tembusu growth fund ii. this document is for discussion purposes only and does not constitute an...

Tembusu Growth Fund II


This document is for discussion purposes only and does not constitute an offering in any way or any jurisdiction. Reproduction and communication of this document in any form or manner is strictly prohibited. This document has not been independently verified and the authors are not liable for any claims or obligations whatsoever that may be attributable to this document. This document is strictly private and confidential and remains the property of the authors.

This product is meant for accredited investors (individuals whose net personal assets exceeds in value S$2 million or whose income in the preceding 12 months is not less than S$300,000) and institutions (corporations with net assets exceeding S$10 million) only. All investors should seek independent and competent advice on the suitability of this Fund in meeting their investment needs before making a decision to invest in this Fund.

Disclaimer

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Table of Contents

I. Executive Summary

II. The Fund Manager – Tembusu Partners

III. Investment Strategy

IV. Investment Selection

V. Track Record

VI. Other Details

VII. Appendix A: Biographies

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8

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25

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Executive Summary


Executive Summary

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Founded by Mr. Andy Lim, Mr. Tan Kim Seng and two other successful entrepreneurs

20 staff in six offices spanning Singapore, China, UK, and ANZ

Tembusu Growth Fund I (“TGF I”): S$100 MM Pan Asia growth capital fund

Nanjing Growth Fund: US$80 MM China growth capital fund

TGF II: Platform for investors seeking attractive risk-adjusted returns from alternative assets in Emerging Asia

Mandated to invest in growth companies seeking expansion capital

Exit investments within 3 to 5 years through IPOs or trade sales

Singapore Private Equity

Manager Established In

2006

S$210 MM Assets Under Management

Over Two Funds

Raising S$300 MM For


(“TGF II”)


Summary of Principal Terms

Fund Company Tembusu Growth Fund II Ltd

Fund Manager Tembusu Partners Pte Ltd

Fund Size S$300 million

Minimum Investment S$5.0 million (Institutions) & S$1.0 million (Individuals)

Target Return (p.a.) 25%

Hurdle Rate (p.a.) 8%

Carried Interest 20% after hurdle on a catch up basis

Management Fee Year 1 - 3 : 2.00% Year 4 - 5 : 1.75%Year 6 - 7 : 1.50%

Investment Period 3 years from Initial Closing

Charter Life (years) 5 + 1 + 1

Tax and other benefitsQualified for zero-rated tax incentive under EDB S13H Scheme for Funds

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Portfolio Allocation

Single investment limit – not more than 15% of the fund or S$30 million, whichever is lower Portfolio size – no more than 25 companies Expected investment size – S$10 to S$20 million

Fund Allocation by Stage

90% growth stage / pre-IPO / buyouts / restructuring* 5% early stage 5% Private Investment in Public Equity (PIPE)

Fund Allocation by Geography

Singapore-based or Singapore-linked businesses - 50% Greater China, Southeast Asia (ex. Singapore), India, ANZ - 50%

Fund Allocation by Size

7

*Charter of the fund allows for investments in companies in these stages. However, the fund is primarily and substantially focused on growth stage companies.

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The Fund Manager – Tembusu Partners


Tembusu Partners Timeline

99

* Appointed as exclusive distributor for China Capital Impetus Fund for Singapore

Incorporation of Tembusu

Partners Limited

Successful launch of S$100

MM TGF I

2007 Investments:

TTMI VDH Energy Hongwei ACTAtek Infinite Frameworks Artivision Technologies Standard Water Tongji Environment Global Roam China Dredging Ying Tai Biotechnology

Successful launch of US$80

MM Nanjing Growth Fund

Agreement with China AMC (part of Citic Group)*

Expected first close of S$300

MM TGF II

2006 2007 2009 2010

2008 Investments:

Sports Asia Tangshan Ganglu

2009 Investments:

Cherie Hearts Silver City Minerals

2009 Investment exit: VDH Energy: 37.6% IRR

2010 Investment exit: Tongji Environment: 8.5% IRRCherie Hearts: 72% IRR

2008


The Tembusu Value Add

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Individual Partner

Sourcing

Weekly Conference

Portfolio Review

New Deals

Resource Planning

Partner Inputs

Market Feedback

Due Diligence

Detailed Action Plan

Presentation to All Partners

and On-Site Visit

Syndication Candidates

Decision by Investment Committee

Portfolio Monitoring

Value Creation

Follow on Funding or

Exit

Local Knowledge & Networks

Optimal Deal Sourcing

Access to Global Intelligence

International Networks

Experienced Team

Strong Team of Advisors

Optimal Deal Structuring

Syndication

Highly Experienced Investment Committee

Advice to Investee Management

Contacts With Potential Customers

Business and Market Analysis

Network of Strategic Investors and ECM Makers


Organizational Structure

International Board of Advisors

Management Team

Investment Committee

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Investment Team (China)

Investment Team

(Singapore)

Administrative & Accounts

Team


*other Investment Committee members and Advisors to be confirmed

Principal Investment Committee and International Board of Advisors

Chairman, Nanyang Executive Program, Nanyang Business School, Singapore

Honorary Professor, Faculty of Management, Xiamen University, China

IC MEMBER EXPERIENCE

Professor Wee Chow Hou

Sheik Faisal Al-Thani

Chairman, Namma Real Estate Company Chairman, Qatar National Export Import

Company Deputy General Manager, and Qatar

Petroleum’s Representative at Anadarko Qatar Energy

Board of Advisors

Chairman, Tembusu Partners Pte Ltd Chairman, MoneyWorld Asia Chairman, Viking Offshore and Marine Honorary Consul, Republic of Lithuania

Andy Lim

IC Member

Yeo Cheow Tong

IC Member

Chairman, Board of Governors, Raffles University Member of the Global Advisory Board of the University of

Chicago Graduate School of Business Minister, Ministry of Transport, Trade & Industry, MD, LMA & Pacific Precision Castings

Board of Advisors

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Management Team

Mr Mahim Chellappa Principal Mahim has over 9 years of investment banking experience in the U.S. and Southeast Asia, with expertise in private equity, M&A, structuring and deal-making across a broad set of industries.

Ms Emily Goh Director Emily has more than 9 years of field experience with regional start-up and growth companies. She has also advised businesses on strategic alliances, cross-border M&A and capital raising activities.

Ms Emily Zhang Investment Director (China) Emily Zhang has over 7 years experience in consulting, business development and marketing in China and New Zealand.

Mr Eric DingInvestment Director (Shanghai) Eric was previously working in the corporate restructuring, listing and company management field. He has also provided financial and listing consultation services for many Chinese companies listed on the Singapore Exchange

Mr Chandran Gnanakuru Investment Director (Europe) Chandran is based in London, and spent 12 years running the alternative asset program of several family offices. He currently works closely with PE/VC teams on fundraising activities.

Mr Daniel LeeInvestment Director (Australia, NZ) Daniel has more than 15 years of experience in the asset management, treasury and securities industry. He is also involved in the hotel management and property development in New Zealand

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Investment Strategy


Fund Focused on Emerging Asia Middle Market Through Significant Minority Investments

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Emerging Asia has consistently outperformed ROW This dynamic region is expected to play a leading global

economic role Much of developed world faces significant long-term crises,

including massive debt, steep budget deficits, and structural unemployment

Emerging Asia

Typically, greater revenue and earnings acceleration than large cap companies

However, much less access to capital, providing investment opportunities for “hands-on” investors like Tembusu

Tembusu invests with proven entrepreneurs who typically have significant personal stakes in their companies

We target a 20% - 30% ownership stake and board representation

Commit internal resources towards improving the finance and operations of our portfolio companies as required

Middle Market

Significant Minority

Investments


Capitalize on Strong Growth in Asia

Continued strong growth from Asian economies – particularly in our focused areas of China, India, South East Asia, and Australia

Strong emerging middle class driving domestic consumption

Rapid urbanization with significant infrastructure building

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Source: IMF and www.xe.com. SE Asian basket consists of 7 countries (Singapore, Indonesia, Philippines, Thailand, Malaysia, Vietnam, and Cambodia), Pan Asian basket consists of 10 countries (Singapore, Indonesia, Philippines, Thailand, Malaysia, Vietnam, Cambodia, China, India, and Australia), Western Europe consists of 9 countries (Ireland, United Kingdom, Portugal, Spain, France, Belgium, Netherlands, Germany, and Italy).


Significant Minority Investments in High Growth Middle Market Companies

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Unique Growth Investment Opportunities

Minority Investment

Significant equity stake is key for management

to be motivated to succeed

Tradition of Asian family businesses

selling only minority stakes

Tembusu is one of the few PE funds with

expertise in this space

Middle Market

Selectively invest in high growth SMEs

Our fund size is tailored to most attractive

investments in Emerging Asia

Less efficient capital markets available for SMEs creates value

opportunities


Team Focused on Maximizing Returns Whilst Minimizing Risk

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Senior Management experienced in running companies as well as working alongside entrepreneurs

General Partners committed significant funds to TGF I and are committed to TGF II

Entrepreneur Led

Management Team

Close attention to investment structures in order to maximize returns, while limiting our downside risks

Experienced in the use of several different instruments in our investment agreements

No reinvestment risk, Tembusu will identify appropriate opportunities for partial or full realization of investments

Capital gains on portfolio investments and distribution proceeds to investors are exempt from taxation in Singapore

Aggressive Deal Structures

Attractive Fund Structure


Aggressive Deal Structures

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Our structured private equity investment agreements have included:

Convertible loans with detachable warrants

Redeemable Convertible Preference Shares

Performance guarantees with clawback provisions

Put options exercisable in the event of non liquidity after a specified time period (e.g., 2 years)

Tembusu carefully and aggressively structures our investments in order to maximize returns, while limiting our downside risk


Investment Selection


Investment Criteria

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High Growth and Scalable Companies

Tembusu Can Enhance Value Through Active Sponsorship

Targeted Industry Focus

Proprietary Deal Sourcing

Companies Have Exit Visibility and Feasibility


Aggressive Growth Capital Investments

Growth Stage Investment Focus Emphasis on companies that have expansion-ready business models

Value Creation Utilize entrepreneurial experience to grow portfolio companies General Partners have over 90 years of combined entrepreneurial experience

Hands-On Investment Approach Assist portfolio companies in Business Development, Finance and Corporate Governance Tembusu team has extensive experience in Private Equity, M&A, Investment Banking,

Financial Accounting, Management Consulting and Business Operations

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Company Value

Venture Capital

Business Plan

TGF II Exit

Growth Expansion

Globally Competitive Enterprise

Time

TGF II’s Focus

22


Sector Focus Emphasis on core sectors where Tembusu has operating and

investment expertise:

2323

Sector Experience

Natural Resources & Oil Services

GP is Chairman of a listed offshore & marine services provider Another GP founded a leading oil & gas services company Existing investment in TGF I

Clean Energy Exited investment in TGF I

Infrastructure Engineering Existing investments in TGF I

Technology, Infocomm & Media Existing investments in TGF I

Education

GP founded and built a multi billion dollar education conglomerate with operations in China and SE Asia Exited Investment in TGF I

Healthcare & Biotechnology IC member was a Senior Government Official in the Health Ministry Existing investment in TGF I


Proven Proprietary Deal Sourcing Ability

2424

IndustryCompany

DescriptionInvestment

StageLocation

Consumer Healthcare Water Filtration SEED South East Asia

Information Technology

Job Search Portal Growth South East Asia

Technology Data Storage Growth Asia-Pacific

Bio TechnologyPharmaceutical Intermediaries

Growth China

Most investees in TGF I were proprietary investments Highly connected network of advisors Sample of potential investments under consideration:


Track Record


TGF I – Tembusu Partners’ Flagship Fund

2626

Raised S$100 million from four general partners and 38 high net-worth individuals

General Partners (including Chairman) committed approximately S$50 million

TGF I’s strategy capitalized on growth opportunities available in the Southeast Asia and Greater China middle-market business space

Invested in 15 entrepreneur-driven companies with scalable business models, investments made between 2007 and 2009

Realized three investment exits and three liquidity events since inception

Achieved IRR of 38% from first investment exit in July 2009 and 72% IRR from third investment exit in September 2010

Three TGF I portfolio companies expected to list on Hong Kong, Malaysia and Australian exchanges during the next six months

Entrepreneur Driven Investees

TGF I Raised S$100 Million

Executed Successful Exits


TGF I – Portfolio Segmentation

Segmentation by Industry Segmentation by Geography

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China Dredging

Offshore & Marine

China

Nov 2007

GlobalRoam

Internet Telephony

Singapore

Oct 2007

Tongji Environment

Water Treatment

China

Oct 2007

Artivision Technologie

s

Technology

Singapore

Jul 2007

TGF I – Portfolio Companies

Standard Water

Water Treatment

China

Aug 2007

Infinite Frameworks

Media Post-Production

Singapore

Jun 2007

VDH Energy

Biodiesel

Singapore

Apr 2007

Hongwei

Synthetic Textiles

China

Apr 2007

ACTAtek

Biometric Security

Singapore

Jun 2007

TTMI

Metals Recycling

Malaysia

Dec 2006

Silver City Minerals

Mineral Exploration

Australia

Nov 2009

Sports Asia

Sports Apparel

China

Feb 2008

Tangshan Ganglu

Steel Manufacturing

China

Feb 2008

Cherie Hearts

Early Education

Singapore

Jan 2009

Ying Tai Biotechnolog

y

Bio-Pharmaceutical

China

Nov 2007

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Investment Exit – VDH Energy

Van Der Horst Biodiesel Pte Ltd (“VDHB” or the “Company”) is a start-up company incorporated in 2006 engaged in biodiesel production Annual production capacity of 200,000 tonnes of biodiesel

TGF I invested S$1.0 million in VDHB through a convertible loan in April 2007, with the view to exit through a listing on the Singapore Exchange within 6 to 12 months

The convertible loan was converted to ordinary shares in October 2007 and swapped for 9.1 million shares of Van Der Horst Energy Ltd, a listed company on the Singapore Exchange’s Catalist board, through a reverse-takeover process

The investment was successfully divested in June 2009 through a block trade on the Singapore exchange, yielding an investment IRR of 37.6% Investment period: Apr 07 – Jun 09 (2 years 2 months) Return Multiple: 2.0x Investment IRR: 37.6%

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Investment Exit – Tongji Environment

Tongji Environment (Asia) Pte Ltd (“Tongji” or the “Company”) is engaged in the business of wastewater treatment, sludge treatment and environmental engineering projects in various parts of China

Tembusu invested S$7 million in the Company through a combination of convertible loans, common equity, and collateral provision in October 2007 for an effective stake of 27.6%

In June 2010, Tembusu exercised its redemption rights on its convertible loans and sold its equity interest in Tongji for a total consideration of S$8.5 million Investment period: Oct 07 – Jun 10 (2 years 8 months) Return multiple: 1.2x Investment IRR: 8.5%

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Investment Exit – Cherie Hearts

Cherie Hearts Group International Pte Ltd is a childcare centre engaged in the provision of early childhood education with over 65 centres in Singapore.

Tembusu invested S$3 million in the Company through a loan with detachable warrants in January 2009.

In September 2010, Tembusu exited the investment via a negotiated management buyout. Investment period: Jan 09 – Sep 10 (1 year 9 months) Investment IRR: 72%

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Other Details


Contact UsUnited Kingdom120 West Heath RoadLondon NW3 7TXUnited Kingdomt: (44) (0) 20 8458 1947

Beijing1513 Zhejiang Tower, Anzhen Xili (North 3rd Ring Rd)Chaoyang District, Beiijng 100029, Chinat: (86) 10 6445 2108 f: (86) 10 6445 1286m: (86) 1351 105 6187m: (86) 1870 139 8078

ShanghaiOffice 1001, Hong Kong Plaza, 283 Huai Hai Road Central, Shanghai 200021, Chinat: (86) 21 6390 6123f: (86) 21 6390 7306

Singapore (Head Office)3 Phillip Street #08-04 Commerce Point Singapore 048693 t: (65) 6536 0578 f: (65) 6536 0576 e: [email protected]

Nanjing (China HQ)23F Huijie Plaza, 268 Zhongshan Road, Nanjing 210008, Chinat: (86) 025 8319 1520f: (86) 025 8319 2351

Australia & New Zealandc/o 155 Queen StreetAuckland, New Zealandt: (64) 21 2828 988

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Appendix A: Biographies


Investment Committee Members Biography

Mr. Andy Lim chairs the Investment Committee of TPPL. He is also the Chairman of MoneyWorld Group of Companies, a leading foreign exchange player and Chairman and controlling shareholder of publicly listed Viking Offshore & Marine Ltd. His other Board appointments include Chairman of Alpha Singapore, Board of Governors of Raffles University, and President of Enterprise 50 Club. Mr. Lim is also the Honorary Consul to the Republic of Lithuania. Mr. Lim graduated with First Class Honors in Engineering from Cambridge University and an MBA Degree at University of California at Los Angeles (UCLA) in 1989.

Mr. Yeo Cheow Tong is currently a Member of Parliament for Hong Kah GRC. Mr. Yeo started off his career in the Singapore Economic Development Board and thereafter joined LeBlond Makino Asia in 1975. In 1981, he was appointed Managing Director of both LMA and its subsidiary company, Pacific Precision Castings. Mr. Yeo first entered politics in 1984 as the elected MP for Hong Kah Constituency and was appointed Minister of State for Health and for Foreign Affairs in 1985. In 1988, he became the Acting Minister for Health and became full Minister in 1990. An experienced political leader, he has handled different Ministerial positions including Health, Community Development, Trade and Industry, Environment and Transport. He subsequently retired as Minister for Transport in 2006.

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Board of Advisors Biography

Dr Faisal Althani is currently based in Qatar and is the Chairman of Namma Real Estate Company and Qatar National Export and Import Company. He has a strong background in the natural resources sector, with numerous years of experience gained at several petroleum companies – with which he is currently the Deputy General Manager and Qatar Petroleum’s Representative at Anadarko Qatar Energy. Dr Althani has studied in the United States of America as well as the United Kingdom and was previously a Fullbright Scholar studying at University of Colorado, Boulder

Professor Wee Chow Hou is Head of the Marketing and International Business Division and Chairman of the Executive Programs at the Nanyang Business School, Nanyang Technological University (Singapore). He is also an Honorary Professor at Xiamen University (China). Professor Wee has consulted/conducted executive training for over 250 major organizations in over 30 economies/countries, including Fortune 500 companies, and is best known for applying Chinese classics to modern business strategies and practices. Professor Wee also sits on several boards of publicly listed companies in Singapore, and is also a member of various advisory boards locally and internationally.

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