

→ Global institutional investors; governments

→ Corporate investors

• Stage independent Investment strategy:

→ Early stage to pre-IPO

→ Technology focus: communications, semiconductor; software & electronics

• “Think global, act local” investment strategy

→ Pan-Asia roll-out

→ Asia-U.S. cross border

3

Singapore

San Francisco

Mumbai

Beijing

Hong Kong

Palo Alto

Kuala Lumpur

Manila

Taipei

Tokyo

Shanghai

Geographic Coverage

4

Jan. 31, 1994 12,599.23

Aug. 31, 1997 16,820.31

Jan. 31, 1995 8,190.42

Aug. 31, 1998 7,926.35

Mar. 31, 2000 18,397.57

Sep. 30, 2001 11,180.79

Mar. 31, 2000 5,132.52

Apr. 30, 2001 2,202.86 Sep. 30, 2001

1,836.19

Global & Asian crisisGlobal & Asian crisis

5

History of China EuphoriaHistory of China Euphoria

1993-1995: Manufacturing from HK-Shenzhen

1995-1996: Infrastructure Building

1996-1998: Telecom Service Providers

2001: Land of Opportunities

1998-2000: Internet Hype

FIVE waves of China investment euphoria

6

Investment Experience in ChinaInvestment Experience in China

• Local Chinese companies: SOE or its spin-off

• Joint Ventures with multi-national companies

• Young technology start-up companies started by returning Chinese nationals or overseas Chinese

• Start-up companies with local Chinese nationals

10 years of investment experience in China... still learning:

7

Sustaining through various crisisSustaining through various crisis

• Survival of portfolio companies→ Re-focus business operations, preserve cash

→ Business model transformation

→ Seek merger opportunities

• Exists→ Flexible investment structures for M&A or IPO

→ Potential exists in multiple markets

• Fund Management (LP-GP relationship)

→ Seeking for potential new investment

→ Working closely with portfolio companies

→ Constant dialog with LP on developments

8

Example: Newave SemiconductorExample: Newave Semiconductor

Company profile• 3 founders: HK, Twn, China• Previously worked together in Shanghai

• Founded as a U.S. company

Target markets• China telecom market• Popular chipsets for mass

Harness talent from China• Software done in Shanghai• Lower development costs• Nearer to market

Design operations in U.S.• Chip design in U.S.• U.S. project mgmt expertise

FABLESS SEMICONDUCTOR COMPANY

9

SRS China• Chinese software developer• RichWin software

US & Taiwan• Leading Silicon Valley based web site• Target Taiwanese/American Chinese

• Held #1 Chinese portal site

• Multiple management leadership changes

• Biz model transformation: software- portal - SMS, from software sales to ad revenue to paying subscription customers.

• Transform from loss making into profitability through M&A and prudent management

Example: Sina.comExample: Sina.com

10

Example: CSMCExample: CSMC

• Investment in 1998 as service company to manage a SOE fab

• Biz transformation: full semiconductor fab company for the semiconductor industry in China

• With an intact management team, it survived the Asian crisis, global semiconductor business down cycle, SARS and previous aborted IPO

• In late 2003, raised US$70M pre-IPO round of funds with IFC as one of the investors. Currently on an IPO route.

11

SummarySummary

• Portfolio companies→ Companies are stronger, has more committed management

team and understand cash management

→ Management awareness of economic impact on business

→ Better relationships between Investors and management

• Fund Management→ Built stronger communications & trust between LPs and GP

→ Constant two way open dialog with good and bad news

→ Cross learning experience and ideas from various LPs

→ Opportunity for follow-up Fund

12

Thank YouThank You

www.waldenintl.com