Tembusu Growth Fund II

Report
Tembusu Growth Fund II
Tembusu Growth Fund II
Disclaimer
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
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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.
2
Tembusu Growth Fund II
Table of Contents
I.
Executive Summary
4
II.
The Fund Manager – Tembusu Partners
8
III.
Investment Strategy
14
IV.
Investment Selection
20
V.
Track Record
25
VI.
Other Details
35
VII.
Appendix A: Biographies
37
3
Executive Summary
Tembusu Growth Fund II
Executive Summary
Singapore Private
Equity Manager
Established In
2006
S$210 MM Assets
Under
Management Over
Two Funds
Raising S$300 MM
For Tembusu
Growth Fund II
(“TGF II”)
 Founded by Mr. Andy Lim, Mr. Tan Kim Seng and two other
successful entrepreneurs
 18 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
5
Tembusu Growth Fund 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 benefits
Qualified for zero-rated tax incentive under
EDB S13H Scheme for Funds
6
Tembusu Growth Fund II
Portfolio Allocation
Fund Allocation by Size



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%
*Charter of the fund allows for investments in companies in these stages. However, the fund is primarily and
substantially focused on growth stage companies.
7
Tembusu Growth Fund II
The Fund Manager – Tembusu Partners
Tembusu Growth Fund II
Tembusu Partners Timeline
Incorporation of
Tembusu Partners
Limited
Successful launch
of S$100 MM TGF
I
2006
Successful launch
of US$80 MM
Nanjing Growth
Fund
2007
Agreement with
China AMC (part
of Citic Group)*
2009
Expected first
close of S$300 MM
TGF II
2010
2008
2007 Investments:











TTMI
VDH Energy
Hongwei
ACTAtek
Infinite Frameworks
Artivision Technologies
Standard Water
Tongji Environment
Global Roam
China Dredging
Ying Tai Biotechnology
2008 Investments:
2009 Investments:
 Sports Asia
 Tangshan Ganglu
 Cherie Hearts
 Silver City Minerals
2010 Investment
exit:
 Tongji
Environment: 8.5%
IRR
2009 Investment
exit:
 VDH Energy:
37.6% IRR
* Appointed as exclusive distributor for China Capital Impetus Fund for Singapore
9
Tembusu Growth Fund II
The Tembusu Value Add
Weekly
Conference
Detailed Action
Plan
Portfolio Review
Individual
Partner
Sourcing
New Deals
Resource
Planning
Due Diligence
Presentation to
All Partners and
On-Site Visit
Decision by
Investment
Committee
Portfolio
Monitoring
Follow on
Funding or Exit
Value Creation
Syndication
Candidates
Partner Inputs
Market
Feedback
Local Knowledge
& Networks
Access to Global
Intelligence
Optimal Deal
Sourcing
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
10
Tembusu Growth Fund II
Organizational Structure
Investment
Committee
Investment
Team (China)
Management
Team
Investment
Team
(Singapore)
International
Board of
Advisors
Administrative
& Accounts
Team
11
Tembusu Growth Fund II
Principal Investment Committee and International Board of Advisors
IC MEMBER
Andy Lim
IC Member
Yeo Cheow Tong
IC Member
Sheik Faisal
Al-Thani
Board of
Advisors
Professor Wee
Chow Hou
Board of
Advisors
EXPERIENCE




Chairman, Tembusu Partners Pte Ltd
Chairman, MoneyWorld Asia
Chairman, Viking Offshore and Marine
Honorary Consul, Republic of Lithuania
 Chairman, Board of Governors, Raffles University
 Member of the Global Advisory Board of Chicago University
Graduate School of Business
 Minister, Ministry of Transport, Trade & Industry,
 MD, LMA & Pacific Precision Castings
 Chairman, Namma Real Estate Company
 Chairman, Qatar National Export Import Company
 Deputy General Manager, and Qatar Petroleum’s
Representative at Anadarko Qatar Energy
 Chairman, Nanyang Executive Program, Nanyang
Business School, Singapore
 Honorary Professor, Faculty of Management,
Xiamen University, China
*other Investment Committee members and Advisors to be confirmed
12
Tembusu Growth Fund II
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 Zhang
Investment Director (China)
Emily Zhang has over 7 years experience
in consulting, business development and
marketing in China and New Zealand.
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 Lee
Investment 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
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, crossborder M&A and capital raising activities.
Mr Allen Shi
Investment Director (Shanghai)
Allen has over 13 years of experience in
investment, business development and
business consulting in China.
13
Tembusu Growth Fund II
Investment Strategy
Tembusu Growth Fund II
Fund Focused on Emerging Asia Middle Market Through Significant
Minority Investments
 Emerging Asia has consistently outperformed ROW
 This dynamic region is expected to play a leading global economic
Emerging Asia
role
 Much of developed world faces significant long-term crises,
including massive debt, steep budget deficits, and structural
unemployment
 Typically, greater revenue and earnings acceleration than large cap
Middle Market
Significant
Minority
Investments
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
15
Tembusu Growth Fund II
Capitalize on Strong Growth in Asia

Continued strong growth from Asian economies – particularly in our focused areas
of China, India, and South East Asia

Strong emerging middle class driving domestic consumption

Rapid urbanization with significant infrastructure building
G D P G ro w th
1 5 .0 0 %
G ro w th (% )
1 0 .0 0 %
5 .0 0 %
0 .0 0 %
2007
2008
2009
2010
2011
2012
2013
2014
2015
(5 .0 0 % )
C hina
SE A sian B asket
Pan A sian B asket
U SA
W estern Euro p e B asket
Source: IMF and www.xe.com. SE
Asian basket consists of 7
countries, Pan Asian basket
consists of 9 countries, Western
Europe consists of 9 countries
16
Tembusu Growth Fund II
Significant Minority Investments in High Growth Middle Market
Companies
Minority Investment
Middle Market
Significant equity stake is
key for management to be
motivated to succeed
Selectively invest in high
growth SMEs
Tradition of Asian family
businesses selling only
minority stakes
Our fund size is tailored
to most attractive
investments in Emerging
Asia
Tembusu is one of the
few PE funds with
expertise in this space
Less efficient capital
markets available for
SMEs creates value
opportunities
Unique Growth Investment Opportunities
17
Tembusu Growth Fund II
Team Focused on Maximizing Returns Whilst Minimizing Risk
Entrepreneur Led
Management
Team
 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
 Close attention to investment structures in order to maximize
Aggressive Deal
Structures
Attractive Fund
Structure
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
18
Tembusu Growth Fund II
Aggressive Deal Structures
Tembusu carefully and aggressively structures our investments in order to maximize
returns, while limiting our downside risk
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)
19
Tembusu Growth Fund II
Investment Selection
Tembusu Growth Fund II
Investment Criteria
High Growth and Scalable Companies
Tembusu Can Enhance Value Through
Active Sponsorship
Targeted Industry Focus
Proprietary Deal Sourcing
Companies Have Exit Visibility and
Feasibility
21
Tembusu Growth Fund II
Aggressive Growth Capital Investments
TGF II’s Focus
Company
Value
Time
Business
Plan

TGF Exit
Globally
Competitive
Enterprise
Emphasis on companies that have expansion-ready business models
Value Creation



Growth
Expansion
Growth Stage Investment Focus


Venture
Capital
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
22
Tembusu Growth Fund II
Sector Focus

Emphasis on core sectors where Tembusu has operating and investment
expertise:
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
Healthcare & Biotechnology
 IC member was a Senior Government Official in the Health Ministry
 Existing investment in TGF I
23
Tembusu Growth Fund II
Proven Proprietary Deal Sourcing Ability


Most investees in TGF I were proprietary investments
Highly connected network of advisors

Sample of potential investments under consideration:
Industry
Company
Description
Investment Stage
Location
Technology
Software
development
Growth
India
Clean Technology
3 separate companies
Growth
South East Asia
Natural Resources
Mining
Growth
South East Asia
24
Tembusu Growth Fund II
Track Record
Tembusu Growth Fund II
TGF I – Tembusu Partners’ Flagship Fund
TGF I Raised
S$100 Million
Entrepreneur
Driven Investees
 Raised S$100 million from four general partners and 38 high net-
worth individuals
 General Partners (including Andy Lim) 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 two investment exits and three liquidity events since
Executed
Successful Exits
inception
 Achieved IRR of 37.6% from first investment exit in July 2009
 Four TGF I portfolio companies expected to list on Hong Kong,
Malaysia and Australian exchanges in 2010
26
Tembusu Growth Fund II
TGF I – Portfolio Segmentation
Segmentation by Industry
Segmentation by Geography
27
Tembusu Growth Fund II
TGF I – Portfolio Companies
TTMI
VDH Energy
Hongwei
ACTAtek
Infinite
Frameworks
Metals Recycling
Biodiesel
Synthetic Textiles
Biometric Security
Media Post-Production
Malaysia
Singapore
China
Singapore
Singapore
Jan 2007
Apr 2007
Apr 2007
Jun 2007
Jun 2007
Artivision
Technologies
Standard
Water
Tongji
Environment
GlobalRoam
China
Dredging
Technology
Water Treatment
Water Treatment
Internet Telephony
Offshore & Marine
Singapore
China
China
Singapore
China
Jul 2007
Aug 2007
Oct 2007
Oct 2007
Nov 2007
Ying Tai
Biotechnology
Sports Asia
Tangshan
Ganglu
Cherie Hearts
Silver City
Minerals
Bio-Pharmaceutical
Sports Apparel
Steel Manufacturing
Early Education
Mineral Exploration
China
China
China
Singapore
Australia
Nov 2007
Feb 2008
Feb 2008
Jan 2009
Nov 2009
28
Tembusu Growth Fund II
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%
29
Tembusu Growth Fund II
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$10.5 million in the Company through a combination of
convertible loans, common equity, and collateral provision in October 2007 for an
effective stake of 54.1%

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$12.4 million



Investment period: Oct 07 – Jun 10 (2 years 8 months)
Return multiple: 1.2x
Investment IRR: 8.5%
30
Tembusu Growth Fund II
Portfolio Highlights – Listed Investments
Hongwei
Technologies
Artivision
Technologies
GlobalRoam
Group
 2 new production lines to commence operations in Q2 2010
 Likely exit after March 2011
 Security business continues to perform well and advertising
business is growing and attractive within interactive ad sector
 Likely exit by December 2010
 Relationship with StarHub continues to grow
 Looking to expand in Indonesia, Thailand, and India
 Likely exit in 2011 through trade sale
31
Tembusu Growth Fund II
Portfolio Highlights – Investments Due to IPO in 2010
Tangshan Ganglu
Iron & Steel
Standard Water
Sports Asia
SCI Minerals
 Awaiting approval from HK Stock Exchange Commission for
September 2010 IPO
 Likely IPO multiple of 12 – 15x P/E, resulting in an IRR of 15% – 25%
 KPMG appointed auditor on 4 May 2010
 Board will decide on IPO timing after completion of audit
 IPO queries and awaiting approval from Malaysia securities
commission
 Expected listing in 4Q 2010
 Recently hired well regarded CEO
 Expected listing on ASX during 4Q 2010
32
Tembusu Growth Fund II
Portfolio Highlights – Other Investments
 Distribution agreement with Certis CISCO (Southeast Asia) driving
ACTAtek
Infinite
Frameworks
Cherie Hearts
Group
growth
 Also signed distribution agreement with leading Indian distributor
G4S
 Likely exit in 2012 through trade sale or IPO
 Business has stabilized following a challenging 2009 for entire
industry
 Likely exit in 2012
 Largest private childcare provider in Singapore with 67 centres
 Strong brand equity in Singapore
33
Tembusu Growth Fund II
Portfolio Highlights – Other Investments
 Veterinary drug for prevention and treatment of cows endometritis
YingTai
BioTechnology
China Dredging &
Engineering
granted First Class Veterinary Drugs Certification in 2009
 Company’s anti-infection bandages included in list of consumables
in hospitals for patients’ medical insurance claims
 Exit likely through IPO in 2012 in HK or USA
 All 4 dredges are operating in the coastal regions of China
 Exit likely through IPO in 2012 in Singapore
34
Tembusu Growth Fund II
Other Details
Tembusu Growth Fund II
Contact Us
United Kingdom
120 West Heath Road
London NW3 7TX
United Kingdom
t: (44) (0) 20 8458 1947
Beijing
1513 Zhejiang Tower,
Anzhen Xili (North 3rd Ring Rd)
Chaoyang District,
Beiijng 100029, China
t: (86) 10 6445 2108
f: (86) 10 6445 1286
m: (86) 1351 105 6187
m: (86) 1870 139 8078
Nanjing (China HQ)
23F Huijie Plaza,
268 Zhongshan Road,
Nanjing 210008, China
t: (86) 025 8319 1520
f: (86) 025 8319 2351
Shanghai
Singapore (Head Office)
3 Phillip Street
#08-04 Commerce Point
Singapore 048693
t: (65) 6238 7422
f: (65) 6238 7237
e: enqui[email protected]
Office 1001, Hong Kong Plaza,
283 Huai Hai Road Central,
Shanghai 200021, China
t: (86) 21 5116 0721
f: (86) 21 5118 0190
Australia & New Zealand
c/o 155 Queen Street
Auckland, New Zealand
t: (64) 21 2828 988
36
Tembusu Growth Fund II
Appendix A: Biographies
Tembusu Growth Fund II
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.
38
Tembusu Growth Fund II
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.
39

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