LEAP General Business Summary Final

CONFIDENTIAL

Leap Alpha Venture Business Summary of 50

CONFIDENTIAL BUSINESS SUMMARY

Exclusive Offering to Limited Partners

LEAP ALPHA Business Summary

Co-Investment Fund, LLC

Harnessing the potential in direct US-China Investments

LEAP ALPHA

December 2016

CONFIDENTIAL


Executive Summary .................................................................. 3

Investors .................................................................................... 9

Exit Channels and Chinese Acquirers .................................. 17

Strategic Partner .................................................................... 21

Target Companies .................................................................. 27

GP Partners ............................................................................. 33

Investment Committee ........................................................... 40

Market Opportunity and Comparative Advantage ............. 43

Revenue Projection ................................................................. 45

Leadership ............................................................................... 48

Timeframe ............................................................................... 50

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Executive Summary

Established in China, LEAP Alpha is a team of professionals specialized in cross-border

investments serving clients in both China and the United States. LEAP Alpha was created by Mr.

Jeffrey Sheng, who has more than 27 years of experience in operations, consulting, business

development and investments; both in Asia and the US. He is joined by a select group of

seasoned private equity professionals having the insight and knowledge of the attraction that US

middle market companies bring to Asian investors. They also have the expertise in sourcing and

managing attractive investment opportunities in the US middle market where our team can

capitalize on a company in transition and tap into unlocked potential in a strategic China angle

within the company for distribution and/or manufacturing.

LEAP team has strong connections to the investment communities in both China and the U.S.

Our first round commitment fund will be targeted at $500 million and plans to invest into 25-30

targeted private US mid-market companies. LEAP team is looking to form a Joint Venture with a

Strategic Partner while reserve the flexibility to cooperate in a Co-Invest relationship. This is an

innovative investment firm specialize in customized solutions for both Chinese and US investors

in alternative asset, targeting an IRR between 20% and 30%. We plan to raise our first committed

fund of $500 million with long term goal of ten billion US dollars AUM by 2030.

Highlights:

• Private Equity Seeder Strategy

• Operational Innovation

• Customized Family Office Services

• Multi Billion AUM

LEAP build the platform to support US financial service firms to approach Asia market and help

Chinese investors approach US market at the same time.

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LEAP team understands the deficiencies of cooperation between US asset managers and capital

outflow from China:

• Large amount of capital outflow from China not placed in attractive product and services,

Chinese HNWIs higher return requirement and more risk preference not satisfied

• Difficulty for US institutions to get into this community in short term without Joint

Venture model or intrapreneurship or invest in a new venture specializing in niche market

• Most institutions think with sell side mindset for short term cash flow; Reluctant to

modify existing strategies with customized product to make full use of long term trend of

capital inflow.

• Huge cultural, legal and business mentality differences in cross border M&A, private

equity asset allocation and what MFO/SFO means to China wealthy families and business

founders.

• Ineffective approaching clients by merely recruiting Chinese young professionals with

limited experiences in China but strong American mindset

Our strategy is to develop LEAP Alpha Franchises or Special Purposes Vehicles with US GP

Partners in the US to serve Chinese Investors. The SPVs are industry segment specific and

provide a diversified portfolio of investments for Chinese investors; given their increasing

demand of overseas asset diversification and cross-border mergers and acquisitions. Our first

round commitment fund will be targeted at $500 million and plans to invest into 25-30 targeted

private US mid-market companies. The fund will focus on target companies within one or more

of 4 highlighted sectors:

niche manufacturing

consumer products

technology-enabled business services

lifestyle services

The target companies will have EBITDA ranging from $5 million to $50 million. Leap Alpha

and our GPs will add operational value over time and assist our portfolio companies to grow

their EBITDA to $10 million to $100 million; thus making the companies very attractive

acquisition targets that can sell at high multiples. The primary objective is to provide capital for

U.S. companies who:

operate in high-growth service industries

possess advanced technologies

are leading brands, or unique products/services

have desire to expand their businesses in China

have the capacity to succeed in China’s vast markets

CONFIDENTIAL


The key elements in our strategy include but not limited to:

Emerging Chinese HNW populations and their increasing overseas asset allocations;

Increasing number of cross boarder acquisitions between China and United States;

First mover in a customized private equity product for Chinese investors;

Outperformance of emerging managers and seeder’s long term carry sharing

Client tailored sector focus, Chinese investors demand oriented;

Expansion business in Asia of US middle market companies;

Cross border strategic alliance or M&A;

Middle market, covering companies with EBITDA ranging from $5M to $50M;

Working with US a strategic investor and US GPs

Scalable business model;

In addition to managing and transforming initial target companies into sustainable and profitable

investments as traditional committed private equity fund do, Leap Alpha provides ongoing

value-added services to target companies, aiming at selling the majority of our portfolios to

Chinese acquirers (listed companies or pre-IPO companies in China) that statistically offer an

average of 36% higher valuation/bid than domestic acquirers in US.

Chinese acquirers are willing to pay for a higher price due to valuation differences between the

two countries. Expected PE ratio of 18X to 25X in S&P 500 and NASDAQ are much lower than

in Chinese stock markets, especially compared to 36X to 53X in Shenzhen Index and China

Growth Enterprise Index (highest 135X in China Growth Enterprise Index in 2015). After being

acquired by Chinese acquirers at a higher price, shareholders can have additional opportunities to

increase value through Chinese capital market growth. Given the volatility in stock markets in

China, the shareholders can choose to sell at a higher price if acquired by listed companies or

cash out their stake when non-public acquirers go public (IPO) in bull market. LEAP Alpha

collects demand information through its deep connections within the PE ecosystems on both

sides. It would also be possible for the target companies to IPO in domestic markets, if higher

valuation exists considering parent companies’ financial strength. Interests of all parties,

including but not limited to Investors, Target Companies, FOF, Family Offices, Acquirers, GP-

partners, and LEAP Alpha team, are well aligned in this business model. LEAP Alpha matches

the demand through innovative deal design, development, and structuring.

$$

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Currently, LEAP Alpha’ Services include but not limited to:

• Raise capital through Investors from China

• Introduce Chinese acquirers

• Form cooperation between US GPs and Chinese GPs

• Seed and support emerging managers in searching and transacting deals with China angle

• Identify the most suitable target U.S. businesses for acquisition, build synergies entering into Chinese market and facilitate the transactions

• Provide additional exit channels for existing portfolios

• Market Brand and track record in China for future fund raising

• Find acquirers (Chinese Asset Management Firms) to purchase the LEAP Alpha team

LEAP Alpha prepared this information solely for the person to whom it has been given for informational and discussion purposes only. The

information contained herein is strictly confidential and may not be reproduced, distributed, or communicated to any third party without the

express written approval of LEAP Alpha. LEAP Alpha reserves the right at any time to amend or change the contents of this document without

notice. The information contained herein shall not constitute an offer, solicitation or recommendation to sell or an offer to purchase any private

equity strategies, investment products or merger acquisition advisory services. LEAP Alpha believes that the research used in this provided

information is based on accurate sources, but we have not independently verified those sources, and we therefore do not guarantee their

accuracy.

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LEAP Alpha Structure

Chinese LPs

LEAP

Alpha

Platform

LEAP team and Chinese Market

US Strategic

Partner

US LPs

Chinese

Acquirers

US

GP Partners

Chinese Asset

Management Firm

Recruit Chinese LPs

Introduce Chinese Angle Investor Acquired by Chinese Asset Management Firm

Chinese Acquirers Connection

Recruit US LPs

Manage Headquarter Investments

Support US GP Partners Cooperate with US Strategic Investor

Chinese

Angle Investor

LEAP team and US Market

Headquarter

Investment

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Capital Flow Chart

Acquirers

LEAP

Alpha

Fund

Headquarter

Investment

Chinese Capital

Market

Target

Company

Chinese Asset

Managers

LPs

Acquirers

Target

Company

Chinese

Investors

Chinese

Acquirers

US

GP Partners

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Investors

The Firm is engaged in a highly competitive business, but we feel we are uniquely

positioned because we have strong personal and past business relationships with various

types of Chinese Investors and Acquirers that have an increasing demand of allocating

their assets to the U.S. There is strong overlap between investors and acquirers. These are

two core assets of the LEAP Alpha team.

Capital Source

LEAP Alpha will source the majority of capital from Chinese private equity investors. We would

also expect our GP Partners to raise 10%-15% of the $500 million commitment fund. LEAP

Alpha briefly divides investors into five categories, among which Investors Type 1, Investors

Type 2, and Investors Type 3 also have an overlap with our ultimate acquirers.

Type 1 Chinese Companies having income or assets globally

Companies under this category already have income or asset in US. These companies have

enterprise value ranges from $500 million to $30 billion, with an average investable capital

between $20 million to $100 million. A sample list of Type 1 Companies includes:

Wanda Group – Wanda Group’s cross-border M&As include US film studio Legend

Entertainment, AMC Theatres, Switzerland’s Infront Sports & Media, and World

Triathlon Corporation. It has also invested in landmark five-star hotels in international

metropolises including London, New York, Los Angeles, and Sydney. Wanda Group

plans to continue its transformation into a global sports, entertainment and tourism

conglomerate.

Legend Holdings – Best known for its 2005 acquisition of IBM’s ThinkPad division, the

firm had a big year in 2014 with two major acquisitions in the US: Motorola Mobility and

IBM’s x86 enterprise server division. In 2015, Legend Holdings and Kailis Family

formed a newly-capitalized joint venture called KB Food Group which is 90 per cent

owned by Legend Holdings and 10 per cent owned by the Kailis Family. In 2016,

WeWork raised $430 from Legend Holdings for China expansion.

Fosun International – Over the last two decades, Fosun has evolved from an

entrepreneurial start-up into a leading investment group taking roots in China with a

global foothold. From 2010 through 2015, Fosun has spent billions buying foreign firms

and says it is looking at healthcare, tourism, fashion firms and banks in the US and

Europe. These include France's Club Med, Britain's Thomas Cook Group, Canada's

Cirque du Soleil, American clothing label St John, and Greek jeweler Folli Follie.

https://en.wikipedia.org/wiki/Club_Med

https://en.wikipedia.org/wiki/Thomas_Cook_Group

https://en.wikipedia.org/wiki/Cirque_du_Soleil

https://en.wikipedia.org/wiki/St._John_(clothing)

https://en.wikipedia.org/wiki/Folli_Follie

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Tencent Holdings – Tencent has made prolific investments in developers of mobile

games, social games, VR and eSports. Ten of Tencent’s investments in gaming have had

exits – nine companies including Riot Games were acquired. Shenzhen-based iDreamSky

managed an exit through an IPO in 2014. Supercell’s acquisition is the largest acquisition

made by Tencent in gaming, eclipsing its acquisition of Riot Games in 2015. Four of

Tencent’s game acquisitions were made overseas – two in Europe, and two in the USA.

Huawei – Despite facing challenges in the US in its core telecommunications equipment

business, the firm continues to do exceptionally well around the world. The firm’s

consumer business has been booming overseas, and many of its new products were

featured at the 2015 Consumer Electronics Show in Las Vegas.

S.F. Express–China's FedEx, moved into Vietnam and Thailand and expanded services

to all 50 U.S. states. The company is partnering with U.S.-based online retailers to bring

more U.S. goods to Chinese consumers. Its’ enterprise value is expected to surpass Fedex

in two years and UPS in five years.

Eternal Asia – Eternal Asia Supply Chain Management Ltd. provides professional

supply chain service and management for Fortune 500 enterprises, and various national

and international enterprises. Its products and services include an integrated platform of

global supply chain service; a service network that covers various cities in China,

Southeast Asia, European Union, the United States, and other regions to provide

customers with regional linkage service nationwide, global procurement and sales,

international distribution, and delivery and other services.

Hepalink Pharmaceutical – In 2014, Hepalink Pharmaceutical completed 100%

acquisition of SPL. SPL became part of Hepalink’s global supply system

for heparin sodium active pharmaceutical ingredients (APIs). Last year, Shenzhen

Hepalink bought U.S.-based biologics contract manufacturer Cytovance Biologics for

$205.7 million. Earlier this year, the company created OncoVent with Canada’s

OncoQuest--a Chinese R&D firm--to explore new therapies and work on existing

immunotherapy products in a $9.3 million deal. In Jun 2016, Hepalink Pharmaceutical

plans to invest US$60 million in TPG Biotechnology Partners, that Hepalink has already

invested $ 22 million.

BYD–Top electric vehicle manufacturers in the world (#1 in terms of overall plug-in

car sales), recently broke ground on the second of three planned expansion/construction

phases at its vehicle manufacturing plant in Lancaster, California. BYD’s successful

oversea expansion and green automobile focus enable itself join Fortune 500 by 2017.

http://consumer.huawei.com/en/press/news/hw-358133.htm

http://cleantechnica.com/2016/09/19/plug-electric-vehicle-sales-grew-50-1st-half-2016/

http://cleantechnica.com/2016/09/19/plug-electric-vehicle-sales-grew-50-1st-half-2016/

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Type 2 Institutional Investors in China

There is an increasing number of strategic overseas asset management divisions within

institutional Investors, including Independent Financial Advisory Firm, Investment Banking,

Commercial Bank Private Wealth Departments, Trust Companies, and Insurance Companies.

The average investable capital for this group of investors ranges from $10 million to $40 million.

LEAP Alpha has a strong connection with the Top 20 Independent Financial Advisory Firms and

Top 50 Investment Banks in China including NOAH Holdings, CreditEase, YinChuang Wealth,

Hang Tang Wealth, HAIYIN Wealth, Huatai Securities, Cinda Securities, and GF Securities etc.

Both Independent Financial Advisory Firms and Investment Banks are expanding foreign market

business and are interested in LEAP Alpha’s unique investment platform specialized in cross-

border merger and acquisitions.

Commercial Bank Private Wealth Departments, Trust Companies, and Insurance Companies

share a common interest of investing clients’ money overseas, especially in assets denominated

in US dollar. This enables LEAP Alpha to build a strong connection with these companies and

develop possible LP relationships.

Type 3 Entrepreneurs or Executives of Chinese listed companies

LEAP Alpha uses a tiered approach to reach investors of this category. We use the term “tier 1”

to refer to our personal connections with these entrepreneurs and senior executive members. The

population size and net worth of this group of investors have increased overtime and they are

targeting investments on a global scale. These investors include:

Entrepreneurs and senior executives of directly served clients that we have

provided financing services, M&A transactions, human resources, strategy, and

cross border business development in the past.

Entrepreneurs and senior executives of portfolio companies served by several funds that

we have worked with for a long time period

Entrepreneurs and senior executives from “sunset” industries with excessive capacity, for

instance, textile, clothing, real estate, mining, steel, and low-end manufacturing. They are

seeking investment opportunities in the “sunrise” industries both in China and overseas.

VC/PE fund managers and investors who have successfully exited. They are interested

in new investment opportunities.

Personal friends and network referrals

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We can call, visit, or meet people with this group without any introduction or referral. Average

assets of this group ranges from $5 million to more than $1 billion. Below we provide three lists

to showcase our tier 1 contacts. For the companies listed below, we personally know the

entrepreneurs and the senior executive team members. We have information about how much

equity stakes they hold in their companies and their overall net worth. We are also aware of the

growth history of the companies, for example, which VC/PE funds have invested how much at

what time stage.

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List 1: Past clients

Below is a partial list of private placement or co-investment, direct investment

deals that we facilitated in the past.

# Company Name Industry Investors Current Status

1 Eternal Asia (www.eascs.com, SZ002183), Shenzhen

Supply Chain, Logistics

SAIF, May 2006 IPO at Shenzhen in 2007, 10+ times of return to investors

2 Longhao (www.longhao.com.cn), Shenzhen. Garment,

Footwear

Hony Capital,

January 2008

The company was partly

acquired.

3 Edan Instrument (www.edan.com.cn,

SZ300206), Shenzhen.

Medical

Devices

Matrix, Softbank,

and WI Harper,

December 2007

The company went IPO

at Shenzhen in 2011.

4 Liancheng (www.lmc-ind.com), Shandong

province.

Auto Parts Hony Capital,

February 2008

Pre-IPO

5 Gross Tubes (www.gross-tubes.com), Energy CDH, September Pre-IPO

6

Zhejiang province.

Shenzhen Catic Wellness

Equipment

Gym Chain

2008

Dacheng Fund,

Pre-IPO

(www.physicalclub.com) Store 2008

7 Shenzhen Hepalink Pharmaceutical

(www.hepalink.com, SZ002399)

Pharmaceutical Goldman Sache,

November 2007.

IPO in 2010, 180 times

of return to investors

within 3 years.

8 Ocean Power Industrial

(www.oceanpower.com), Shenzhen.

Environment

Protection

Pre-IPO

9 Audi Toy and Aufei Culture, Guangzhou Toy design and animation

IPO in 2010

10 SonoScape (www.sonoscape.com), Shenzhen. Ultrasound

diagnostic

systems and

transducers

China

International

Capital

Corporation

(CICC), 2011

Pre-IPO

11 Aisidi (www.aisidi.com, SZ002416),

Shenzhen.

Mobile Phone

Wholesale

The company went IPO

at Shenzhen in 2010.

12 Universal Marble & Granite Group

(www.umgg.biz), Dongguan, Guangdong

province

Decorative

Stone

Manufacturing

China

International Trust

and Investment

Pre-IPO

13 Capital International Business Centre (www.wybgs.com), Shenzhen.

Serviced offices Sequoia Capital, Trust Bridge

Pre IPO

14 Wanda Group (www.wanda.cn), the largest

commercial real estate group company of

China, headquartered in Dalian.

Commercial

real estate

Several private

equity funds

Dalian Wanda

Commercial Properties

went IPO at HongKong

in 2014.

15 TopOne Auto (www.top1.cn), Shenzhen. Car rental SIG Secondary transaction

16

Shanghai KNX (www.knx.com.cn), Shanghai.

Human

resources

OFC, Everbright

Pre-IPO

http://www.eascs.com/

http://www.longhao.com.cn/

http://www.edan.com.cn/

http://www.lmc-ind.com/

http://www.gross-tubes.com/

http://www.physicalclub.com/

http://www.hepalink.com/

http://www.oceanpower.com/

http://www.sonoscape.com/

http://www.aisidi.com/

http://www.umgg.biz/

http://www.wybgs.com/

http://www.wanda.cn/

http://www.top1.cn/

http://www.knx.com.cn/

CONFIDENTIAL


List 2: Top 500 Private Enterprises in China

All-China Federation of Industry and Commerce (ACFIC) recently unveiled China Top

500 Private Enterprises in 2015.

Rank Company Name Industry Location

2 华为投资控股有限公司

Huawei

www.huawei.com

7 大连万达集团股份有限公司

Wanda Group

www.wanda.cn

Telecommunications

electronics

Real estate, hotel, leisure,

entertainment, sports

Guangdong

Liaoning

10 万科企业股份有限公司 China Vanke Co. Ltd.

www.vanke.com

15 TCL 集团股份有限公司 TCL Corporation

www.tcl.com

36 比亚迪股份有限公司 BYD Company

www.byd.cn

42 上海复星高科技（集团）有限公

司 Fosun Group

www.fosun.com

Real estate Guangdong

Consumer electronics Guangdong

Automotive Guangdong

Asset management Shanghai

58 深圳市爱施德股份有限公司

www.aisidi.com

Communications device

wholesale

Guangdong

81 九州通医药集团股份有限公司

www.jztey.com

133 浙江龙盛控股有限公司

www.longsheng.com

Medical wholesale Hubei

Chemical Zhejiang

174 中经汇通有限责任公司

www.zjhtc.com

business service, consumer

service

Guangdong

190 卧龙控股集团有限公司

www.wolong.com

213 万丰奥特控股有限公司

www.wfjt.com

361 浙江亚厦装饰股份有限公司

www.chinayasha.com

482 浙江古纤道新材料股份有限公司

www.guxiandao.com

Electrical equipment Zhejiang

Automotive parts Zhejiang

Construction and decoration Zhejiang

Chemical fiber Zhejiang

http://www.huawei.com/

http://www.wanda.cn/

http://www.vanke.com/

http://www.tcl.com/

http://www.byd.cn/

http://www.fosun.com/

http://www.aisidi.com/

http://www.jztey.com/

http://www.longsheng.com/

http://www.zjhtc.com/

http://www.wolong.com/

http://www.wfjt.com/

http://www.chinayasha.com/

http://www.guxiandao.com/

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List 3: Top 100 Shenzhen Enterprises

Shenzhen Enterprise Confederation and Shenzhen Enterprise Association published the list

of top 100 enterprises of 2015. The full list of companies is available at:

http://www.shenzhenql.com/pbbz/2015/201510/2015101619165780pls_1.html.

The table below shows 12 companies as our tier 1 contacts (Not all companies have English

names, and there are a few duplicates as in List 2).

Rank Company Name Industry

1 中国平安保险（集团）股份有限公司

www.pingan.com

2 华为技术有限公司

www.huawei.com

3 招商银行股份有限公司

www.cmbchina.com

4 万科企业股份有限公司

www.vanke.com

5 腾讯控股有限公司

www.tencent.com

23 国信证券股份有限公司

www.guosen.com.cn

32 普联技术有限公司

www.tp-link.com.cn

36 深圳市兆驰股份有限公司

www.szmtc.com.cn

44 深圳市怡亚通供应链股份有限公司

www.eascs.com

57 深圳市建工集团股份有限公司

www.szjgjt.com.cn

80 深圳劲嘉彩印集团股份有限公司

www.jinjia.com

90 深圳市海普瑞药业股份有限公司

www.hepalink.com

Insurance, financial services

Telcommunications

electronics

Commercial bank

Real estate

Internet

Security services

Communications equipment

Consumer electronics

Supply chain management

Construction and equipment

Packaging service

Medical

http://www.shenzhenql.com/pbbz/2015/201510/2015101619165780pls_1.html

http://www.pingan.com/

http://www.huawei.com/

http://www.cmbchina.com/

http://www.vanke.com/

http://www.tencent.com/

http://www.guosen.com.cn/

http://www.tp-link.com.cn/

http://www.szmtc.com.cn/

http://www.eascs.com/

http://www.szjgjt.com.cn/

http://www.jinjia.com/

http://www.hepalink.com/

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Type 4 High Net-Worth Individuals

China now has the most billionaires globally despite the country's economic slowdown, stock

market plunge and crackdown on corruption. According to a China-based wealth research firm,

the Hurun Report said China now has 568 billionaires versus the United States' 535; giving it the

largest population of billionaires in the world.

The population size of “China Ultra High Net Worth” market is estimated to be 17,000, with an

average net worth of 1.82 billion (CNY), or USD 293 million. LEAP Alpha has close

connections with thousands of HNWIs who have accumulated wealth in stock or real estate

investments. They have successfully exited and are seeking new investment opportunities,

particularly overseas. LEAP Alpha can get in touch through previous networks of about 200

VC/PE fund managers in China, each of them having access to Chinese HNWIs. Through their

referral, we can get in touch with more Chinese HNWIs, at the scale of another several

thousands.

Type 5 US and International LPs

Besides abundant resources in China, LEAP Alpha has also been actively approaching US co-

investors. We have built a connection with more than 300 entities in US, including: Private

Equity Funds, Private Debt Funds, FOF, Secondary Funds, Investment Banks with Principal

Investment, Hedge Funds with Private Capital Strategies, Alternative Asset Firms, Wealth

Management Firms, Private Banking, Family Offices, Trust Company, Listed Private Equity

Fund.

LEAP Alpha will reserve right to approach other investors. Clearly, LEAP Alpha’s strong

connections in both China and US are large strategic assets. The private information is highly

confidential and sensitive in nature, and it is not easily available. We will be happy to share such

information when it comes to specific discussions.

CONFIDENTIAL


Exit Channels and Chinese Acquirers

By integrating various participating parties, LEAP Alpha could add significant value in the

cross border acquisitions. The most valuable assets of the LEAP Alpha team is its’

connection with Chinese Acquirers. By fully leveraging these resources, LEAP Alpha

brings additional exit channels to portfolio companies.

LEAP Alpha will invest 25-30 target companies in the first round funding. Within these target

companies, LEAP Alpha plans to find acquirers including Chinese listed companies, Chinese

pre-IPO private companies, US companies or go public in US market.

Each investor has its own exit timeframe, cost basis and return objectives. LEAP Alpha’s

strategy is unique in the marketplace by involving Chinese Investors and providing additional

exit channels. In most cases, the exit channels for a U.S. fund are largely restricted to the U.S.

Stock Markets, domestic buyout funds, or acquisition by large U.S. companies. LEAP Alpha’s

connections could bring exit channels including Chinese Stock Markets, Chinese private buyout

funds, and Chinese Corporations; some of which overlap with Investors in Type 1, Type 2 and

Type 3. By providing additional exit channels, LEAP Alpha better aligns shareholders’ benefits.

Early monetization allows sellers to lock-in gains, return cash to limited partners and reallocate

resources.

Another reason LEAP Alpha focuses on Chinese acquirers is that Chinese acquirers on average

bid a 36% higher premium than domestic buyers based on our research. Expected PE ratio of

18X to 25X in S&P 500 and NASDAQ indices is much lower than in the Chinese stock market

(compared to 36X to 53X in Shenzhen Index and China Growth Enterprise Index). Because of

this valuation difference between China and US, Chinese corporations are willing to pay a higher

price and get a bigger return from the Chinese stock markets. However, LEAP Alpha reserves

the right to sell to US and global acquirers given higher bids.

CONFIDENTIAL


LEAP Alpha divides Chinese acquirers into the following categories:

Category 1:

Sales and Distribution Channel

In January 2016 Havells Sylvania was acquired by Shanghai Feilo Acoustics Co. Ltd. and

formed Feilo Sylvania of which they own 80%. The deal puts the equity value of Havells

Sylvania at $204.6 million. Being an entrepreneurial and market driven organization, Shanghai

Feilo’s aggressive growth plans will become a reality by acquiring Havells Sylvania’s strong and

broad sales and distribution networks and a well-established operational system across the

regions.

Category 2:

Technologies and Innovations

Shuanghui International Holdings Ltd. agreed to pay $34 a share for Smithfield, the world's

largest hog farmer and pork processor. Including debt, the deal values the Smithfield, Va.,

company at $7.1 billion. American pork farming is a consolidated modern industry with

economies of scale. Eighty-seven percent of the pork sold in the U.S. is produced on big pig

farms with more than 2,000 hogs. Such farms are climate-controlled and self-contained to

minimize the spread of disease. By contrast, the Chinese pork industry is fragmented, small-scale,

and low-tech. Seventy percent of the pork in China is produced by pig farms with 500 hogs or

less. Thanks to this acquisition, Shuanghui also acquired valuable hog-farming and processing

technology.

Category 3:

Forward Acquisition

Luxury tour operator Abercrombie & Kent has entered into a deal to be acquired by Chinese

tourism developer and investment group Zhonghong Holdings. People from the Chinese

mainland spent $215 billion traveling abroad in 2015, 53 percent more than in 2014. Annual

double-digit growth of Chinese visitors can be expected. U.S. has become most favorable

country Chinese visitors and Chinese visitors have become vital to the U.S. tourism industry

since China has become the fourth-largest source of inbound tourism to the U.S. With huge

tourism resources by Zhonghong Holdings, this forward acquisition would open a new door for

its expansion in U.S. market.

Category 4:

Backward Acquisition

Aviation Industry Corp. of China, known as AVIC, has agreed to buy Henniges for about $800

million including debt. AVIC’s ambition to grow bigger in the auto-parts market is driven by its’

desire to own a greater piece of the global supply chain in industries where its consumers are big

buyers. China is the world’s largest market for sales of automobiles.

http://www.abercrombiekent.com/

http://www.zhonghongholdings.com/

http://www.zhonghongholdings.com/

CONFIDENTIAL


Category 5:

Rivalry Acquisition

Global ride-hailing giant Uber Technologies Inc. has given up its costly battle for China’s riders,

swapping its local operations there for a minority stake in the country’s homegrown champion,

Didi Chuxing Technology Co. The sale, which would create a new company worth about $35

billion, would end the battle. The merge enables Didi eliminate the biggest rivalry in China ride-

hailing market. After the merger, Uber shareholders would receive a 20 percent stake in the new

company, which will result huge benefit after this new company go public.

Category 6:

Brand Acquisition

Anbang purchased New York’s Waldorf Astoria from Hilton Worldwide Holdings in 2014 for

$1.95 billion, one of the highest prices per room ever paid for a U.S. hotel. Anbang Insurance

Group has agreed "to restore the property to its historic grandeur" and will allow Hilton to

manage the property for the next 100 years. By reserving the 83-year old Waldorf Astoria’s

world-class standards brand’s for generations, Anbang is rushing to take the next bite and

purchase more U.S. hospitality properties. This acquisition provides Anbang both stable return

and strong brand. Given the strong performance in the past, the group intends to realize long-

term stable investment return by investing in high quality real properties in North America.

Going forward it will increase the share of overseas assets in asset allocation, taking Europe and

North America as priority areas.

Category 7:

Management and Experiences

China’s largest entertainment group Dalian Wanda Group, controlled by billionaire real-estate

developer Wang Jianlin, agreed to buy AMC Entertainment Holdings Inc. for $2.6 billion

including debt, expanding into the U.S. to create the world’s biggest cinema owner. As part of

the deal, Wanda plans to invest as much as an additional $500 million in AMC, which the U.S.

chain can use to update its cinemas' technological innovations and reduce debt. As the second

largest theater chain in the U.S. and Canada, AMC could bring Wanda widely-recognized

management and experiences in theater chain. This will enhance Wanda’s theater in Chinese

market, which is expected to surpass U.S. in 2018 and become the largest movie market.

Category 8:

Industrial Transform

Wanda has reached an agreement to acquire 100% of the World Triathlon Corporation (WTC)

for$650 million. This acquisition will bring a top international competition to China for the first

time and marks a key milestone in the development of China's sports industry. As Wanda is

transforming to conglomerates composed of real estate, finance, and entertainment and sport, this

acquisition completes the formation of a comprehensive sports business for Wanda. Wanda has

built a full industry value chain that includes event organizing, athlete representation, event

marketing and rebroadcasting, which will greatly enhance Wanda's influence on the global sports

stage and accelerate Wanda's strategic advancement in the industry.

http://www.wsj.com/articles/uberchina-didi-fight-drives-merger-talk-1466004980

http://www.wanda.cn/English/

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Category 9:

Non-listed company (pre-IPO)

In past decade, most of deals between US and China are bid by Chinese listed companies using

cash. With the rapid growth of private companies, we will see more and more US companies

acquired by Chinese private companies. This could results huge benefit for target companies. As

the shareholder of the private acquirers, target companies could cash out when the acquirers go

public, which brings additional source of profit.

Category 10:

Listed Company (China or Hong Kong)

Currently China Securities Regulatory Commission (CSRC) does not allow stock deal in cross

border acquisitions. This is the reason all of the transactions made by cash. However,

considering the development and reform of Chinese capital market, stock deals can be expected.

When the target companies become the shareholder of the acquirer under the stock deal, they

could choose to sell at a higher price given the much volatile market in China. By doing so,

besides higher premium paid by Chinese acquirers, target companies shareholders would have

opportunity to maximize profit from capital market.

Since 2005 to 2015, there have been 144 M&A transactions between China and US with an

average deal size of $695 million. After the Chinese government announced its Go Global policy

in 2012, encouraging Chinese companies to invest overseas, there has been a rush into cross-

broader acquisitions between China and the U.S. Working together with GP Partners in the US

we could build exit channels in both the US and China, ensuring we get the highest bid from

either market and achieve a much higher return for our investors. Effective exits of portfolio

companies will enable us to more efficiently raise our second round fund, with a target size of

one billion.

CONFIDENTIAL


Strategic Partner

LEAP Alpha is looking for one or two strategic partners to form a joint venture. We realize that

the inefficiency of Chinese investors allocating asset overseas, according to current horizontal

capital flow. Therefore, we created a customized platform and product set exclusively for

Chinese investors. Compared to the traditional asset allocation model as is the case in most

developed countries, we integrate our resources and initiate this ecosystem based on our

understanding of Chinese investors.

Traditional Asset Allocation

Chinese

Investors

GPs

Multi Family

Office Fund of Funds

Secondary

Fund

Portfolio

Companies

Business Development and

Investor Relations

Fund Placement

Agent

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LEAP Alpha Platform

Traditional vs. LEAP Alpha

Compared to traditional model, LEAP Alpha largely saves time and cost to approach Chinese

investors according to the following reasons:

We think the current method for multi-family offices, fund of funds, alternative asset

management firms, and private equity firms is very inefficient There are two or three levels in

between the ultimate money managers and the original investors. It usually takes three to six

months for each level to get the committed fund assigned and establish the proper relationship.

Therefore, one can expect approximately two years for the ultimate GP to reach the investable

capital, (assuming each level could successfully raise the capital).

In each level of fund placement, there is a business development and investor relations

department, which indicates a large amount of inefficient resources. Furthermore, at each level

the money manager charges a consulting fee or management fee; leading to duplicative double

fees or sometimes even triple fees to investors. Our team will accomplish all of these functions

with only one level of interface. By cutting all these intermediaries, LEAP Alpha largely saves

investors’ money. This is the main reason why so many potential Chinese investors are interested

in our business model.

Strategic Partner

(MFO/AAM/FOF)

Portfolio

Companies

GPs

Chinese

Investors

Leap Alpha

CONFIDENTIAL


Chinese investors have much higher expected rate of return expectations and risk aversion

compared to US investors. By introducing Chinese expansion angles to our portfolio companies

and potential exit strategies to Chinese acquirers, we could meet the Chinese investors’

expectations for both overseas asset allocation and higher rates of return.

A mid teen rate of return is necessary for maintain the long term capital since average PE or HF

in China could generate an annual return of 30%. Our target IRR is more than 20% and this is

totally achievable by combining:

• Middle market;

• Selected sectors;

• Early stage growth potential;

• Asia market expansion;

• Exit channel development;

• Chinese GP cooperation;

• Emerging manager with superior return;

• Seeder’s long term carry sharing;

In summary, by creating this new platform, LEAP Alpha saves time and cost, and provides a

customized product to Chinese investors that can meet their demand of both oversea asset

allocation and high rate of return.

Strategic Partner

LEAP Alpha

Chinese GPs

LEAP

Chinese

Acquirers

Chinese LPs

Chinese Asset

Management

Co-Invest

Co-Transact

Co-Manage

Seeded Emerging Manager A, B, C…

CONFIDENTIAL


Our ideal Strategic Partner may fall into one of the following categories:

Private Equity Firm

Emerging Manager Fund

Fund of Funds

Multi Family Office

Alternative Asset Management Firm

Secondary Fund

Private Debt Fund

Fund Placement Agency

Hedge Fund with PE arm

Investment Bank with M&A Advisory

LEAP Alpha can contribute more value than a typical placement agent relationship and provide a

strategic angle for a dedicated secondary fund relationship.

One of the most valuable assets we bring to this platform is by integrating our connections with

Chinese Asset Management Firms and Chinese GPs, who could contribute in capital, deals, and

other resources:

Bring additional capital as a co-investor

Refer their existing clients interested in oversea asset allocation

Introduce ongoing financing or strategic investors from China

Serve as a secondary fund, purchase existing portfolios

Acquire US seeded managers in corresponding sector

Share other resources in China, eg joint venture partners, potential acquirers, government

relations, sales distribution channels, etc

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Successful examples include Life Sciences Fund as the joint venture between GF Securities and

Bay City Capital, Silverfern Group co-invest with Fosun in Club Med, Acquiline Capital sold

AssetMark to Huatai Securities etc

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What We Add Value to Strategic Partners:

A committed fund of $500 to the joint venture by the end of 2017

Long term benefits through the growth of business, expected AUM of ten billion by 2030

Generate Asia alpha through Asia market expansion, ongoing financing, cooperation with

Chinese strategic partners, or acquisition opportunity to Chinese acquirers

Higher return resulting from seeding emerging managers in deals with China angle

Share management fees and carry from other sector may not have access to

Introduce Chinese LPs interested in existed or upcoming strategies

Attract US and global LPs interested in PE Seeder Strategy

Partnership with Chinese GPs in the same sector, bringing more capital and resources

Brand recognition as the first US customized solution provider for Chinese clients

Cash out of either LEAP Alpha or seeded managers to Chinese asset management firms

Others upon request

What We Add Value to Strategic Partners:

Assign business development or transaction professionals to work together understand

China clients' multiple demands and build China Angle deal search and transaction

support team

Develop new multiple strategies for higher return for clients to make sure we could

attract and retain capital in long term in private equity and private wealth management

Identify emerging managers that have strong motivation to originate deals with China

angles

Develop other deals sources channels with China angles, among current or even past

portfolios

Evaluate companies with interest or plan to expand to Asia, with or without capital needs,

to make good companies good deals and good deals good transactions

Prepare fund raising PPM by June

Form the investment committee and advisory board

Build team with effective compensation plan

Register JV with agreed equity share, streamline Leap Alpha's structure and process

Provide operational capital

CONFIDENTIAL


Target Companies

Classification

LEAP Alpha focuses on companies within sectors and of sizes attractive to Chinese acquirers.

This is basically an investment demand driven process. Therefore, we focus on industries

including but not limited to:

Niche manufacturing

Consumer product

Technology-enable business service

Life style services, including media & entertainment, travel, education, etc

Chinese acquirers are looking for companies that can provide at least one of the following:

Sales and distribution channel

Supply chain

Technologies and innovations

Recognized Brand

Management Experiences

Major player in the industry that acquirer is transforming

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When evaluating investment targets, we divide target companies into two categories:

EBITDA value and Current status regarding overseas expansion

LEAP Alpha is looking for companies with EBITDA ranging from $5 million to $15 million,

$15 million to $25 million, or $25 million to$50 million respectively. After four to six years

emerging market expansion and operational improvement, target companies’ EBITDA is

expected to grow to $10 million to $100 million. For overseas expansion, these target companies

should also have at least one of the following:

expand business in China/Asia

find JV partners, supplier, clients, service provider, distribution channels in China/Asia

raise next round capital from Chinese investors

be acquired by Chinese listed companies in 3-5 years

seek other value that we and China investors/partners could bring to them upon their

demand, for their revenue or profit growth or financial return as well as strategic purpose

CONFIDENTIAL


By these criteria, we classified investment targets into four different groups.

Green Target

This is our primary target with EBITDA ranges from $15 million to $50 million and having a

clear plan to enter into Chinese markets or interested in being acquired by Chinese investors.

Most Chinese acquirers would be interested in these target companies.

Blue Target

This is our secondary target with lower EBITDA ranges from $5 million to $15 million and

having a clear plan to enter into Chinese markets or interested in being acquired by Chinese

investors. Considering our GP Partners’ expertise and reputation in middle market, we are

willing to invest majority stakes in two to three companies under this category.

Yellow Target

If the target companies already have strong demand to expand into Chinese markets and satisfy

our acquirers’ requirements, we will consider investing. We could provide exit channels and

connect target companies with suitable acquirers.

Red Target

If the firms have EBITDA lower than $5 million or have no interest in overseas expansion/being

acquired by Chinese investors, we would consider these companies in having difficulty in

attracting growth capital. LEAP Alpha will not invest in companies within this category.

CONFIDENTIAL


Green Target

We will to invest eight to ten companies within this category. With EBITDA ranges from $15

million to $50 million and Enterprise Value ranges from $ 25 million to $ 200 million, we plan

to take an equity stake of five percent to twenty percent. Chinese team members would take

more initiative in searching and evaluating investment targets. We rely on GP Partners’ deal flow

connection, due diligence experience and post investment management (including operational

improvement, legal, accounting, compliance, etc.). Chinese team will take the main

responsibility to find suitable acquirers for exits.

Projected revenues are two percent management fee annually and twenty percent carried interest.

Blue Target

We will heavily rely on GP Partners’ strength and plan to invest in two to three companies

within this category. Given the controlling stake we will have, it will be easier for us to bring

target companies into Chinese market.

Projected revenues are two percent management fee annually and twenty percent carried interest.

CONFIDENTIAL


Yellow Target

This category mainly provides advisory business activity. We can find suitable targets being

acquired instantly and earn advisory commission/fees during the process. These target companies

are from different sources including GP Partners’ existing portfolio, investment banks, FOFs,

family offices, and other personal connections.

Projected revenue is commission fee.

Synergies

Besides organic growth by operational improvement, LEAP Alpha provides additional strong

growth potential by bringing an opportunity to enter into a large and growing Chinese market.

Considering LEAP Alpha stake in target companies, we would also help target companies to be

acquired by Chinese acquirers. Our contributions to target companies include but not limited to:

Get used to and have a better understanding of Chinese mindset

Open a rep office or subsidiary in China

Find JV partners, supplier, clients, service provider, distribution channels

Build connections with local government

Seek highest bidding buyers in China given shared common goals

CONFIDENTIAL


An example of how the stock market reacted when Netflix announced its Chinese Plan

Challenges

Our biggest challenges include not being able to find suitable investment targets to Chinese

Investors/Acquirers and not being able to convince target companies to enter into Chinese

market.

It will be imperative that our GP partners understand the need for proper due diligence in finding

suitable co-investments where the China angle is clear and can be executed upon.

CONFIDENTIAL


GP Partners

LEAP Alpha is looking for partners that have strong connections of deal flow in lower middle

market, core middle market and up middle markets respectively; targeting North America

companies with EBITDA ranging from $5 million to $50 million in four sectors including:

niche manufacturing

consumer product

technology-enable business service

life style services

GP Partners would also play a critical role in due diligence, operation management, and other

investment operations. GP Partners evaluation and selection is a dynamic process throughout the

whole business cycle.

There are dozens of Private Equity firms that have expressed interest in the LEAP Alpha

business plan and have engaged in in-depth conversations with LEAP Alpha senior team

members. LEAP Alpha team will select four to six GP Partners to serve in this capacity. There

will be a separate GP support group to:

help GP Partners better work with us and follow our mindset about our investment

strategy and value to portfolio companies

conduct extensive and intensive research about what kinds of American business would

be attractive to Chinese acquirers

assess and improve these target companies' China business plan and help them to find

right partners in China

GP Partners’ potential benefits include but not limited to:

Additional capital source from Chinese investors

Higher rate of return by selling to Chinese acquirers

Exit channels to existing or referred portfolios, commission fee expected

A strategic partner in LEAP Alpha that has plans to grow to an expected 10

Billion AUM, much higher management fee and carried interest*

Additional brand recognition in Asia by cooperating with LEAP Alpha, possibly

attracting more Chinese LPs for their funds

Attract more US and other international institutional LPs by their higher return

than typical North America PE firms

Cash out by selling shares to an asset management firm in China

CONFIDENTIAL


Comparison of GP Partners

LEAP Alpha provides different cooperation forms of co-invest, co-transaction, co-manage and

seeded fund with our GP Partners, based on the ability of them to bring target companies being

acquired by Chinese acquirers.

Seeded Fund:

As the lead investor, we could take shares/equity of the emerging manager thus not only get

benefit from their possible higher rate of return compared to established firm. Those shares

enable us to share the long term profits from them.

Co-Manage GP:

Co-Manage Partners are responsible for deal flow sourcing, due diligence, transaction, post-

invest management, exit, etc. It can be a side fund affiliate to Co-Manage Partner or within Co-

Manage Partner’s next round fund.

Co-Transact GP:

According to the increasing number of attractive target companies LEAP Alpha team source, we

would not have sufficient time and investment professional to engage into every single company

we have interests. Co-Transaction Partners help us in the investment operations. The main

difference between Co-Manage Partner and Co-Transaction Partner is that Co-Manage Partner is

responsible for deal sourcing and exit channel development while Co-Transaction Partner only

participate in the investment transaction. Co-Transaction can be Private Equity, Investment

Banking, Management Consulting, etc.

Co-Invest GP:

Co-Invest Partner reserves the flexibility in its original deal focus and investment criteria. If

there is an investment target that Co-Invest Partner deliver to LEAP Alpha and approved by

LEAP Alpha Investment Committee having Chinese angle, we will co-invest with Co-Invest

Partner on a deal basis. However, LEAP Alpha team might not be able to add more value by

introducing Chinese exit channel to our Co-Invest Partners, thus losing the potential opportunity

of higher rate of return. Meanwhile, LEAP Alpha team reserves the right of exit channel

opportunities in addition to Chinese acquirers.

The form of cooperation is one of the most important factors that will affect percentage of

carried interest sharing between GP Partners and LEAP Alpha team. Different forms of

cooperation could be changed given both parties’ agreement at the beginning of each fund.

CONFIDENTIAL


Weak Strong

Co-Investment Seeded-Fund Co-Transaction Co-Manager

Partnership Types

CONFIDENTIAL


Seeded Fund

LEAP Alpha design this product and built the platform in order to attract more and more seeded

emerging managers in the long run and take advantage of the booming cross border acquisition

between China and US. However, we understand it takes time for us to find enough seeded

emerging managers. LEAP has a plan to short term and long term GP Partners cooperation.

Short Term Plan of GP Partner Cooperation

Long Term Plan of GP Partner Cooperation

Co-

Manage

LEAP Co-

Invest

Co-

Transaction

Co-

Invest

Co-

Manage

Co-

Transaction

Seeded

Funds

LEAP

CONFIDENTIAL


They could be emerging managers, established managers, pledge fund or investment bank,

private debt fund, or secondary fund especially direct secondary. LEAP could support them to

build such skill sets and enter into Asia market, as long as they would originate deals with China

angles.

Values LEAP could bring to US Emerging Managers:

• up to half amount of fund leading commitment, we would bring 50M-100M to each fund;

• deal (with China angles) search and transaction support;

• Asia market development or multiple exit channels in Asia for higher return 20+% IRR;

• partner with China GPs in same sectors, resulting more cross border M&A opportunities;

LEAP is launching the PE seeder strategy, in which our investors could benefit from co-

investment, secondary, and cross border M&A opportunities that Chinese acquirers provide

quick liquidity with potential alpha return. High rate of return result from Asia alpha and

seeder’s long term carry sharing also makes our strategy differentiated and attractive. LEAP will

seed emerging managers, in selected sectors including consumer product, life style services,

technology enabled services and niche manufacturing, to ensure a sustainable and scalable

business growth.

Seeder Strategy mitigates the risk that some managers may not find enough deals with China

angles. It takes time for most of managers to develop new skillset in identifying deals with China

angles, to make sure those prospective portfolios could be acquired by Chinese listed companies

with significant premium due to the synergy between them and the much higher P/E ratio in

Chinese stock market. More and more China Operation of US business service companies would

be sold to Chinese counterparts or competitors if they can’t achieve their goal in Chinese market.

US companies could be shareholders of Chinese listed or pre IPO companies through such

transactions, thus sharing much higher return from Chinese stock market than continuing their

China operation. Uber China’s merge with DiDi is a good case. Service companies from US may

have some difficulties to beat local players in China, especially those supported by major private

equity firms, so M&A could be a good exit. Such strategy with China angles or dynamics may

take time for most of PE firms in States to take due to different market landscape or traditional

practice in developed countries or matured market. We expect Emerging Managers could be

more flexible, innovative, entrepreneurial and hard working to meet the huge demand of Chinese

investors’ interest in M&A or global business expansion in a few sectors, by actively learn how

to souring or originate deals for Chinese investors. It’s the core of our business

CONFIDENTIAL


PE seeder strategy will enable us solve two problems at the same time:

Sufficient deal flow origination, for our fund II, targeting 1 billion or even more capital to

be invested out to more than 50 target companies within two years

Higher return by combing Asia alpha and seeder’s long term carry sharing

With hundreds of emerging managers come into the market every year, we could ensure

sufficient deal flows when the fund size grows multi billion. The seeded fund could be emerging

managers, established managers, pledge fund or investment bank, private debt fund, or secondary

fund especially direct secondary. Emerging managers tend to perform better across asset classes,

with similar or less risk than larger, established firms.

We believe the seeder strategy, that provides a 20% plus IRR, is necessary to attract and

maintain the long term capital from China (competitive PE or HF in China could generate an

annual return of more than 30%). Being able to invest out more and more capital within a

specified time could also be effectively solved by seeding emerging managers. Therefore we

could build up a scalable business.

CONFIDENTIAL


Innovation:

Many emerging managers rise from established firms. When they branch out on their own,

talented managers take legacy information and experience with them while also taking advantage

of the entrepreneurship and benefits inherent in being emerging managers.

By partnering with emerging managers, LEAP Alpha creates diversified, risk-adjusted portfolios

while providing expert access to undiscovered investment talent and tomorrow’s stars.

Emerging managers tend to perform better across asset classes, with similar or less risk than

larger, established firms. By seeding emerging managers with our investors, we could:

find more high-motivated managers sourcing the deals we are expecting

have a higher rate of return compared to investing in matured fund managers

generate a scalable business for our ongoing expansion client base

Most current emerging manager seeders in the market provide 15% to 20% of the committed

fund. LEAP could introduce maximum 50% of the fund. Not to mention other intangible assets

including Asia market expansion and exit channel development for their portfolios, as well as

strategic partnering with fund mangers for Asia/China. These will give us a bigger bargain power

with emerging managers and maximize our LP’s rate of return.

Cooperation with GP Partners is a dynamic process. We will continuously evaluate the deal flow

origination ability of our GP Partners. LEAP Alpha reserves the right to introduce new GP

Partners, maintain existing GP Partners, and cease cooperation in the following rounds of fund.

LEAP Alpha also provides forms of co-invest and co-manage with our GP Partners, based on the

ability of them to bring target companies being acquired by Chinese acquirers. This is one of the

most important factors that will affect percentage of carried interest sharing between GP Partners

and the LEAP Alpha team.

The four to six partners could be very flexible in their types as long as they would source deals

being interested to Chinese acquirers and work together with LEAP to implement overseas

expansion. GP partnerships could be a pledged fund or a committed fund team, principal

investment team in an investment bank, private debt fund, mezzanine fund, direct investment

team in family offices, listed private equity fund, FOF, secondary fund, alternative asset firm, or

private market group.

The rest of this page is intentionally left blank for further illustration of specific partner(s).

CONFIDENTIAL


Investment Committee

The primary purposes of the Investment Committee of the Board of Directors of LEAP Alpha

are to assist the leadership team in:

1. reviewing LEAP’s investment policies and strategies

2. reviewing performance and valuations

3. overseeing LEAP’s capital and financial resources

No investments on behalf of LEAP Alpha Co-Investment Fund, LLC will be made without the

Investment Committee’s explicit approval. LEAP Alpha will assign a member in each GP

Partners’ Investment Committee as well. This senior member from LEAP Alpha has the right to

vote on important matters. Investments will be made only by approval by both LEAP’s

Investment Committee and GP Partners’ Investment Committee.

The Investment Committee will have the main responsibility to identify appropriate investment

targets that fulfil our targeted attributes.

LEAP IC

GP IC GP IC GP IC GP IC

CONFIDENTIAL


Investment Committee Goals and Responsibilities

In order to carry out its mission and function, Investment Committee has the authority to perform

the following:

Oversea Investment policies, strategies, transactions and program of LEAP Alpha and

GP Partners;

Review Investment policies, strategies, transactions and program of LEAP Alpha and

GP Partners to ensure they are consistent with goals and objectives of LEAP Alpha;

Evaluate and approve or disapprove each proposed Investment on behalf of LEAP

Alpha;

Determine whether applicable Investment policies are consistently followed and that

procedures are in place to ensure that LEAP Alpha and GP Partners portfolios are

managed in compliance with LEAP Alpha policies;

Review the performance of the Investment portfolios of LEAP Alpha or GP Partners;

Approve LEAP Alpha Investment policies and guidelines, periodically review and

make any necessary changes to policies and report such changes to Board;

Report Investment Committee’s actions and recommendations to the Board at

regularly scheduled Board meeting following any meeting of Investment Committee;

Perform any other activities of the Board deems necessary.

Investment Committee Membership

LEAP Alpha will implement and install Investment Committee members from both China and

US to better execute investment policies in serving Chinese investors and acquirers. There will

be seven permanent members in Investment Committees:

Chief Investment Officer

two Board Members

representative from Strategic Partner

investment professional from US private equity firm that has abundant experience in due

diligence in mid-market companies

Investment professional from China that has a solid track record of cross border

acquisition between China and US

lawyer

Members of Investment Committee will serve until their resignation, death or removal from the

Board or until their successor are appointed.

Meetings

CONFIDENTIAL


Meetings of Investment Committee will be held as often as the Committee determines is

appropriate to carry out its responsibilities. The Chief Investment Officer, in consultation with

other Committee members, will determine the frequency and length of the meetings and will set

agendas consistent with policies. Minutes will be prepared and filled with the minutes of the

Board and Investment Committee will report to the Board the results of its meetings. The

minutes contain the following information: the agenda of the session, the number of the session,

the date of the session, present and absent members and decisions rendered on certain issues.

Minutes and supporting documentations of Investment Committee meetings shall be kept as

permanent and confidential. Chief Investment Officers from GP Partners reserve the right to

attend LEAP Alpha Investment Committee meetings while do not have voting rights.

Voting Rules

As a rule, the Investment Committee renders decision at sessions. The presence of five of the

seven members that serve on the Investment Committee shall be necessary to establish a meeting.

All members of the Investment Committee must express their viewpoints in order for any

decision to be rendered. Decisions are made by majority vote of members of Investment

Committee. No Investment on behalf of the Company will be made without Investment

Committee’s approval. The Investment Committee must discuss any proposal and render a

decision within a reasonable time.

CONFIDENTIAL


Market Opportunity and Comparative Advantage

Market Opportunity

According to the Rhodium Group, in 2006, China did 39 deals worth $195 million in the United

States. By 2015, that had mushroomed to 171 deals worth $15.3 billion. Since 2005, Chinese

investments have been concentrated in New York, California, Virginia, and Texas. For first half

of 2016, Chinese companies invested $18.4 billion in the U.S., more than triple the amount

invested in the first half of 2015. This increase was largely driven by private sector acquisitions –

there were more than 55 completed deals - in services, technology and consumer-oriented assets

as well as green-field projects in real estate and manufacturing. The largest Chinese acquisition

so far this year was Haier’s $5.6 billion acquisition of General Electric’s appliance division.

http://rhg.com/interactive/china-investment-monitor

CONFIDENTIAL


The ongoing overhaul of China's growth model, lower political barriers for outbound investment,

and greater confidence by Chinese businesses to invest overseas will propel an outflow of

hundreds of billions of dollars from China in the coming decades. LEAP Alpha foresees the

increasing trend of cross boarder acquisition especially between China and US within the next

few decades. In mandarin, LEAP Alpha believes in taking advantage of tail wind (顺势而为) to

integrate resources in this industry, thus better serving Chinese investors.

Chinese investors have a strong desire to allocate or purchase assets overseas. Entrepreneurs and

senior executives want to acquire U.S. companies with advanced technologies and leading

brands to support the growth of their enterprises. However, most of them are still facing the

challenge of an unfamiliar environment, legal system, financial markets, investment product, and

foreign language.

LEAP team is designing this platform to satisfy the following demands:

• Chinese listed companies have a strong desire to acquire companies in US or Europe,

mostly for strategic development purpose;

• Chinese GPs plan to invest in US companies in their specialized sectors, generating

synergies by facilitating the cooperating with their portfolio companies or other

established resources in China;

• Chinese asset management firms are eager to create/acquire a cross culture and cross

border platform to expand their private equity businesses in US market more efficiently

and productively;

• Chinese individual and institutional investors have strong interest to allocate their assets

oversea, primarily in US

Competitive Advantage

LEAP’s core competence is its direct approach to cross-border investors/acquirers, most of

whom are board members or controlling shareholders of listed companies in China. By providing

good investment options for Chinese investors, even larger networking can be expected. LEAP

Alpha has set up an innovative investment platform, providing customized investments for

Chinese Investors. This platform can be extended to many different areas.

We believe all parties' interests are well aligned in this investment model. We could work

together to make those companies more powerful and more profitable by leveraging the Asian

market.

CONFIDENTIAL


Revenue Projection

Management Fee

LEAP Alpha will raise a committed co-investment private equity fund with a target size of $500

million. Management fees from investors/LPs would be 2.5% of fund size ($ 500 million) each

year. Within the co-investment structure, approximately $100 million will be managed directly

by the LEAP Alpha team and approximately $400 million co-managed with selected GP Partners.

LEAP Alpha expects $12.5 million in management fees annually. A portion of that annual

management fee may go to selected GPs in Co-GP arrangements. We target an investment period

of three to four years for LEAP Alpha to fully commit the raised $500 million to invest in 25 to

30 target portfolio companies.

Once the first co-investment fund is fully committed, LEAP then plans to raise LEAP Alpha Co-

Investment Fund II, with a target size of $1 billion. Management fees would increase

correspondingly, which is expected to be 25 million in the next three years.

Carried Interest

LEAP-managed fund

We target the IRR of this allocation to be a minimum of 25%, the fund life will be 5+1 years,

therefore in ~6 years; the $100 million allocation will grow to a projected $ 380 million

(representing a 3.8x return). After deducting three years management fees of $7.5 million, the

fund's retained profit will climb to $272.5 million. With a 20% carry interest to the fund manager,

this LEAP-managed fund earns $54.5 million of carried interest based on our role/contribution of

shares in this fund management company.

LEAP Co-managed fund

We target the IRR of this fund to be a minimum of 25%, the fund life will be 5+1 years,

therefore in ~6 years; the $400 million will grow to a projected $1.52 billion (representing a 3.8x

return). After deducting three years management fees of $30 million, the fund's retained profit

will climb to $1.09 billion. With a 20% carry interest to fund manager, this LEAP co-managed

fund earns $218 million based on our role/contribution of shares in this fund management

company. LEAP team will split 40% of the carry interest of the co-managed fund, which is $87.2

million. The total first fund carried interest for the LEAP team is $142 million.

LEAP intends to split carried interest with its GP Partners. The percentage splits varies. LEAP

takes 30% to 60% of the co-managed fund carried interests while GP Partners take 40% to 70%.

CONFIDENTIAL


The factors that affect percentage of split include:

Selling price/rate of return

EBITDA improvement

Exit efficiency

Deal flow resources

Ability to execute overseas expansion

Commission fee

Each year we could assist China acquirers (which are not our LPs) by closing an acquisition of a

US private company which is not in our portfolio. For such a transaction, LEAP Alpha would be

paid an advisory commission. LEAP Alpha charges a commission fee for facilitating the M&A

transactions on an average commission rate of 5%; depending on the size of transactions and our

connection with targets/acquirers. Usually such transactions have a minimum size of $200

million.

Placement fee

LEAP Alpha can assist our GP Partners raise capital for their funds from Chinese investors each

year with a minimum size of $100 million. LEAP would charge a 2% placement fee for role.

Cash Out

LEAP Alpha is actively approaching Chinese Asset Management Firms, with AUM ranging

from $ 20 billion to $100 billion US dollars. It is possible for the LEAP Alpha team to become

the overseas private equity arm of an asset manager from China and shareholders could cash out

during the process, maximizing our shareholders’ return.

CONFIDENTIAL


CONFIDENTIAL


Leadership

Jeffrey Sheng, Founder & CEO – China/US

Our 6 to10-person team is leading by Mr. Jeffrey Sheng, who has more than 27 years’

experiences in operation, consulting, business developing and investment both in Asia and States.

Mr. Jeffrey Sheng is a pioneer of private equity, venture capital, and investment banking in

China. He founded LEAP Alpha Venture Resources, an investment and advisory service firm, to

help Chinese entrepreneurs with business financing needs. The majority of the corporate

involved has gone IPO successfully or been acquired by other firms.

Prior to LEAP Alpha, Jeffrey worked at IDG VC. Jeffrey successfully invested in Tencent (HK

0700) in 2000, and its market valuation increased over 100 times within five years when it went

IPO. It is one of his five investments within IDG VC before he started up his own business as a

deal originating and deal making specialist. He has also had more successful deals since, such as

one in 2006 with Eternal Asia (SZ 002183), a supply chain management service company, which

brought investors over ten times return within four years (more deals details refer to List 1: Past

clients).

Jeffrey has extensive and intensive relationship with top PE firms and their portfolios in the

world and is active in facilitating any possible cooperation among them. He also works with

government officers and banks in different levels very effectively. He is regarded as a good

strategist in business model and commercial resources integration by most of his partners in PE

firms, ventures, banks and security firms, as well as government. He has published 16 books on

financial service and entrepreneurship in China. Many of them are adopted by top MBA

programs in China as textbooks. He presents lectures for many entrepreneurs, investment

professionals, government officers and MBA students in China.

Ted Kanarek, Managing Partner – US

LEAP is directed in the US by Ted Kanarek, who brings 20+ years of experience in the asset

management marketplace. Ted was formerly a managing direct at Citi Capital Advisors

overseeing business development for their hedge fund, private equity and infrastructure and real

asset strategies. Ted also had senior roles with Allianz Global Investors, GE Asset Management

and various pension consulting firms. Ted has recently worked with single and multi-family

offices in looking at direct private investing in US lower mid-market companies and assisting

them in souring the opportunities and then setting up the operational team to manage the

investments on their behalf. Ted received his BS in Biology and Mathematics and an MBA in

Finance from Seton Hall University.

CONFIDENTIAL


Steven Zhou, Manager – China/US

Steven Zhou is the Business Development Manager and Investment Consultant at LEAP Alpha.

He is a contributing member mainly responsible for developing and designing customized

product for Chinese investors, building team members, specifying target companies attractive to

Chinese investors and acquirers, and connecting partnership financial institutions in both US and

China. Prior to LEAP, Mr. Zhou served as Head of Research at Boston College Endowment and

Summer Equity Research at East Coast Asset Management. Mr. Zhou started his career in China

at Cinda Securities and KPMG, where he accumulated dozens of Institutional Investors and

HNWIs connections. He has a MBA/MSF dual degree from Boston College and passed all three

levels of CFA.

CONFIDENTIAL


Timeframe

Strategic Investor

LEAP plans to find a strategic investor to partner with us, as a

targeted 10-30% shareholder. We are talking with a handful of firms

that have plans to launch customized co-investment funds in 2018

and we think the LEAP Co-investment fund is a strategic fit for them.

We are looking for brand recognition, strong research due diligence,

human resources, custody, audit, legal and compliance capabilities.

GP Partners Search

GP Partners are skilled at finding attractive investment opportunities

and generating strong deal flow. This deal flow comes from a

network built from working in particular industries that are attractive

to Chinese investors. We plan to find ~10 investment targets that

satisfy our requirements by the end of first quarter 2017 and then

continue with our due diligence throughout the fund cycle

Angle Investor

LEAP Venture is speaking with Angle Investors from either China or

the US to raise one million as a seed investor. We are willing to

share a percentage of the business based on our valuation. Angle

Investors have an access to first round carried interest, estimated to

be more than $140 million.

Deal Flow Sources

Along with our GP Partners, there are other channels that will

generate appropriate investment opportunities for our investors.

LEAP plans to source 20 potential deals by our team, GP Partners,

single and multi-family offices, investment banking, consulting firms,

and other sources by Q2/Q3 2017.

Capital Raise

LEAP plans to finish raising capital for the first co-investment fund

by 2017. Target size of the commitment fund is $500 million. LEAP

team members will keep updating Investors’ preferences and

summarize demand accordingly. The minimum equity capital of

single investor would be $5 million.

Strategic Partner

GP Partners

Angle Investor

Deal Flow Source

Capital Raise

LEAP General Business Summary Final

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