Overall Strategy

China Forward’s investment philosophy centers on maximizing the potential for capital gains and confining the risk of loss by: (i) investing in companies managed by proven management teams and, when appropriate, forming new management teams that can add substantial value; (ii) investing with a value orientation; (iii) working in active partnership with management; (iv) targeting companies that offer the potential for sizable operating profit growth through the implementation of focused business and financial strategies and diligent oversight; and (v) and maintaining a pro-active, strategic-oriented exit strategy throughout the investment lifecycle. In order to convert returns in RMB back to US dollar, China Forward has agreements with export-oriented companies to keep proceeds in the USA so they can be used to pay back our investors.

Small-Cap Focus

China Forward focuses primarily on the smalley market for the following reasons: (i) a significant portion of this segment is “under the radar screen” and provides attractive deal sourcing opportunities outside the conventional “auction” process and at potentially lower acquisition multiples; (ii) the smalley market contains a significant number of under-managed businesses where the application of best practices and disciplined oversight by seasoned investors and operators can drive significant improvements in cash flow and organic growth; (iii) a depressed economic environment, low interest rates, and limited (public) exit options contribute to a positive investment landscape for smaller deals. Further, with the majority of recent private equity capital flowing into larger funds, financial sponsor competition in the small-cap space remains less intense on a relative basis (but with greater opportunity for smaller investments� exit prospects). Finally, small-cap funds have demonstrated an ability to produce attractive short, medium, and long-term rates of return relative to large-cap and mid-cap funds.

Proprietary Deal Flow

China Forward has a substantial relationship network, and maintains an active pipeline of proprietary deal flow in its Targeted Sectors. China Forward’s deal network consists of senior executives and seasoned entrepreneurs, family investment offices, investment and commercial bankers, consultants, brokers, hedge funds, analysts, lawyers, accountants, and other investment firms. China Forward believes that the relationships of the Managing Partner, supplemented by those of the firm’s co-investment partners, and “friends of the firm”, provide China Forward with a competitive advantage in sourcing actionable, proprietary investment opportunities.

Sophisticated and Experienced Investors

Many of China Forward’s investors and advisors are experienced private investment professionals and operating executives, typically in the directly relevant segment of small-cap Manufacturing and Pharmaceutical companies. This unique blend of talent provides another source for strategic advice and deal flow to benefit the Firm. In addition, China Forward often involves in its investments sophisticated third party co-investment partners – either funds, family offices, or individuals -- that provide valuable contributions to China Forward’s portfolio companies.