1. Steven Wei SU [email_address] Structuring RMB-denominated Private Equity Funds in China and Recent Regulatory Development Hong Kong May 2011 Guo Lian PRC Lawyers 国联律师事务所

5. Increasing Interest in RMB Fund (Cont) Guo Lian PRC Lawyers 国联律师事务所 Source: Zero2IPO VC Fundraising in RMB and US$ for 2006 - 2010

6. Increasing Interest in RMB Fund (Cont) Guo Lian PRC Lawyers 国联律师事务所 Source: Zero2IPO PE Fundraising in RMB and US$ for 2006 - 2010

7. Increasing Interest in RMB Fund (Cont) Guo Lian PRC Lawyers 国联律师事务所 Source: Zero2IPO PE/VC Fundraising in RMB and US$ for 2006-2010

8. Increasing Interest in RMB Fund (Cont) Guo Lian PRC Lawyers 国联律师事务所 Source: Zero2IPO 2011Q1 PE/VC Fundraising Cases and Volumes in RMB and Foreign Currency

9. Increasing Interest in RMB Fund (Cont) Guo Lian PRC Lawyers 国联律师事务所 Source: Zero2IPO China: 2008Q1-2011Q1 PE/VC Fundraising Cases and Volumes

10. Increasing Interest in RMB Fund (Cont) Guo Lian PRC Lawyers 国联律师事务所 Source: Zero2IPO 2008Q1-2011Q1 Investment Cases and Volumes

22. Options for RMB Fund – FIVCIE (Cont) Guo Lian PRC Lawyers 国联律师事务所 Offshore Onshore FIVCIE Management Co/Partnership PortCo A Investment in ForEx Typical FIVCIE Structure GP PortCo N SPVs LPs RMB Fund (CJV) PortCo B … ... Domestic LPs Offshore Fund Management Agreement Investment in RMB Investment in RMB Dividends in RMB Dividend in ForEx Fund Manager Investment in ForEx Return + Carried interest in ForEx Return in RMB SPVs Investment in ForEx Return in ForEx

32. Options for RMB Fund – Equity Investment Fund (Cont) Offshore Onshore GP LP s EIME Co/Partnership PortCo A Investment in ForEx Guo Lian PRC Lawyers 国联律师事务所 SPVs RMB Fund PortCo B PortCo N … ... Domestic LPs Management Agreement Investment in RMB Investment in RMB Investment in ForEx Dividends in RMB Return in ForEx + Carried interest SPVs EIF Structures Return in RMB Dividends in ForEx Investment in ForEx Offshore Fund Services, Fee and Return

40. The Shanghai Pilot Program (Cont) Guo Lian PRC Lawyers 国联律师事务所 Offshore Onshore GP LPs FIE EIME Co/partnership PortCo A PorCo B PortCo N … ... SPVs RMB Fund Domestic LPs Management Agreement Investment in RMB Investment in RMB Dividends in RMB 5% capital contribution in RMB A Structure under the Shanghai Pilot Program Return in RMB Investment in ForEx Dividens in ForEx Return on investment in ForEx Investment in ForEx SPVs ?? ??

44. The Shanghai Pilot Program (Cont) Guo Lian PRC Lawyers 国联律师事务所 △ Main foreign investor(s) must be either of (i) offshore sovereign-wealth funds; (ii) pension funds; (iii) endowment funds; (iv) charitable funds; (v) fund of funds; (vi) insurance companies; (vii) banks; (viii) securities companies; or (ix) other foreign institutional investors recognized by the Joint Conference. △ One of the notable clarifications under the Pilot Program is that a Pilot FIE EIME can make foreign exchange capital contributions as a GP to an RMB fund up to 5 per cent of the fund size and such a contribution will not affect the (domestic) nature of the relevant RMB fund. If the fund has foreign LPs, it may not benefit from this treatment.

46. Case Study – Blackstone Zhonghua Development Investment Fund Guo Lian PRC Lawyers 国联律师事务所 Blackstone Zhonghua Dev. Investment Fund PortCo B PortCo N PortCo A Blackstone Zhonghua Development Investment Fund GP Blackstone Zhonghua Development Investment Fund LPs HK Management Co HK Holding Co Management Co Blackstone onshore GP Domestic LPs Management Agreement Advisory Services

53. Thank you Steven Wei SU Email: [email_address] Tel: +86 13552639569 +86 1051660506-123 All rights reserved Guo Lian PRC Lawyers 国联律师事务所