We believe that robust, well-governed processes are critical to source, acquire and build better businesses in China’s growing consumer market, and will allow us to generate stronger risk-adjusted returns. Our investment process follows ten-stages that emphasize timeline, control, discipline, transparency and results. We aim to leverage our resources and experience running Chinese consumer companies, monetize sweat equity and manage downside risk.

We identify and map target sectors to proactively seek out a large pipeline of unique investment opportunities. As we move forward with an opportunity, we complement our proprietary diligence with the industry insight we have within other businesses in our portfolio, and the use of independent advisers who affirm our financial and commercial due diligence. Concurrently, we work to build management and formulate a detailed business plan once we take control. This allows us to focus on clear deliverables immediately upon taking control – for example, to roll out ready-to-drink Joysun beverages, or bring Yonghong snack foods into modern retail channels, all with the goal of validating our investment thesis by strong growth. This also has allowed us to put our entrepreneurial efforts to work for our investing partners by identifying other opportunities to create value beyond the core businesses we acquire. This is evident in the actions we have taken since acquiring Yeehoo, which has grown its leading babywear positioning while allowing us to acquire or spinout Peekaboo to focus on kidswear, Pinco Pallino for luxury goods and Soho Baby for foreign brands.

With growth on track in most of our portfolio companies, we can turn to later stages of streamlining operations and generating higher operating margins. Evidence of this can be seen in our efforts in the past year to lower the cost of goods sold for our apparel businesses, enter into higher margin e-commerce channels and recruit higher quality management talent to allow us to lower overall headcount.

We believe that by taking control, validating our investment thesis through growth, and improving margins through better management and efficiency, we create the platform to allow our Investment and Corporate Finance team to generate realizations. We seek to generate  partial realizations as soon as reasonably possible after making an investment, either through dividends, recapitalizations or partial sales, often to a strategic investor. We believe this helps to de-risk our investments, and set the stage for more attractive future exits. Building this approach to realizations into our investment process has, to date, resulted in full or partial exits in 11 out of 18 of our investments.

We will continue to marry our control-oriented, consumer-focused investment thesis with a robust, repeatable and scalable approach as we deploy capital from our current and future funds under management.