Capital Yuan Tao invests in China alternative assets including Chinese private equity GPs (funds), direct co-investment in growth capital companies alongside Chinese GPs and secondary opportunities. The team is well-positioned with the leading GPs in China to generate attractive returns for Capital Yuan Tao and its investors.

Capital Yuan Tao’s investment philosophy is to achieve the right balance between capital preservation and attractive returns. We invest in GPs which are able to identify portfolio companies with market-leading positions in promising industries and which demonstrate solid business fundamentals and strong growth momentum. Capital Yuan Tao tests its selection of GPs on two critical dimensions:

• On deal terms, Capital Yuan Tao focuses on attractive entry evaluations, deal structures which facilitate various exit strategies and appropriate downside protection for the GP.

• On the portfolio company side, Capital Yuan Tao requires direct face-to-face interviews with most of the portfolio companies’ CEOs to reaffirm the business model and growth opportunities; the management team’s caliber, vision and capabilities; and the GPs ability to add value to the portfolio companies.

Due Diligence Rigor and Process
Capital Yuan Tao applies the same fact-based approach and analytical rigor as do our colleagues at American Securities in the due diligence process. In addition to the core investment and business competencies of the Capital Yuan Tao team, American Securities’ Shanghai-based team includes strategy and operations professionals who help thoroughly assess GPs and the portfolio companies, drawing in deeper expertise when required.

Geographic Focus
Capital Yuan Tao focuses exclusively on Greater China. China is the largest and fastest growing market and the epicenter of private equity in Asia. China has more private equity opportunities than any other Asian country, accounting for ~30% of private equity investments in the region. Through its geographically-focused strategy, Capital Yuan Tao possesses in-depth understanding and knowledge of the dynamics of the China PE market and Chinese GPs to optimize the quality of Capital Yuan Tao’s investments.

Capital Yuan Tao Fund I
Capital Yuan Tao launched its first fund in 2007. Our unique skill set and experienced investment processes enable us to select GP teams that have invested in growth companies with solid business fundamentals, as well as to separate out momentum investors which have had to write down numerous investments. The GPs selected by Capital Yuan Tao all demonstrated disciplined investment throughout 2007 and 2008. The portfolio companies continue to navigate well through the downturn, a reflection of the strong selection of solid growth companies by Capital Yuan Tao’s GPs, as well as the GPs’ ability to work with portfolio companies to provide the additional operations and management attention required during the current economic environment.

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