Beijing Capital Cleantech Fund

- Beautiful Beijing Event -

Cleantech Investments and Financing in China

HU JUNMING,INVESTMENT DIRECTOR, Beijing Capital Investment

首创创投

BCG (Beijing Capital Group) is the investment conglomerate of the Beijing Municipal Government.

• Founded in 1995 to manage the Beijing government’s assets• Diversified conglomerate with operations in Financial Services (includes Private

Equity group), Infrastructure, Technology and Real Estate• Over USD$30 billion in assets under management• BCG is a trusted and influential brand• 32 offices throughout China • 6 publicly-listed subsidiaries

Beijing Capital Investment (Beijing Capital)BCG

BCI (Beijing Capital Investment) is a subsidiary of BCG for PE and VC investment management.

• Manages BCG’s private equity investment activities • Pioneer in RMB private equity in China• Investors in the five prior funds• Successful track record focusing on high growth, pre-IPO companies

• Three PE funds and one VC fund :• Gross IRR on exited funds from 20%-50%• Over 30 investments across 5 funds

• 22 exits, 12 through public market exits• 2 of current portfolio companies in listing queue

A successful track record in managing investments and generating high returns

Beijing Capital

Funds managed by Beijing CapitalBeijing Capital

Name Founded inInvestment scale

(RMB)

Beijing Capital Investment (Direct Invest) 1998 300 million

Shenzhen Capital Growth (PE ) 2007 100 million

Xinrong Hengji Investment (PE) 2008 100 million

Ningbo Capital Growth (VC) 2010 100 million

Beijing Fuying Tiancheng (PE) 2012 300 million

Name Deals IPO M&A IRR

Beijing Capital Investment (Direct) 10 8 2 53.65%

Shenzhen Capital Growth (PE )7 2 3 22.93%

Xinrong Hengji Investment (PE) 2 2 32.39%

Ningbo Capital Growth (VC) 4 4

Beijing Fuying Tiancheng (PE) 5 1

Funds managed by Beijing CapitalBeijing Capital

Investment and Market OpportunitiesChina’s environmental industry

is booming

China is fast becoming a major market for global environmental technology

• More than 8 000 billion RMB flowed into cleantech sector during 2011-2015• At least 300 million people have migrated and is migrating into urban areas in

the process of urbanization• As the environmental pressure increasing dramatically, the government and

civil society have achieved a high degree of consensus on the implementation of stricter environmental policies

• It is expected that the environment/cleantech industry in China grows at an average annual rate of 15-20%

• 7 “strategic emerging industries” including 3 key industries related to cleantech, e.g., environmental protection, new energy, energy conservation and clean energy vehicles

Investment and Market OpportunitiesS&T VC will be the biggest winners in the

industrial upgrading and the capital market transformation

Transformation of Chinese capital marketNEEQ is a huge opportunity for science and technology venture capital in China.NEEQ has gradually formed innovative institutional arrangements and operational mechanisms for SMEs, and is becoming a good choice for small and medium technology enterprises to operate their capital. Currently, NEEQ provide listed companies with a variety of financial instruments, including equity financing, private placement and preferred equity.Opportunities for S&T VCThe gene of venture capital perfectly matches NEEQ, and the development of science and technology venture capital is inseparable from the support of efficient capital markets. NEEQ, as the best development as well as an exit, provides an excellent opportunity for the development of S&T VC.

The boom in M&A transactions in China happens in the past three years. For example, the number and value of announced deals in 2014 both increased, by 14.1% and 1.5% respectively over 2013, reaching 6 967 and 372 billion USD.

In 2015, M&A market is expected to expand and upgrade, moving from traditional industries to emerging industries. As a sample, Beijing Xiangeqing Co., Ltd., a chain restaurants operator, changed its name to “Cloud Live Technology Group Co., Ltd.”, planning to explore the M&A integration in emerging industries based on big data.

As a result of the financial crisis and Euro-zone quantitative easing etc., Chinese enterprises’ acquisition in overseas markets is growing even faster than in Chinese market. The number of mainland enterprises overseas M&A transactions hit an all-time high of 272 in 2014, a 36% increase over 2013.

Investment and Market OpportunitiesM&A, especially overseas M&A

brisk up unprecedentedly

Investment and Market OpportunitiesM&A, especially overseas M&A

brisk up unprecedentedly

Number of M&A transactions

Value of M&A transactions (100 million USD)

Overseas M&A by Chinese companies

• In March 2014, BCG acquired Transpacific New Zealand (TPI NZ) 100% shares through its Hong Kong Listed subsidiary. The case volume was around 5 billion RMB. The acquiring was approved by OIO (New Zealand) and completed in June 2014.

• In May 2015, Beijing Capital Water Co, one of Listed company of BCG, acquired 65% shares of BCG NZ Investment Holding Limited, which is the biggest waste management operator in New Zealand. The case volume is around 1.8 billion RMB.

Investment and Market OpportunitiesLatest case study by Beijing

Capital

Added-value to European technologiesBeijing Capital Cleantech fund

China is becoming the world’s largest environmental market. The fund aims at: • to explore the most potential segments of Chinese environmental market• to develop the complementarity of the expertise (high-tech companies) and Chinese

financing (high growth and pre-IPO companies)• to invest in and facilitate the JVs with leading technologies and market shares in

Chinese market• to create a high return (IRR) by the domestic IPO process

Invest

ChinaEurope

JV fundLPs

GPFund management

companyBCI

Clean Techcompanies

Leading companies

LPs (BCG ,BCI,BANK,

Chinese investors)

StructureBeijing Capital Cleantech fund

Industry focus• Smart Cleantech: technology and service• Clean energy related operating assetsForms of investment• Equity investment• Joint investment/co-investment through joint venture in the Chinese market Geographic focus• The European countries with the strength to match with the top demands of Chinese

cleantech marketInvestment stage• Nordic companies which has locally completed commercialization, with a net

turnover of 1 million to 10 million EUR

Value Realization StrategyBeijing Capital Cleantech fund

Investment scale5-50 million EUR, depending on the specific project

Investment objectiveEnvironmental enterprises with local market resources + overseas environmental technology companies with core technology

Shareholding structureAiming at obtaining the right to use the technology from the source company, and becoming the controlling or influential shareholder of the Chinese company

CriteriaCompanies with promising target market and high growth potential

Time horizonInvestment will be completed in 1-2 years, and the entire investment cycle is less than 3 years

Exit strategyMerger integration, independent IPO or acquisition by listed companies

Governance structureClear property structure, identifiable benefits

Target IRR> 25%

Value Realization StrategyBeijing Capital Cleantech fund

Key Focus Areas of Cleantech Investment

Smart cleantech areas

Significant technology focuses

Technology focuses

Entry points for subsequent technology

Environmental services

Water

Energy

Material cycles

Monitoring services

Governance services

Water-saving equipment

Energy Efficiency Services

New materials

Sludge disposal

Waste-to-energy

Sorting

System integration

Equipment

Control system

Business model

Miniaturization of biogas equipment, refining equipment

Key equipment to manage energy consumption

Key equipment to utilize sludge

Real-time measurement and big data analytics

Operating facilities and services in Europe

Assets

Clean energy