Investment Process

The “SBP Formula” is subsequently integrated with a step-by-step screening process designed to screen opportunities and eliminate those that do not meet the investment criteria, ultimately identifying the most promising targets for investment committee evaluation. Following the equity participation, SBP takes an activist investor role in supporting the company to expand into the China market, or advising on how to accelerate its already established business in the target regions. The SPB investment process, relying on focused investment criteria and active post-transaction involvement, essentially creates value by:

• Tracking companies that, based on SBP research, represent sectors that are more likely to succeed based on the macro fundamentals and sector focus specified in the SBP Formula.
• Qualifying companies for investment committee evaluation only upon compliance with the stringent investment criteria and a three-stage screening process.
• Advising and supporting the company through the board of directors (on strategy level) as well as on the ground in China (on relationships level).

The investment process consists of screening, transaction, post-transaction involvement, and exit.

The purpose of the screening process is to build a wide pool of preliminary investment ideas and to distil these opportunities through the screening funnel into a limited number of investment decisions. The screening process consists of the following three subprocesses:

1. Pre-Screening. Tracking and listing companies that are likely to fit the investment themes. Opportunities that do not comply with the conditions set in the SBP Formula are discarded. The expected qualification rate for this gate is 20%.
   
2. Opportunity Validation. The partner prepares a one-pager that summarises the fit with investment themes and attractiveness of the investment on several key parameters defined in the investment criteria. The partner shortlists the most promising investment opportunities and it is expected that this step discards roughly two thirds of the one-pagers.
   
3. Investment Committee. The partner prepares an investment committee memorandum of each of the opportunities shortlisted in the previous phase, with an in-depth analysis on all of the investment criteria. The memorandum, 5-10 pages, will be presented to the investment committee that reviews the material and decides upon new investments four times a year. As a guideline, this step should discard 20%-30% of investment opportunities. Those investments that survive this stage receive approval for an investment.