Competitive Advantages
We believe that DPG has some unique competitive advantages which makes its managed funds attractive investment opportunities and highly competitive in the PRC market:
Alliance with European Development Banks Offerring Total Finance Packages
The cooperation between DPG and the European Development Finance Institutions has enabled us to offer comprehensive long-term debt and mezzanine financing to our portfolio companies. These long-term debt facilities are unavailable from local and international banks in the Chinese market.
Regional Office Network
In addition to the Beijing and Hong Kong offices, DPG has an office in Chengdu and intends to open regional representative offices in Urumqi, Kunming, Hohot, Xi'an and Dalian to support its deal origination and execution effort. DPG will be the first international fund manager to establish such an extensive inland presence and network.
Superior Execution through Management Team Approach
Execution competence and efficiency is one of the most important criteria for a Chinese entrepreneur when choosing an investor. DPG is a professional investment team with members proceeding in parallel - instead of having 1-2 investment managers running the entire investment process - we can execute a transaction within 8-12 weeks without compromising on due diligence/execution quality.
Successful Track Record and Reputation
DPG has an impressive track record in investing and supporting industry leaders, and commands a strong reputation among sellers, investors, management teams and entrepreneurs for high quality execution and support. The team has successfully executed fourteen investments both onshore and offshore and four exits within the first four years of operation.
Superior Deal Sourcing
Through our partners’ proprietary network, regional teams and our dedicated origination managers, DPG enjoys a formidable deal sourcing capability. In our various offices combined, DPG reviews an average of 4~5 investment opportunities per week.
China Focus
DPG focuses and operates only in China. The investment environment in China is challenging, dynamic and fast-paced. We solely focus on China and thus have accumulated ample experience and expertise in doing business in China.
True China Management Team
Most funds recruit overseas or very westernized Chinese professionals. DPG believes that these young professionals often lack a certain amount of chemistry which is required to successfully engage with Chinese middle-market entrepreneurs. For that reason, DPG is predominantly staffed with "mainland Chinese" and locally educated professionals whose domestic careers provide them the context, experience, connections and knowledge needed to succeed in China.
Investment Expertise
We perform rigorous due diligence on all potential target investments, using both our extensive in-house resources, as well as third-party experts. Our due diligence scope is comprehensive, evaluating company's management, competitive advantages, weaknesses, credit worthiness, prospects for growth, reputation, profitability, environmental and social responsibility and sustainability. We also apply our management and capital markets expertise to assist these companies to: (i) implement effective management incentive structures; (ii) create significant value post-investment through hands-on strategic input; and, (iii) ensure that these companies have the financial resources to realize their full growth and market potential.
Minimizing Investment Risk
DPG is heavily involved with its portfolio companies’ post-investment activities and has the expertise and experience to successfully manage and exit investments across varying economic and business cycles. Furthermore, DPG's approach to investment through the use of convertible structures maximizes downside protection through: (i) deadline for exit: redemption feature due to the fixed maturity of the convertible bonds; (ii) cash yield through coupons; (iii) no-exit yield between 12-18%; (iv) structure of security including guarantees and share pledges; (v) value protection measures and exit IRR guarantees; (vi) business objective timetables; and (vii) use of put, call and redemption terms.
Innovative and Creative
The investment environment in China is challenging due to its dynamic legal, business and political environment. Furthermore, for historic reasons, Chinese companies have widely varying forms of corporate, shareholder and organizational structures. The aforementioned, coupled with rudimentary financial reporting habits, opaque decision making processes, and tendency towards limited disclosures makes investing in China fairly complex. DPG prides itself in looking beyond the traditional due diligence and structuring techniques to execute investments. DPG's professional yet creative attitude is highly appreciated by Chinese entrepreneurs.
Friendship and Cooperation
The decision to sell a stake in his company and to co-opt external professional partners at the most senior level is a momentous step in the career of a Chinese middle market entrepreneur. Trust, friendship, shared values and China-knowledge are key concepts which an entrepreneur looks for when inviting investors into his company. DPG is confident that the China-ness, integrity, professionalism and earnestness of the team are the soft characteristics which give DPG an edge over other funds.
European Background and Quasi-Government Support.
Due to its European background, DPG has a soft political advantage compared to US-based funds. Furthermore, the European Development Finance Institutions - as most government linked entities - enjoy a very high level of respect in China.
