Contact: Peter Fuhrman, Chairman & CEO China First Capital Ltd. Email: ceo@chinafirstcapital.

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China First Capital, Ltd

Press Release
China's Capital Markets, IPOs & Private Equity Go From Feast to Famine, and Now Back Again. New Research Report Published by China First Capital A year of rapid-fire change: 2014 will see significant increases in investment activity and restructuring at China's private sector and state-owned enterprises
Hong Kong, Shenzhen, China, January 20, 2014: The long dark eclipse is over. The sun is
shining again on Chinas capital markets and private equity industry. Thats good news in itself, but is also especially important to the overall Chinese economy. For the last two years, investment flows into private sector companies have dropped precipitously, as IPOs disappeared and private equity firms went into hibernation. Rebalancing Chinas economy away from exports and government investment will take cash. Lots of it. Expect significant progress this year as Chinas private sector raises record capital and Chinas state-owned enterprises (SOEs) gradually transform into more competitive, profit-maximizing businesses. These are some of the conclusions of the most recent Chinese-language research report published by China First Capital, an international investment bank and advisory firm focused on China. The report is titled, 2014, ( 2014: A Year of Transformation and Opportunities for Chinas Public and Private Sectors). A copy can be downloaded from the Research Reports section of the China First Capital website. "The report's key message is we expect this year overall business conditions in China, as well as capitalraising environment, to be significantly improved compared to the last two years," explains Peter Fuhrman, chairman and CEO of China First Capital. "We expect the IPO market to stage a significant recovery. Our prediction, over 500 Chinese companies will IPO worldwide during this year, with the majority of these IPOs here in China." The report also investigates the direction of economic and reform policy in China following the Third Plenum in November 2013, and how it will open new opportunities for SOEs to finance their growth and improve their overall profitability, including through carve-out IPOs and strategic investment. SOEs will become an important new area of investment for PE firms and global strategic investors, the report advises. "The SOEs we work with are all convinced of the need to diversify their ownership, and bring in profitdriven experienced institutional investors," China First Capital's Fuhrman continues. "For investors, SOE For Release 8 a.m. Eastern, January 20, 2014 more

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China First Capital Research Report 2014

deals offer several clear advantages: scale is larger and valuations are usually lower than in SME deals, SOEs are fully compliant with Chinas tax rules, with a single set of books; the time to IPO or other exit should be quicker than in many SME deals." As financial markets mature in China, one unintended consequence will be a drop in activity on Chinas recently-established over-the-counter exchange, known as the New Third Board (. The report offers reasons why this OTC market is a poor, inefficient choice for Chinese businesses looking to raise capital. While the aims of the Third Board are commendable, to open a new fund-raising channel for private sector companies, the reality is that it offers too little liquidity, low valuations and an uncertain path to a full listing on Chinas main stock exchanges. "Over the last three years," Fuhrman highlights, "China has had the highest growth rate and the worst performing stock market among all major economies. In part, the long stock market slide is both necessary and desirable, to bring Chinas stock market valuations more in line with those of the US and Hong Kong. But, it also points to a more uncomfortable reality, that Chinas listed companies too often become listless ones. Once public, many companies profit growth and rates of return go into long-term decline. IPO proceeds are hoarded or misspent. Rarely do managers make it a priority to increase shareholder value." A small tweak in the IPO listing rules offers some promise of improvement. Beginning this year, a Chinese companys control shareholder, usually the owner or a PE firm, will be locked-in and prevented from selling shares for five years if the share price after Chinese domestic IPO stays below the original IPO level. China's rate of change and reform are accelerating, the report concludes. "In two years, access to capital went from feast to famine. And now maybe back again. An IPO exit went from a reachable goal to an impossibility. And now maybe back again. Meanwhile, markets at home surged while those abroad sputtered. Government reform went from minimal to now ambitious," Fuhrman concludes. "2014 is going to be quite a year." _____________________________________________________________

About China First Capital: China First Capital is a China-focused international investment bank and advisory firm for private capital markets and M&A transactions in China. China First Capital has a disciplined focus on -- and strives for a leadership position in -- four distinct business areas. These are: - Private placement and equity financing for China's high-growth entrepreneur-led companies; - Private equity Secondaries, buy-side and sell-side representation for acquisitions and early liquidity events; - Strategic M&A transactions, domestic and cross-border; - Restructuring, financings and advisory for China's State Owned Enterprises. China First Capital serves a distinguished group of clients, including industry leaders in China, both private sector companies and SOEs, as well as global corporations actively expanding within China. China First Capital's research and analysis on China, its capital markets and private equity industry are often featured in international media including The Wall Street Journal, Financial Times, The Economist,

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New York Times, Washington Post, Bloomberg, China Daily. China First Capital's chairman Peter Fuhrman is an occasional columnist for Seeking Alpha and three prominent Chinese-language business publications, 21st Century Business Herald, Caijing and Forbes China. For up-to-date commentary and analysis, visit: www.chinafirstcapital.com/blog

For more information, contact:

Peter Fuhrman, Chairman, China First Capital, Ltd. Website: www.chinafirstcapital.com China Private Equity Blog: www.chinafirstcapital.com/blog Email: info@chinafirstcapital.com Phone China: +86 755-86590540