Roth Capital Partners - ChinaVenture's 2011 Annual Investment Conference • Beijing

—Value Discovery After an Extraordinary Influx of Capital to be held in Beijing

The Roth Capital Partners–ChinaVenture's 2011 Annual Investment Conference • Beijing titled Value Discovery After an Extraordinary Influx of Capital is scheduled to be held on Oct. 27, 2011 at the Beijing J.W. Marriott Hotel. The grand event, jointly organized by the leading financial information provider - ChinaVenture Group, will be attended by a large galaxy of most respected VC/PE investors and representatives from the decision-making levels at major Chinese enterprises.

In 2011, in response to mounting domestic inflation pressures and intensifying financial turbulences in major economies following the new Eurozone debt crisis and the U.S. credit rating downgrades, mopping up excess liquidity in the domestic capital market looms large in the Chinese fiscal and monetary policies, with new measures of dampening credit surges from the Chinese central bank coming out in a quick succession. However, it seems that repeated stamps on the brake still failed to cool off the nation-wide PE frenzies. Over the past first half of 2011, domestic PE investment market still extended its trend of explosive growth as last year, and centrally controlled SOEs, local brokerages, listed firms, and global giants vied with each other to grab a larger slice of the growing cake. The PE boom and the resulting more crowded playground also contributes to exorbitant corporate valuations and bloated asset bubbles. With the explosive expansion in the domestic PE market, the fierce competition for deals is really like a fight, resulting in not only irrational valuations, but also no real winners in the long run. Among all the bustles and hustles, it seems that few people have the time, and willingness, to tap into and discover intrinsic values fueling the fast growth of their target firms. But all good things must come to an end, so will the ongoing boom in capital markets. When the party is over, both investors and entrepreneurs will surely get down to essentials — What hidden risks are there lying ahead? How should the PE industry grapple with these uphill challenges going forwards? What are the implications of the ongoing nation-wide PE fervor for the PE sector or even the whole economy? The upcoming gathering maybe provides you some cool-headed thinking and well-informed insights.

The biyearly investment conference hosted by ChinaVenture has been regarded as the golden opportunities for corporate elite and institutional investors to deliberate upon their capital allocations. The present gathering-Roth Capital Partners-ChinaVenture's 2011 Annual Investment Conference • Beijing will provide a highly efficient venue for PE/VC professionals to share their insights, integrate their resources and create a win-win situation.

Changes and Options — To Redraw the Roadmap for the Chinese VC Industry

According to the latest statistical data from ChinaVenture's CVSource, out of the 167 Chinese firms getting listed on domestic A-share market in the first half of 2011, 63 ones slumped below their IPO prices, accounting for 37.7%. Squeezed by lowered P/E ratios and higher costs of capital, the book ROIs of VC/PE exits edged down along the road, with the average book ROI of domestic capital exits for the second quarter of 2011 being a meager 7.34 times tracking earnings, far below the levels in 2009 and 2010.

Immediately following Moody's Investors Service's bearishness on the China-related plays, the international rating agency Fitch also warned that Chinese enterprises will continue to be easy targets for fraud charges. The weakening capital markets across the globe and the recent crisis of confidence dogging the Chinese overseas-listed companies darkened the prospects for Chinese firms in future: a raft of overseas-listed firms, including Renren, NetQin, Phoenix New Media, Taomi and Tudou, fell below their issue prices, while many others such as Xunlei Networking and Cloudary Holdings also had to postpone their overseas IPO plans, citing highly worrisome market conditions. Domestic A-share market extended its downward trend, and fraud revelations at China's US-listed firms cropped up one after another. The lackluster at the downstream end of domestic VC/PE industry chain will surely cast a shadow over the investment landscape at the other end. Are there challenges or opportunities for you in the aftermath of a flurry of bubble bursts? This is really a hard nut to crack for each VC/PE institutions.

The repeated discordances between venture capitalists and entrepreneurs in such firms as South Beauty and Minghong Times dampened the optimistic perceptions amid the investment boom over the past few years, prompting entrepreneurs to reflect on the role that venture capitalists should play in the process. To be a guide, a caretaker or a partner, which role VC should play during the development of enterprises going from excellence to preeminence and growing from being unfledged entrants into industry champions? To shift towards the Chinese hinterlands, to go down to grass roots, or to advance into highly segmented sectors? How to strike a balance between their aggressive expansion and in-depth exploration? How to forge their specialized advantages? And how to make inroads into strategic industries? The Chinese VC industry must make its choices at this time of the day. Perhaps, you may get some inspirations from the upcoming Roth Capital Partners-ChinaVenture's 2011 Annual Investment Conference • Beijing.

Opportunities and Challenges — To Realize Its True Values for the Chinese PE Industry

Latest statistical data from ChinaVenture's CVSource shows that domestic VC/PE fundraisings experienced an explosive growth over the past few years. In 2010, 235 funds garnered a combined amount of more than USD 30.0 billion during their fundraising efforts, registering a 197% and 185% increase respectively in the fund number and the financing amount from five years ago, while in the first half of 2011, the domestic fundraising market continued to go up, with 55 funds netting as much as USD 10.97 billion. In terms of VC/PE investments, things seemed to be also as red-hot as ever. 804 VC deals disclosed in 2010 invested a total amount of USD 5.7 billion, recording a 65.1% and 96.6% year on year increase in deal number and investment amount, and 375 PE deals invested USD 19.6 billion in total, posting a 75.2% and 16.0% year on year increase. By the end of the first half of 2011, the total VC/PE investments have already topped USD 3.7 billion and USD 14.9 billion, and the total investments for the full year are expected to exceed the figures last year, hitting new highs.

In the aftermath of massive capital influxes, a new wave of industry consolidations, organizational restructurings and reallocation of investment portfolios will surely come in. How can PE investments achieve their true values in the process? A plethora of diverse players and excess inflows of funds reversed the supply-demand relations in the domestic investment market. Should investors take up the challenges lying in the road, or turn away to blaze a new trail? How should PE institutions adapt to ever-changing landscape?

Just now, immature multilayered capital market, limited fundraising options and higher costs of capital are among constraints to the healthy growth of SMEs, hence, hurting the much-needed job creation and private economic dynamisms. As one of key financing facilities for SMEs, PE has acted as an important driving force behind regional economic development and industrial upgrading. However, along with excess influxes of funds also came some undesirable practices such as shadow financing, bull campaign and window dressing, leading to serious disruptions to the normal PE market orders. In addition, the long delayed release of the revised Fund Law and the lack of specially-designated PE regulators also brought about lots of uncertainties to the healthy development. Amid a lot of mixed receptions and a jungle of new rules, which direction should the Chinese PE industry choose to take? Are self-discipline and governmental regulation really incompatible with each other? To be a guardian or to be a guide? Which role should come first?

Just like the last four events, the upcoming conference will continue to mull over the latest developments and prospects of the Chinese PE/VC market. During the gathering, PE/VC elites will discuss with you on various key topics, share with you their experience in PE/VC investments in China, and exchange their insights in a bid to discover the real investment values in different industries and explore highly efficient investment strategies.

It is really our great honor to invite you to be present at this Conference, and join in our discussion.

About CVSource

An online information system developed by ChinaVenture, CVSource is dedicated to providing financial professionals with a variety of unique information offerings, including business intelligence, equity transaction data, corporate financial analysis, industry research findings, analytic tools, etc., in order to help them enhance their capabilities to carry out research into investment markets, and to seize and assess potential investment opportunities.

CVSource's client base consists of institutional investors, strategic investors, investment banks, asset management corporations, consulting firms, accounting firms, universities, research institutes, etc.

Introduction to ChinaVenture

ChinaVenture Group is a leading provider of financial data and business information. Through its database platform – CVSource, ChinaVenture provides specialized financial data, news and analytic tools to all players active in the Chinese market, such as Investment Institutions, Investment Banks, Strategic Investors, Asset Management Companies, etc.

ChinaVenture also operates two of the largest media platforms in the Chinese finance industry: WWW.ChinaVenture.com.cn and WWW.CVFinance.com.cn, and hosts various investment-related conferences and forums each year. ChinaVenture was founded in 2005 with offices in Beijing, Shanghai and Shenzhen.

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