Investment Focus and Strategy

China Environment Fund's investment strategy is formed on the basis of experiences with its successful portfolio of companies and the extensive research conducted since the establishment of Tsing Capital.

Worth over US$200bn in environmental protection and renewable energy, the China market has the world's highest growth rates in environmental spending. It is also where the greatest short and long term financial opportunities are seen.

The strength of the demand is reflected in the Chinese government's mandates in the 11th Five Year Plan to 2010. Its measures include boosting renewable energy capacity up to 10% of total energy consumption, reducing energy consumption by 20% in comparison to 2005, upgrading the sewage treatment rate to 70% and the urban refuse decontamination rate to 60%, among many other aims. Although CEF invests in private companies, cleantech is now firmly on the political agenda.

CEF III, to be closed at the end of 2007, will invest in cleantech companies possessing proprietary products, technologies and/or services that are marketable and competitive in China and in many cases the global market.

The Fund's investment strategy is guided by the following underlying criteria. We seek to invest in:

1. Businesses with economic, as opposed to regulatory, drivers that provide sustainable revenue streams.
2. Privately owned, not state owned enterprises (SOEs)
3. Businesses that have a demonstrable environmental and social return.
4. Proven and well-rounded senior management teams with sound transparency and accountability

The CEF seeks companies that have demonstrated advanced and applicable products, technologies and/or services that are China-appropriate and will create sustained revenue streams.

The following areas are targeted for investment:
Renewable energy
Energy efficiency
Water resources and water treatment
Carbon Development Mechanism/Certificate of Emission Reduction
New Materials
Food and agriculture
Clean production
Waste management
Resource management
Environmental information management systems