D2 Capital Partners: Capital Markets Internship

D2 Capital PartnersCreation ∙ Deployment ∙ Structuring

The D2C Capital MarketsInternship Program

February – May 2010

“D2C Internship: Immersion into the Capital Markets”

Creation ∙ Deployment ∙ Structuringwww.d2capitalpartners.com

D2 Capital PartnersOnshore Access • Global Platform

D2 Capital is an independent, privately owned, investment and advisorypartnership. It is active across the spectrum of investment assets whilstsimultaneously applying he accumulated global capital market experience of itsteam to a diverse range of advisory situations. D2C is encumbered by convention. Itis flexible, focused and innovative in the provision of niche solutions.

Where we fit into the capital process :

I. Creation – we raise capital for companies

II. Deployment – we assist strategic and financial investors withdeployment of capital

III. Structuring – we structure the best-fit, most effective andinnovative solutions

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D2 Capital PartnersI. Executive Summary

TABLE OF CONTENTS

I. Executive Summary

II. Capital Market Careers

III. Capital Markets Overview

IV. How to Break into the Industry

V. The D2C Internship

VI. Appendices

The D2C Internship Program was created as an immersion into the realm ofinternational capital markets.

Our aim is to give candidates a taste of high-level finance careers in capitalmarkets for the most outstanding graduates.

The D2C Internship Program is an intensive 12 week schedule with extensivein-class training for required technical skill-sets and heavy involvement doingreal assignments on complex capital market transactions.

D2C is proud to present interested candidates in a program catered to createthe foundation for success of the future leaders in capital markets andcorporate strategy of Vietnam


D2 Capital PartnersII. Capital Market Careers

4

Benefits to Capital Market Careers Top Job Industry Dynamic Compensation Schemes Key Jobs in Capital Markets Advisory Aspects of Capital Market Jobs

TABLE OF CONTENTS






VI. Appendices


D2 Capital Partners

Compete and work with the most talented, ambitious and competitive individuals

Interact daily with experienced fund managers, portfolio managers, analysts etc.

Understand various business models in multiple sectors / industries from CEOs, CFOs etc.

Understand foreign business culture to build global corporate and investor relationships

EXPERIENCE = VALUE

Vastly enhance one’s chances of obtaining an MBA at top universities

Fast-track oneself into a role as CEO or CFO of a corporate entity

Launch oneself into an international career

Build important domestic business relationships

Apply knowledge and experience in investments to raise funds for: Establishing an investment fund

Starting a venture business

Helping companies expand, grow and become regionally/globally competitive

VALUE CREATES OPPORUNITY

Benefits to Capital Market Careers

5


D2 Capital Partners

“Bulge-bracket” I-banks, leading hedge funds, Private Equity Groups are extremely selective and competitive

Graduates from top schools (i.e.: Harvard, MIT, Stanford, Berkeley, Wharton, Columbia etc.)

Highest academic achievements (i.e. honors, awards , dean’s list etc.)

Overachievers and leaders (i.e. presidents of business / finance clubs , associations etc.)

Possess comprehensive financial knowledge prior to graduation to prepare for interviews

Able to navigate challenging interviews (i.e.: How many ping-pong balls can fit into a Boeing 747 Jet?)

Confident, outspoken and articulate; No indications of weakness

Competitive Job Industry Globally…

Commodity Job Locally…

Top Job Industry

6

Retail client focused, lack institutional experience

“Stamp factory” job – expect to be processing not creating

Propensity to Job-hop – little continuity of experience or direction

Little English language requirements – reflective of standards

Don’t expect to provide much valuable input – Most retail investors in VN would rather trade themselves

Most companies in VN would rather raise capital themselves rather than rely on a local securities company

Illegal activities the norm – such unprofessional ethics would get you fired in a global firm

Expect limited global exposure or internationally transferable experience


D2 Capital Partners

Highest paid professional career for undergraduate degrees in the West

Best way to get rich besides being an illegal con-artist, inheriting money from your family,being a famous celebrity/musician/athlete or starting your own business

Fresh graduate Analysts at global Investment Banks start at $100K+ in annual comp

Managing Directors make millions of dollars from annual bonuses

One of the Most Lucrative Careers…

Bonus compensation based on performance while salaries highly competitive with mostother professional industries

Given its low base, Vietnam’s capital markets have potential for high growth and hencehigher pay whilst already offering some of the highest compensation packages

If one has the international caliber skill-sets, professional ethics and determined attitude,investment banks and funds in the region will poach and handsomely pay talent toenhance their Vietnam coverage

Fortunately, opportunities in Vietnam do exist…

Dynamic Compensation Schemes

7


D2 Capital PartnersKey Jobs in Capital Markets Advisory

Roles DescriptionSkill-sets ,Personalities &

Traits

Advisory /Corporate

Finance

• Work directly with companies• Structure transactions• Originate investments• Analyze valuations• Focus on primary markets

• Diligent and focused• Willing to work long hours• Business model oriented• Opportunistic

InstitutionalSales

• Manage relationships with investment funds• Initiate investment ideas and strategies withinvestors• Focus on secondary markets

• Sociable• Early birds• Sales oriented• Articulate• Opportunistic

Trading

• Manage principle positions’ risk• Create liquidity – Market makers• Focus on secondary markets

• Quick thinking• Quantitative prowess• Calm and decisive• Disciplined behavior• Early birds

Research

• Focus on secondary markets• Recommend investments• Create visibility of companies• Provide impartial advice• Analyze valuations

• Analytical expertise• Theoretical aptitude• Superb verbal dexterity• Opinionated

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D2 Capital PartnersAspects of Capital Market Jobs

Qualitative Analysis

• Research Industries

• Evaluate strategies

• Analyze business models

• Write business plans / offeringmemorandums & prospectuses

Structuring

• Transaction legality

• Terms & Conditions

• Investor protections

• Hybrid financing

• Imbedded derivatives

Quantitative Analysis

• Valuation Models

• Financial Forecasts

• Earnings Models

• Quant Models

Sales & Marketing

• Pitch book presentations

• Networking (investors, execs)

• Meet company executives

• Investor / company road shows

• Attend / host conferences

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D2 Capital PartnersIII. Capital Markets Overview

10

What are the Capital Markets? What is Investment Advisory? Organizing the Clutter in Capital Markets Venture Capital & Private Equity Investments More on Venture Capital: Incubation Mergers & Acquisitions (M&A) Sell-Side Advisory: Managing the Capital Raising Process Buy-Side Advisory: Capital Deployment Strategy & Execution Restructurings & Divestments: Shedding Fat for Leaner Growth Our Partnership Lasts Throughout the Entire Company Lifecycle

TABLE OF CONTENTS






VI. Appendices


D2 Capital Partners

• Real Estate

• Venture Capital

• Private Equity

• Currencies

• Commodities

• Swaps

• Futures

• Options

• Warrants

• Convertible Securities

• Treasury Bonds

• Corporate Bonds / Debentures

• Commercial Paper

• Bankers Notes

• Stocks

• American Depository Receipts (ADRs)

• Exchange Traded Funds (ETFs)Equity

FixedIncome

AlternativeAssets

Derivatives

The capital markets…

Facilitate efficient avenues for raising and deploying capital

Allow investors and companies to realize the value of their assets

Create mechanisms for transparency in market price

Offer a diverse array of financial structures suitable to investors and companies

Provide access to international financing channels and investment opportunities

We advise on transactions across nearly all asset classes…

What are the Capital Markets?

11


D2 Capital Partners

Act as intermediaries in raising and deploying capital for companies and investors

Enhance companies’ credibility to investors in accessing international capital markets

Market (“Pitch”) investment opportunities to companies and investors

Map, source, and analyze investment opportunities across all industries and sectors

Structure investment transactions (“deals”) to the needs of counterparties

Creating access to capital and investment opportunities…

What is Investment Advisory?

12

BUYER:Private Company

Public CorporationInvestment Fund

SELLER:Private Company

Public CorporationInvestment Fund

TRANSACTION:Mergers & Acquisitions

Leveraged BuyoutInitial Public Offering

Secondary Market TradePrivate Equity

Venture Capital

Sell-SideAdvisor

Buy-SideAdvisor

Sell-SideAdvisory

Buy-SideAdvisory


D2 Capital Partners

CLIENT

CREDITORS

ACCOUNTANTS

LAWYERS

CONSULTANTS

Myriad of Services… We Manage, Structure & Package…

INVESTMENTADVISOR

CREDITORS

ACCOUNTANTS LAWYERS

CONSULTANTS

Organizing the Clutter in CapitalMarkets…

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CLIENT


D2 Capital Partners

PURPOSE: Raising growth capital: At the earliest stages of the life-cycle

Forging synergistic relationships betweencompanies

Structure financial investment partnerships toprepare a company for IPO exit

D2C ROLE: We act as both advisors tobuyers and sellers, management in ourprinciple investments and consultants inpost-deal monitoring services

COUNTERPARTIES: We advise companiesin raising capital or advise private equityinvestors in their deployment strategy.

PROCESS: We in assist in designingbusiness plans, writing informationmemorandums, building financial modelsand drafting term sheets

Start-upGrowth

CompanyCash Flow

Positive

From VC to PE, we help accelerate the growth paththrough growth capital raises…

Venture Capital involves start-up and early stagecompanies requiring funds for growth

Seller

FinancialInvestment

StrategicPartnership

Private Equity involves private profitable companiesseeking expansion capital or strategic partnerships

Venture Capital & Private EquityInvestments

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D2 Capital Partners

Leveraging Vietnam’s Entrepreneurial Spirit Aiming to be the leading business partner

NewVenture

DomesticPartners

Investors

ForeignPartners

ProfessionalManagement

More on Venture Capital: Incubation

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PURPOSE: Create and start new ventures

D2C ROLE: Apply creative intelligence,vast network and market knowledge tostarting, funding and managing newventures

COUNTERPARTIES: Foreign / domesticinvestment funds, domestic / foreigncompanies, local / expat professionalexperts / management

PROCESS: Develop the business plan,build financial forecasts, research thetarget market, hire management team,establish local and foreign partnerships,obtain licensing, connect customers andraise venture capital.


D2 Capital Partners

PURPOSE: Assist global / domesticcompanies structure partnerships via: Direct purchase of ownership

Issuance of new shares for growth capital

Setup of new Joint Ventures

D2C ROLE: We act as advisors to eitherthe buyer seeking acquisition targets orsellers requiring strategic partners

COUNTERPARTIES: Transactions involveglobal and / or domestic companiesacting as either buyers / sellers

PROCESS: The scope of work requiresextensive preparation of investordocumentation, regulatory filings,financial due diligence, marketingmaterials and road-shows spanningmany months and even beyond a year

CompanyA

CompanyB

CompanyA-B

To partake in Vietnam’s across-the-board growth curve,strategic interest is driving M&A demand…

MERGERS are the combination of two companies into onelarger entity…

Acquirer

Target A

(90% Stake)

Target B

(100% Stake)

Target C

(70% Stake)

ACQUISITIONS are the purchases of part or all of an assetor company by another company…

Mergers & Acquisitions (M&A)

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D2 Capital Partners

Sell-Side Advisory: Managing the CapitalRaising Process

DOCUMENT PREP (3 – 4 WEEKS):

• Draft Business Plan / Investment Memo

• Financial Forecasts

• Valuation Model

MARKETING PREP (1 – 2 WEEKS):

• Finalize Potential Buyers List

• Draft Teasers

• Write and Coach Investor Presentation

MARKETING (3 – 4 WEEKS):

• Teaser Dissemination

• NDA & Investor Document Release

• Presentation to Investors

BIDDING PROCESS (1 – 2 WEEKS):

• Determination of Final Round Investors

• Draft Term Sheet

• Coordinate Investor Due-Diligence

DUE-DILIGENCE (6 – 12 WEEKS):

• Management Meetings

• Facility Tours

• Data Room Visits

NEGOTIATIONS (2 – 4 WEEKS):

• Finalize Purchase Agreements

• Finalize Shareholder Agreements

• Obtain regulatory approvals

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TOTAL TIME FRAME:16 – 28 WEEKS


D2 Capital Partners

Buy-Side Advisory: CapitalDeployment Strategy & Execution

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INDUSTRY / SECTOR ANALYSIS:• Determine industry / sector trends• Segment value-chains• Identify growth drivers

TARGET MAPPING:• Categorize key players• Matrix SWOT and comparable metrics• Short-list preferred targets

COMPANY MEETINGS / PROFILES:• Gather key operating metrics• Business model descriptions• Trends and developments

INVESTMENT DUE DILIGENCE:• Stress test forecast assumptions• Comprehensive valuation models• Coordinate legal due diligence

NEGOTIATIONS & STRUCTURING:• Customize deal structure• Buffer hostility through intermediation• Negotiate buyer’s terms & conditions

Locking inthe Target!!!


D2 Capital Partners

Need capital to fund growth but don’t want to sell equity or raise debt?

Not enough management resources to scale higher growth core business?

Restructurings allow companies to unlock capital trapped in underperforming assets

Divestments in businesses where management is inexperienced to focus on core growth

Immediate value creation that can be realized by the capital markets (i.e. stock price)

Ca$h Proceeds

Sometimes more is less; Allocate capital where it grows best

Restructurings & Divestments:Shedding Fat for Leaner Growth

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Post-AssetDisposal

Pre-AssetDisposal

Non-Core Asset


D2 Capital Partners

Our Partnership Lasts Through-outthe Entire Company Lifecycle

Venture Capital

• Start-Up

• Early Stage

Private Equity

• Capital Raise

• Strategic Partnership

Listing

• Initial Public Offering(IPO)

• Secondary Issuance

M&A

• Takeovers

• Carve-outs

• Consolidation

Restructurings /Divestments

• Asset Disposal

• De-listing

• Privatization

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D2 Capital PartnersIV. How to Break into the Industry?

21

Preparation is Vital Sample Résumé

TABLE OF CONTENTS






VI. Appendices


D2 Capital Partners

Extensive research into careers in investment banking – Read vault career guides, wet feet

Be up to date on the local and global news (i.e. wallstreet journal, barons, bloomberg, vietstock etc.)

Read research reports and macro analysis (i.e. Investors Insight, Morningstar, PIMCO etc.)

Understand technical financial theory (i.e. Investopedia, “the intelligent investor”, CFA etc.)

One does not necessarily have to have a finance degree; Applicable finance is self-taught or trained onthe-job; in fact, many finance professionals have non-finance backgrounds (i.e. engineering, pharmacy)

ESTABLISH FUNDAMENTAL KNOWLEDGE

Build technical skills on valuation modeling in excel (i.e.: Training The Street, Wall Street Prep etc.)

INTERNSHIPS!!! Gain experience with asset managers, investment banks, securities companies

Network by attending industry conferences, seminars; utilize linked-in, doostang, CFA societies

Invest yourself – Putting a little money to work is a fast way to learning hard-earned lessons

Ultimately, be prepared to begin high-level value-added work upon hire; Distinguishing oneself by havingthe experience and skills at the beginning is a sure way to improving your chances of being hired. Havinga polished resume is key to being an outlier in the application process.

ACCUMULATE INDUSTRY RELEVANT EXPERIENCE & SKILLS

Preparation is Vital

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D2 Capital PartnersSample Résumé

John Smith <> 9999 Cherry Boulevard <> Cambridge, MA XXXXX <> USA<> (001) (555) 555-5555 <> [email protected]:Top University – B.A. Economics [Cambridge, MA 9/2005 - 6/2009]Cumulative GPA: 3.9 Major GPA: 4.0Top University of Singapore, Education Abroad Program [Singapore 8/2006 - 12/2006]CFA Level I CandidatePROFESSIONAL EXPERIENCE:Analyst (Intern), ABC Private Equity Group, LLC [Cambridge, MA 02/2008 – 6/2009]ABC Private Equity Group, LLC located in Cambridge, CT, is a global private equity fund of funds advisory group servicing institutional investors in private equity Analyze private equity fund manager performance using proprietary analysis model. Apply thematic investment assumptions to calibrate outperforming private equity funds and allocation strategies for superior risk-adjusted returns. Update and maintain database of proprietary private equity data and information to conduct trend analysis.Summer Analyst (Intern), 123 Partners – Mergers & Acquisitions [Manhattan, NY 7/2008 - 9/2008]123 is a global Investment Bank specializing in M&A Advisory, underwriting, research and institutional brokerage services.Worked intimately with Managing Directors to source two potential deals currently in the process of entering the firm’s deal pipeline. Met with executive management (i.e.: CEO, CFO, COO etc.) at over 30 companies to understand key operations for potential growth and upcoming projects Supported analysts on building pitch books and conducting research. Wrote an internal thematic project on M&A investment strategies for the Managing Directors.M&A Research Analyst (Intern), Acme Partners, Inc. [Boston, MA 6/2007 - 6/2008]Acme Partners is a specialized mergers and acquisitions firm serving the middle market. GPI leads in executing strategic acquisitions. Researched industries/companies for growth opportunities in: Aviation, Waste, Food and Beverage, Manufacturing, Contract Packaging, Logistics, Pharmaceuticals Called company CEO’s, CFO’s as well as utilized internet resources and online databases to determine scale, scope and details of operations Updated and added information of over 1,000 internal company reports to the proprietary database to source deals for firm principles.INTERESTS:Chancellor and Member, the Professional Fraternity of Alpha Alpha Alpha [Cambridge, MA 6/2007 - 9/2008]Alpha Alpha Alpha is a professional fraternity organized to foster the study of business in universities. The fraternity has over 300 chapters and over 500,000 members Arbitrated risk management and interpreted bylaw compliance measures to ensure best practices and operations. Organized, directed and facilitated efficient general body meetings and procedures while cutting time by over 50%. Restructured corporate configuration to formulate business strategy and improve effective operations in corporate sponsorship.Portfolio Manager and Member, Top University Student Foundation Investment Committee [Cambridge, MA 4/2006 – 6/2009]The Student Foundation Investments Committee is responsible for the management of the Student Foundation's $10m endowment. Managed weekly equity market discussions and decisions in managing entire endowment portfolio. Built comps, DCF and LBO valuation models on companies considered for investments. Maintained quantitative asset allocation and risk management model for endowment portfolio.

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D2 Capital PartnersV. The D2C Internship

24

Introducing the Internship Internship Purpose Internship Description In-Class Training Schedule On-the-Job Soft-Stills Training Work Environment at D2C Candidate Requirements Not an Office Assistant Position Application Procedure

TABLE OF CONTENTS






VI. Appendices


D2 Capital PartnersIntroducing the Internship

D2C seeks dynamic and energetic team members to help us grow whilstproviding impeccable service to our clients.

Our entrepreneurial environment is founded on our groups’ enthusiasmand diversity to synergize and leverage all participants’ contributingstrengths.

We seek ambitious individuals driven to outperform and execute acrossall areas of businesses to provide the insightful strategic advice for ourclients’ capital allocation decisions.

These are high level capital markets programs involving candidates in theentire transaction process: analysis, target selection, valuation,structuring and post-deal monitoring.

25


D2 Capital PartnersInternship Purpose

The internship is meant to provide interns with a foundationof applied experience in capital markets advisory: M&A,private equity, venture capital etc.

The pragmatic approach of the internship is meant toprovide interns with advanced skills transferrable to anyfirm, whether financially focused or not.

Exemplary performance may lead to full-time jobplacements with D2C as we seek the most talentedindividuals to join our team.

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D2 Capital Partners

Analyze Industry / Sector trends, growth drivers and investment opportunities

Map major players, matrix competitive quantitative and qualitative metrics

Prepare and attend management meetings, agendas and questions

Evaluate M&A targets and market entry considerations for new ventures

Conduct macroeconomic updates for analytics and presentation purposes

RESEARCH FOUNDATION

Assist team with drafting pitch book presentations

Aid in writing industry due diligence reports

Build public / acquisition valuation comps models in excel

Build forecast assumptions and models for new ventures and start-up companies

Support D2C team in any and all aspects of the transaction process from pitch to close

TRANSACTION FOCUS

Internship Description

27


D2 Capital PartnersIn-Class Training Schedule:

SUBJECT SESSIONS

APPLIED RESEARCH 2

INTRO TO VIETNAM MACRO 1

BUILDING PITCH BOOKS 1

INTRO TO INCOME STATEMENT 1

INTRO TO BALANCE SHEET 1

INTRO TO CASHFLOW STATEMENT 1

FINANCIAL STATEMENT ANALYSIS 1

INTRO TO EXCEL 1

PUBLIC COMPS ANALYSIS 2

ACQUISTION COMPS ANALYSIS 2

M&A TRAINING: BUSINESS OF M&A 1

M&A TRAINING: SELL-SIDE 1

MACROECONOMIC INDICATORS 1

EMERGING MARKET MACROECONOMIC ANALYSIS 1

28


D2 Capital PartnersOn-the-Job Soft Skills Training

Professional E-mail, Fax, Letter, Phone / Conference Call Protocol

Interacting with foreigners at D2C, Investors and MNCs

Communicating with executives in Vietnam and abroad

Presentation / speaking skills through weekly updates

Teamwork / collaboration on assignments and tasks

Time management through constant deliverables and due-dates

Multi-tasking on various projects

Managing pressure under stressful situations and tight deadlines

Discussion and debate on various topics challenging critical thought process

29


D2 Capital PartnersWork Environment at D2C

• Constant Reading: News, reports, memorandums, presentations

• Constant Training: In-class and on-the-job

• Constant Preparation: team discussions, company meetings

Steep LearningCurve

• Young principles and management team

• International Mix: US, UK, Canada, HK, VN

• Global and domestic client base

Young, Global &Dynamic

• International and local guidance (Nearly 40 years combined)

• Opinions, ideas, strategies and recommendations strongly encouraged

• Inquisitive curiosity and thirst for knowledge and solutions desired

Intellectual CapitalEncouraged

• Multi-tasking on multiple projects

• Tight deadlines and deliverables

• Fierce competitionFast Paced

• Social activities, active participation and inclusive involvement

• Trust, accountability and responsibility required

• Leverage, scale and growth orientedFamily Culture

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D2 Capital PartnersCandidate Requirements

Resourcefulness; ability to find information; keen intellectual curiosity

Proficiency in Microsoft Applications (i.e. Word, Excel, PowerPoint)

Basic understanding of Financial Statements

Ability to read, write and speak professional business English

Creative, innovative and imaginative thought process

Diligent work schedule

Accountability & Dependability

Excellent organizational capacity

Professional / urbane manner

Strategic, structured mindset

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D2 Capital PartnersNot an Office Assistant Position…

Not about getting coffee

Not about filing papers

Not about ordering supplies

Not about admin work

We are looking for value-added contributingteam members

32


D2 Capital PartnersApplication Procedure

Please send (1) resume / CV, (2) cover letterand (3) indication of academic achievementsand courses obtained.

Direct all applications by email to IanNguyen, Vice President, [email protected]

Please kindly cite: “CAPITAL MARKETSINTERNSHIP” in subject line

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D2 Capital PartnersVI. Appendices

With more than forty years of combined, international, capitalmarket experience, D2C is defined by Capital :

Creation

Deployment

Structuring

34


D2 Capital PartnersThe Scope of Our Partnership

Mergers & Acquisitions

VC and PE Investment

Business Plan Preparation

Capital Structuring

Deal Negotiation

Due Diligence

Industry Mapping & Competitive Analysis

Post Deal Monitoring

Strategic Advisory

35


D2 Capital PartnersCAP MKT UPDATE : What Has Changed

The Bad News

VN remains on periphery of regional investment universe

Risk appetite of overseas funds for high risk, emerging assets is stilldepressed

The quality of onshore capital market advisors lags far behind that oflawyers and accountants

The Good News

Strategic investor interest is rising

Specialist financial investors get more access opportunity

Funding costs are low

Less noise = more deals can be done but …

Preparation and structuring is critical

36


D2 Capital Partners

400bps interest rate subsidy ending in 2010

FDI funding channels impaired

FX Reserves down 27% (USD16bn)

Current account deficit approaching 15% ofGDP

Budget deficit facing pressure0%

10%

20%

30%

40%

50%

60%

0

20

40

60

80

100

120 USD Loan Outstanding…YOY Loan Growth rate

Far from Pretty… Credit Cycle Returns…

20% 18% 19%20% 20%28% 35%39% 43% 48%

59%66%

71%93%

107%

131%

0%

20%

40%

60%

80%

100%

120%

140%

Loan to GDP (%)

Leveraged Growth…

0%

20%

40%

60%

80%

100%USD Billion % FDI [Disbursed] / GDP

% FDI [Disbursed] / FDI [Announced]Government 2009

guidancecontrasts with

trend

FDI Absorption Limitations…

Dependent on Leverage to Grow

37

SOURCE: Reuters, Bloomberg, GSO, D2C Research


D2 Capital Partners

Units inUSD bn

1H 2009M&A

1H 2008M&A

% Change

World 914.04 1,573.33 -41.9%

USA 289.36 569.07 -49.2%

China 38.29 62.33 38.6%

SE Asia 18.56 49.94 -62.8%

Vietnam 0.23 0.471 -50.7%

0

5

10

15

20

0

500

1000

1500

2000

2003 2004 2005 2006 2007 2008

USD

mill

ion

s

Total Value (USD mn) Average Deal Value

Vietnam M&A Slowdown… Declining Capital Flows…

-22.5% YoY

-61.5% YoY

-76.3%YoY

-

10.0

20.0

30.0

40.0

50.0

60.0

China SE Asia Vietnam

USD

mill

ion

s

Average M&A Deal Size 1H 2009 Average M&A Deal Size 1H 2008

Shrinking Size …-38.6% YoY

-62.8% YoY

-50.7%%YoY

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

China SE Asia Vietnam

USD

mill

ion

s

Transaction Value (1H 2009) Transaction Value (1H 2008)

Vietnam Has Seen V Little …

Poor Access + Uncertain Legal Framework =

38

SOURCE: Reuters, Price Water House Coopers, D2C Research


D2 Capital PartnersRational Behaviour, Finally

Investors into VN are more cautious, and getting much betterprepared, than at anytime in the past .

Competitive and industry analysis

Substantially more comprehensive terms, reps and warranties

Detailed due diligence

Post Deal monitoring

This requires that sellers/founders/shareholders step up to thechallenge and meet these needs if they want the capital.

39


D2 Capital Partners

Detailed Business Plan Growth strategy Use of proceeds Clear exit options

Financial Forecast Model & Valuation De-risked model assumptions Return profile sensitivities

Structure Equity, Debt, Hybrid

Improve credibility Expedite investment process Magnify marketing coverage Outsource non-core competencies Enhance position in negotiations Expand financing options Receive expert coaching Obtain protection

Preparation is Key Seek Professional Help

Expect post-deal monitoring byPartner or third-party contractors

Solidify trustworthy relationship Instill culture of Corporate Governance Leverage network synergies Minimize misunderstandings

Transparency Convey rationality Understand / Satisfy your partner Bridge the gap Opportunity cost / Time value Loosen terms & conditions Engineer alternative financing

Flexible Pricing

Improving Probability of Completion

40


D2 Capital Partners

What Investors Look for inManagement

Vision Does the entrepreneur see the long-term picture and all the steps need to get there?

Scale Can the entrepreneur attract dedicated talent?

Willing to share rewards of success?

Innovation Does the entrepreneur understand the future of his industry?

Leader or follower?

Courage Understanding failure is part of the process

Persistence Able to execute framework to success despite obstacles along the way

Principles Does the entrepreneur maintain a credible relationship with customers and suppliers?

Succession Is the entrepreneur willing to groom his/her successor for the sake of the company?

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D2 Capital PartnersMost Common Deal Tripwires

Deals tend to flounder on a regular series of factors, many of whichmay be international practice - but in VN it is all innovation …

Emotional Seller Premium

Contingent Risks – especially from earlier raise

Validity of Documents – are licenses even real ?

Failure to Launch – understand the need

Veto Rights – some things require permission

Options – to put or call

Avoid/fix these and your chances just improved sharply

42


D2 Capital Partners

Background

CONTEXT:Strategic Investors in Education, Media, Alternative Energyand Construction Materials, sought / seeking potential JVand / or M&A targets in Vietnam.

PREPARATION:Macro Overview Industry Analysis Sub-sector analysis Competitive Analysis Target DD

STRUCTURE: Potential JVsM&A

EXECUTION: Industry / Sector mapping, interviews Potential JV Partner / Target Negotiations

Lack of information hindering dealsrequiring strategic investors to pay forprofessional insight and intelligence.

Companies providing better cooperationcalm investor concerns

Strategic Investors are actively preparingfor potential partnerships and so shouldinterested companies: improve your rankingon investors’ list of priorities!

Easing Investor Pain Strategic sales still attractive

30.40%

21.70%26.20%

13.10%

4.30%4.30% IPO

Trade Sale

Secondary Sal

MBO

Refinancing

Other

Key Takeaways

Case Study 1: Proactive Preparation

Most Attractive /Achievable Exit Strategy

SOURCE: Grant Thornton Private Equity Survey 2009, D2C Research

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D2 Capital Partners

Background

CONTEXT:FMCG distributor & retailer sought equity capital raise toexpand into mass distribution. Regulatory hindrances insensitive sector to foreign participation required extensiveprofessional advice. Transaction closed in <3 months

PREPARATION: Investment Teaser Business Plan Formulation Detailed Forecasts & Valuation Model

STRUCTURE: Straight Equity Convertible Bond (Loan) Bridge FinancingCall Option for Ownership Rights to FMCG Co.

EXECUTION: Investor Road Show Term Sheet Discussions

International caliber work and documentpacks enhanced management credibility

Professional sell-side advisory servicesensured necessary provision of informationto investors for faster decision turnaround

Structuring advice provided multiplesolutions to potential deal killers

Coaching of management enhancednegotiation techniques with investors

Appear Serious Addressing Investor Concerns

22.40%

18.40%

14.30%

12.20%

10.20%

8.20%

4.10%

4.10%

4.10%

2.00%

Transparency in business activities

Operational / Cultural Fit

Growth story / Forecasts

Target's management support

Strategic fit

Cash flow

Speed which value can be created

Tax shields and investment savings

Brands / Products

Track record

Key Takeaways

Case Study 2: Professional Help

Investor Concerns WhenInvesting in Vietnam


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D2 Capital Partners

Background

CONTEXT:Professional Services Company sought capital raise withstructured equity bonus conversion feature.

PREPARATION: Investment Teaser Business Plan / Investment Memorandum DraftingInvestor Presentation & Coaching Detailed Forecasts & Valuation Model

STRUCTURE: Standard Terms & Conditions Convertible Bond KPI Benchmark Bonus Equity Kicker

EXECUTION: Investor Road Show Term Sheet Structuring Negotiations

67%

13%

8%

8%

4% IRR obtained on exit

Dividends received

Successful integration

Improved revenue

Cost savings

Structuring Investor Returns Returns Attract Investors

Detailed strategy & model frame-workedand expedited discussions

Management flexibility and rationalityinstilled greater trust in management

Return windfall protection alleviatedinvestor concerns

KPI benchmark linked performance ensuredalignment of interests with investor

Key Takeaways

Case Study 3: Flexible Pricing

Measuring InvestmentSuccess in Vietnam


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D2 Capital Partners

Background

CONTEXT:Well established and rapidly growing services companysought equity capital for new venture; however, clause inshareholders agreement from previous investor presentedconsiderable risk and liability to new investors.

PREPARATION: Investment Due Diligence ReportModel Assumptions Sensitivity Testing Legal Due Diligence Report

STRUCTURE: Standard Terms & Conditions Straight Equity at Holdings Group LevelMBO / LBO carve out at Subsidiary Level

EXECUTION: Location Inspections D2C Supported Negotiations

Unwillingness to provide full transparency on legaldocuments can endanger deal

Eventual cooperation by management lead to apartnership with the new investor for MBO / LBOof existing shareholders in Holdings subsidiary

Offshore investors now requiring extensiveprofessional due diligence support and buy-sideadvisory services.

Third party post-deal monitoring also becoming ofgreater importance to offshore investors withlimited man power, experience and resources in VN

The Truth Reveals Itself Being fair and open matters

21.40%

21.40%

18.70%

11.40%

11.40%

15.70%

Corporate Governance

Skills / Experience ofexisting managementLack of transparency

Finance / debt issues

Key Takeaways

Case Study 4: Corporate Governance

Important InvestmentConsiderations / Factors


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D2 Capital PartnersBackground Information

Spencer White, CFA ([email protected]; +84 907 009 112) Spencer is a co-founder and Managing Partner of D2 Capital Partners. Prior to D2C, Spencer was an Executive member of the Board of TVS, a start up Investment Bank in Vietnam, leading its

nationwide growth for two years. Prior to TVS Spencer was a Managing Director of Merrill Lynch. Having joined the Asia Pacific Group in 1999 he became

the Chief Regional Equity Strategist in 2001. Previously, Spencer was the Country Head for Taiwan. Prior to joining Merrill Lynch, Spencer was an Associate Director with AIB Govett Asset Management in London and before

that he served as an investment manager with Hambros Bank, investing in both large- and small-cap Japanese companies. Spencer received a First Class Honors degree in Management Science from the University of Warwick and he has been a

CFA Charter Holder since 1997.

Christian Leitzinger, MBA ([email protected]; +84 902 250 393) Christian co-founded D2 Capital Partners in 2009 and is Managing Partner. Prior to D2C, Christian joined TVS in 2007 heading the Institutional Client Group as Managing Director; servicing domestic

and foreign institutional investors in the Vietnamese equity and bond markets. Prior to TVS, Christian was a Director at CIBC Oppenheimer World Markets (Canada). Having joined the US Equity Sales

team in 1999, he rose to manage the team by 2004. His role was to aid Canadian institutional investors in allocatingcapital within the US and China.

Prior to joining CIBC Oppenheimer World Markets, Christian worked on the investment side at Mackenzie Financial(USD40bn AUM) and O’Donnell Investment Management (USD2Bn AUM) investing in mid/small-cap Canadian companies.

Christian received a Bachelor’s degree from McMaster University in Canada, and an Executive MBA from the KelloggSchool of Management (Northwestern University, Chicago).

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D2 Capital PartnersContact Information

Vietnam Office:5th Floor, Nam Minh Long Building61A Vo Van Tan, District 3HCMC, Vietnamwww.d2capitalpartners.com

Spencer White, Managing PartnerEmail: [email protected]: +84-907-009-112Ian Nguyen, Vice PresidentEmail: [email protected]: +84-934-164-716

Christian Leitzinger, Managing PartnerEmail: [email protected]: +84-902-250-393Tat Sun Ho, Vice PresidentEmail: [email protected]: +84-121-728-8080

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D2 Capital Partners: Capital Markets Internship

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Transcript of D2 Capital Partners: Capital Markets Internship