Opportunities in Asian Private Equity

Chin Chou | CEO of Morgan Stanley Private Equity Asia

FOR PROFESSIONAL CLIENTS ONLY. FOR EXCLUSIVE USE AT IDEAS LONDON. NOT FOR ONWARD DISTRIBUTION CRC 2911142 Exp. 01/27/2021
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SECTION 1

The Market Opportunity in Asia

The Market Opportunity

World GDP (PPP Basis)(1)

% of Total, 2018
50%

39.9%
40%

30%
22.5%
18.7%
20%
15.2%

10% 7.6%

0%
Asia China U.S. Europe Latin America
Population
3,622 1,390 328 828 646
(million)
Source: Euromonitor 2019
1. GDP measured at Purchasing Power Parity (PPP). Asia includes China, Hong Kong, India, Indonesia, Japan, Malaysia, Pakistan, the Philippines, Singapore, South Korea, Sri Lanka, Taiwan and Thailand. Europe includes Austria,
Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom.

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The Two Largest Contributors to Global Growth

Real GDP, Annual

$Bn
24,000
20,494

16,931
16,000
13,602

8,000
5,064 5,419
3,994 4,151
2,795 3,383
1,619 2,433 2,822
1,187 1,104
0
China India South Korea Germany U.K. Latin America U.S.
Increase $8,538 $1,608 $515 $611 $389 $1,268 $3,563
2006 2018

Past performance is not indicative of future results. All forecasts are speculative, subject to change at any time and may not come to pass due to economic and market conditions.
Source: Oxford Economics, Euromonitor 2019

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Asia Pacific Has Become Increasingly Important in Terms of
Market Cap
Historical Equity Market Cap
(US$ Trn)

1997 2007 2017 2027E TRENDLINE

Asia $3.8 $17.9 $29.6 $56.4

North America $11.8 $22.1 $33.7 $42.5

EU $5.7 $14.4 $13.8 $15.3

Past performance is not indicative of future results. All forecasts are speculative, subject to change at any time and may not come to pass due to economic and market conditions.

This document reflects the views and opinions of Morgan Stanley Private Equity Asia and is based on matters as they exist as of date of the commentary and not as of any future date, and does not contend to address the financial objectives,
situation or specific needs of any individual investor. Of course, these views may change in response to changing circumstances and market conditions and the information will not be updated or otherwise revised to reflect information that
subsequently becomes available or circumstances existing, or changes occurring after the date hereof.
Source: Morgan Stanley Equity Research

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U.S. and China: Two Most Entrepreneurial Economies in the World…

U.S. China

• 26 million businesses in 2016(1)

• 11 million businesses in 2016(1)
• Leads the world in new business creation
• Circa 1,400 IPOs in the last ten years
• Two times the number of IPOs (circa 2,800+) in
• Circa 500 new $1bn+ market cap companies the past 10 years compared with US
created since 1994(2)
• Circa 800 new $1bn+ market cap companies
• The US and China together dominate the largest created since 1994(2)
e-commerce companies(3)
• The US and China together dominate the largest
• Circa 135 start-ups worth at least $1billion(4) e-commerce companies(3)
• 181 start-ups worth at least $1 billion(4)

The above reflects the views and opinions of Morgan Stanley Private Equity Asia team and is based on matters as they exist as of date of the commentary and not as of any future date, and does not contend to address the
financial objectives, situation or specific needs of any individual investor.
Source:
1. UHY Consulting as of December 11, 2017
2. Capital IQ as of July 23, 2019
3. Capital IQ as of June 17, 2019
4. Huron Report, November 2018

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…Driven by Data Volume Expansion and Emergence of Internet
Start-Ups in China
China Data Volume, 2016–2020E Internet Startup Number
2016–2020E (Exabyte (1)) 2014–2016 (k)
9,000 350
8,060
299
280
240
6,000
210

146
140
3,000
1,881
70

0 0
2016 2020E 2014 2015 2016

Source: Literature search; Athenee consulting analysis as of August 20, 2017

1. Exabyte = 220 Terabyte

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Look to the U.S. as a Developmental Model for China

In the U.S. (1950s – 1960s) In China (Early 2000s)

• Post-War Era • WTO Era

• $2,000 – 4,000 GDP Per Capita (1) • $2,000 – 4,000 GDP Per Capita (1)

• Large Manufacturing Base • Basic Consumables (Food, Clothing,

Electronics, etc.)
• Basic Consumables (Procter & Gamble, Sears,
Coca Cola) • Core Infrastructure

1. World Bank Open Data, as of August 21, 2019

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Look to the U.S. as a Developmental Model for China (cont’d)

In the U.S. (1970s – 1980s) In China (Mid 2000s to Present)

• $10,000 – 20,000 GDP Per Capita (1) • $8,000 – 12,000 GDP Per Capita (1)

• Systemic Headwinds • Services Sectors Overtaking Manufacturing

– OPEC – Education
– Rust Belt Restructuring – Healthcare
– Record High Interest Rates – Entertainment
– Travel
• Nonetheless a Successful Transition to Domestic
Services – Business Services

1. World Bank Open Data, as of August 21, 2019

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China – A Notable Shift From Manufacturing to Services

China Economic Output (1990 – 2018)

% of Total, 2018
60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%
1991 1994 1997 2000 2003 2006 2009 2012 2015 2018
Manufacturing Services

Source: Euromonitor 2018

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Is China Friendly to Foreign Investors?

Example: MSPEA Experience Example: Tencent Other Notable Examples

• $3.8 bn of capital gain in China • Pre-IPO Foreign Investor, Naspers, • Alibaba

realized to date (4.1x Gross MoM, 32% owned circa 50% of Tencent
• Baidu
Gross IRR) (1)
• $32mm investment worth circa • China Construction Bank
$100+bn today (2)
• MSPEA controls a number of mid- • China Pacific Insurance
sized strategic businesses
• ICBC
– Kindergartens
• JD.com
– Maternity Hospitals
• Meituan Dianping
– Core Education
• Mengniu Dairy
• Four Hang Seng Index companies • Ping An Insurance
(Ping An, Hengan, Mengniu, Belle) • WH Group
• Xiaomi

Past performance is not indicative of future results.

The above has not been based on a consideration of any individual client circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek
independent legal and financial advice, including advice as to tax consequences, before making any investment decision.

1. Data as of September 30, 2019, including co-investments. Values above are presented on a gross basis, and have not been adjusted to reflect the deduction of management fees, expenses and carried interest, if any. Gross MoM and IRR
for overall MSPEA portfolio across region, including unrealized portfolio companies, is 2.4x and 24.7% respectively. The Net MoM and IRR for overall MSPEA portfolio as of September 30, 2019, the latest period for which net
figures are available, is 1.7x and 18.5% respectively. For additional information, please see the complete investment track record in the appendix
2. Thomson Reuters as of August 21, 2019, and CNN.com (https://money.cnn.com/2018/07/30/investing/naspers-tencent-share-price/index.html)

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SECTION 2

Clear Macro Headwinds

China Facing Macro Headwinds in 2019

GDP Growth Slowdown, Keqiang Index Declined SHSE Index Plummeted to Last Stock Market Crash (2015) Level
2004 – 2018 2008 – 2019
% % #
15% 30% 6,000

10% 20% 4,000

5% 10%
2,000
0% 0%
2004 2006 2008 2010 2012 2014 2016 2018 0
GDP Growth Li Keqiang Index (RHS) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: NBS, Wind, October 31,2019 Source: Bloomberg, December 31, 2019

Onshore Bond Defaults Outburst in 2H 2018 RMB Depreciated Significantly in 2018

Jun14-Jan19 2012–2019
Bond Defaults occurrence RMB BN USD/RMB
30 18 7.9

20 12 7.3

10 6 6.6

0 0 5.9
Jun-14 Mar-15 Dec-15 Sep-16 Jun-17 Mar-18 Dec-18
5.3
# of occurrance Total value affected by default 2012 2013 2014 2015 2016 2017 2018 2019
Source: Wind October 31, 2019, Morgan Stanley Research April 30, 2019 Source: Bloomberg, December 31, 2019

Past performance is not indicative of future results.

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China Facing Macro Headwinds in 2019 (cont’d)

Total Retail Growth Rate Fell to Single Digit for the First Time Since 2008 Auto Sales Declined for the First Time Since 2008
2008–2018 2011–2018
YoY% # of Autos, MM
30% 30 24.7
22% 23% 24.4
21.1 22.4
18% 19.7
17.9
20% 15% 14% 14% 20 15.5
12% 13.8 14.5
11% 10% 10% 10.3
10% 4% 10 6.8

0% 0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: Wind, October 31, 2019 Source: Wind, October 31, 2019

Housing Market Sales Growth Rate Declined # of Listed Companies Issuing Profit Warning Almost Double
2008–2018 2016–2018
SqM Sold YoY % #
60% 44% 150
109 110
40% 23% 100 78 69 69
17% 52
20% 11% 7% 8%
4% 2% 1% 50
(8%)
0%
0
2016 2017 2018
(20%)
Expected Loss Dramatic Decline
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Wind, October 31, 2019 Source: Wind, October 31, 2019

Past performance is not indicative of future results. All forecasts are speculative, subject to change at any time and may not come to pass due to economic and market conditions.

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Root Causes

Overcapacity of Old Industries Led to Stagnant Growth New Economy Still Small as % of GDP
2018 2018
Overcapacity % % of GDP
36% 9%
7.9%
30.1%
29.4%
28.1%
26.6%
25.8% 6.4%

24% 6%

4.5%

3.7%

12% 3%

0% 0%
Nonmetal Mineral Coal Mining Utility Chemical Raw Healthcare Internet Transportation & Advanced
Products Marterial Logistics Manufaturing
Material
Source: Wind, October 31, 2019 Source: National Bureau of Statistics in China, April 31, 2019
The above reflects the views and opinions of Morgan Stanley Private Equity Asia and is based on matters as they exist as of date of the commentary and not as of any future date, and does not contend to address the financial objectives,
situation or specific needs of any individual investor. Of course, these views may change in response to changing circumstances and market conditions and the information will not be updated or otherwise revised to reflect information that
subsequently becomes available or circumstances existing, or changes occurring after the date hereof.

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Root Causes (cont’d)

• Ongoing threat of trade war is likely Timeline of Sino-US Trade Friction

to last because: Jan 22, 2018 Jun 15, 2018 May 8, 2019 Aug 5, 2019 Sep 20, 2019
The Tariffs Begin New Tariffs Escalate Tensions Trump Issued New Tariffs China took Countermeasures Both Sides Gestured Goodwill
̶ China unlikely to meet US’s • Tariffs on imported solar cells • 25% tariff on $50bn in Chinese • The Trump administration gives • China’s Commerce Ministry • Following a two-day meeting of
goods formal notice of its intent to raise halted purchases of U.S. U.S. and Chinese deputies,
requests in full in the short term and certain washing machines
• Tariffs on $50bn in US goods tariffs on $200 billion of Chinese agricultural products, and the USTR issued tariff exclusions on
imports to 25% from 10%, Chinese currency, the yuan, about 400 Chinese products.
̶ In the long term US needs to effective May 10 weakens past the key seven per • Chinese companies purchased
constrain China from becoming dollar level about 600,000 tons of U.S.
soybeans
a superpower
Jan, 2018 Apr, 2018 Jun, 2018 Sep, 2018 Jan, 2019 Apr, 2019 Aug, 2019 Oct, 2019

A full resolution of differences is unlikely

in the near term. An eventual de- Mar 8, 2018 Apr 1, 2018 Sep 17, 2018 Aug 1, 2019 Aug 13, 2019 Oct, 2019
Trump Angers China Takes Its Trump ups the Stakes & Trump announced New Tariff Delayed Progress Made in
escalation would address key US Trading Partners First Shot China Fires Back Additional Tariffs Trade Talk
concerns, but still consistent with China's • Tariffs of 25% on steel • China retaliates with • 10% tariffs on $200bn in • Trump announced 10% • Trump delays more than • China and US continued
economic strategy: and 10% aluminum tariffs on about $3bn Chinese goods, with a tariffs on $300 billion worth of half of his 10% tariffs on high-level trade talks in
imports worth of US goods plan to hike the rate to Chinese imports, in addition the $300 billion goods list Washington, with both
• Larger deficit reduction 25% at the start of 2019. to the 25% already levied on until Dec 15, 2019 sides citing progress
• Tariffs on $60bn in US $250 billion worth of Chinese being made
• Further opening products goods
• Fine-tuning industrial policy
• Enhancing IP protection Net Export Declining Since 2015
2008 – 2018 (US$ BN)
• Promoting market-oriented reforms
900
2019 China Economic
Outlook | Asia Pacific 600
MS Research 300

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Net Export
Source: Public information, Wind, October 31, 2019

The above reflects the views and opinions of Morgan Stanley Private Equity Asia and is based on matters as they exist as of date of the commentary and not as of any future date, and does not contend to address the financial objectives,
situation or specific needs of any individual investor. Of course, these views may change in response to changing circumstances and market conditions and the information will not be updated or otherwise revised to reflect information that
subsequently becomes available or circumstances existing, or changes occurring after the date hereof.

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Gov’t Taking Initiatives Addressing the Problems
Multiple Policies and Fiscal Measures to Boost Economy
• U-turn in government’s attitude Recent Announced Policies Favoring Private Sector (1)
towards private sector since 2018–2019
2H2018, including protecting DATE POLICY INFLUENCE
Set timetable to cancel the restriction on foreign shareholdings
entrepreneurs and cutting taxes/fees June 2018
The new 2018 “Negative lists” for foreign investments was published, aiming to further
in the banking industry and in special purposes, motor vehicles
ease the current restrictions on foreign direct investments in China
for private companies and new energy automobiles
China's top financial regulators and State Council Financial Stability and Development Added Rmb100Bn relending to small banks to support lending to
October 2018
• Administrational goal turning from Commission pledged more supports to the financial market and SME financing private sector
deleveraging to stabilizing debt level China's top leadership laid out the first comprehensive framework to boost the private China's top leader pledged on protecting private business and
November 2018
sector restore business confidence
China's top leader set goal for State-owned commercial banks to provide more loans to Aimed to ease financing tense and lower the financing cost for
• China Securities Regulatory March 2019
SMEs with 30% YoY increase SMEs
Commission and the Central Bank
set up supportive measures to help
Fiscal / Financial Measures Deployed to Boost Private Sector
companies with liquidity crunch (2)
2018–2019
DATE MEASURES INFLUENCE
China is launching a Nasdaq style tech board in 2Q19 in Shanghai and encourage Improve and reform capital market to support
November 2018
innovative enterprises going public innovative enterprises
December 2018 More PBoC injection to credit enhancing entities to support corporate bond issuance More supports to the financial market and SME financing
3ppt VAT cuts on the 16% bracket for manufacturing industry and 1ppt VAT cut on the
10% bracket for transportation and construction industries, etc.
March 2019 Cut down social insurance mandatory payment ratio to 16% for enterprises Mitigate corporate burden about Rmb ~2Tn
Small-scale taxpayers can be exempted up to 50% of resource tax, real estate tax and
education surtax, etc.
PBoC lowered overall deposit reserve ratio by 0.5% and further lowered provincial-level
September 2019 Provides ~Rmb ~900 billion liquidity to the financial market
urban commercial bank deposit reserve ratio by 1%

Source: Xinhua, PBoC, Government Websites, Morgan Stanley Research, October 31, 2019

The above reflects the views and opinions of Morgan Stanley Private Equity Asia team and is based on matters as they exist as of date of the commentary and not as of any future date, and does not contend to address the financial objectives,
situation or specific needs of any individual investor.
1. The above has not been based on a consideration of any individual client circumstances and is not investment advice, nor should i t be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek
independent legal and financial advice, including advice as to tax consequences, before making any investment decision.
2. Caixin as of June 18, 2019 (https://www.caixinglobal.com/2019-06-18/china-urges-big-brokerages-to-support-smaller-non-banks-101428013.html)

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NPL Within Manageable Scale
Majority of Debt in Infrastructure/RE and NPL Level is Low
Comparing with Int’l Banks, China Leading Banks’ NPL Level is Low ~80% of the Non-Standardized Loan Flows to Infrastructure /
Real-Estate, Where Massive Defaults Are Less Likely
2009–2018 2018
NPL Level (%) %
9%

Corporate, Individual
& Others
20%
6%

Infrastructure
3% 50%

0% Real Estate
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 30%

World Avg EU Avg US Avg

ICBC CCB ABC
BOC
Source: World Bank Open Data (March 31, 2018), Wind (March 31, 2018) Source: Lit Research, Expert Interview, March 31, 2019

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Transitioning as New Economy Growth Drivers Emerge
Innovative Sectors Becoming New Growth Engines of China
Online Retail GMV Electric Vehicle Sales Unit
2013 – 2020E, RMB TN 2015 – 2022, # of EV, K
15 4,000
3,591
11.3
9.7 2,779
3,000
10 8.0 2,124
6.3 2,000 1,557
4.7 1,246
5 3.8
2.8 770
1.9 1,000 508
329
0 0
2013 2014 2015 2016 2017 2018 2019E 2020E 2015 2016 2017 2018 2019E 2020E 2021E 2022E
Source: iResearch, October 31, 2019 Source: MS Research, April 31, 2019

China 5G Market Size China AI Sector Market size 2015 – 2020E

2020 – 2030 2015 – 2020
RMB BN RMB BN
12,000 90

8,000 60

4,000
30
0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 0
5G Direct Output 5G Indirect Output 2015 2016 2017 2018 2019E 2020E
Source: iimedia Research, October 31, 2019 Source: China 2018 AI Development Report, Internet Society of China, October 31, 2019

Past performance is not indicative of future results. All forecasts are speculative, subject to change at any time and may not come to pass due to economic and market conditions.

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Trade Tensions at the Forefront
Sino-US Trade Limited in Impact on Economy and Concentrated in Selected Industries
Listed Equities Geographical Trade in Computers / Electronics with China Represents the Single Largest Chunk (Over 50%) of the US Trade Deficit ($Bn)
Revenue Exposure to the US, 2017E
BALANCE OF GOODS IN 2015, BY TRADING PARTNER (1)
US Exposure
ALL
Taiwan CANADA MEXICO CHINA JAPAN EURO AREA PACIFIC (2) LATAM MID. EAST COUNTRIES
30
Agriculture (0.2) (4.5) 14.1 6.4 NA NA NA NA 16.7
Mexico 16
Oil, Gas, Minerals (43.2) (6.7) NA NA NA NA NA NA (105.9)
Japan 15 Food (0.6) 3.2 (0.2) 5.0 (4.0) 0.5 (1.3) NA 4.7
S. Korea 11 Beverages, Tobacco 1.3 (3.6) 1.7 0.5 (10.3) (0.1) (0.5) NA (12.5)
India 9 Textile 1.3 2.9 (13.3) (0.3) (1.1) (4.9) NA (0.9) (16.5)
Australia 8 Apparel 2.4 (4.2) (57.2) 0.5 (4.8) (6.8) NA NA (120.6)
Paper (9.3) 4.3 (3.3) 1.0 1.2 0.9 (2.1) NA (6.2)
China 6
Petroleum (1.7) 14.1 0.5 (0.3) NA NA NA NA 25.7
Brazil 4
Chemical 3.3 17.2 (3.8) (1.0) (44.0) 0.6 13.0 (4.2) (20.0)
South Africa 4 Plastics 2.2 5.7 (14.9) (2.0) (2.0) (5.0) 0.4 (0.1) (17.2)
Russia 3 Nonmetallic Minerals 1.7 (1.2) (6.6) (0.4) (1.9) (0.1) (0.8) (0.6) (10.3)
Hong Kong 2 Primary Metals (9.2) 2.1 (3.8) (1.5) 4.6 1.8 (8.7) (1.4) (29.2)
Turkey 2 Fabricated Metals 6.1 2.6 (18.9) (3.2) (5.9) (5.8) 1.5 1.5 (21.4)
Machinery 15.3 2.5 (21.4) (16.7) (25.4) 6.2 6.8 4.8 (19.3)
Thailand 2
Computer 18.6 (15.0) (153.1) (7.9) 3.1 (29.1) 10.2 4.5 (171.3)
Singapore 2 Electrical Equipment 9.0 (9.2) (38.7) (3.7) (1.7) (3.7) 1.8 2.1 (44.0)
Philippines Transportation (7.3) (64.6) 8.3 (47.3) (31.6) (2.0) 8.5 19.3 (103.5)
Indonesia Furniture (0.1) (1.9) (20.2) 0.0 (1.3) (2.4) 0.0 0.2 (31.0)
Malaysia Misc. Manufacturing 5.2 (2.8) (37.5) 2.3 3.6 (3.7) 1.7 (1.7) (37.2)
All Goods (5.2) (59.3) (368.5) (68.3) (121.5) (53.7) 30.5 23.5 (718.9)
0 15 30 45
Source: Morgan Stanley Research estimates Source: Department of Commerce, Goldman Sachs Global Investment Research

1. Sample limited to top 30 trading partners

2. Korea, Taiwan, Hong Kong, Singapore, Australia, India, Malaysia, Thailand

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SECTION 3

Investing in Asia
A Snapshot of Morgan Stanley Private Equity Asia(1)

Continuously Investing in Asia Private Equity Since 1993

• $4 Bn of total AUM across three investment strategies:

a) Pan Asian private equity

b) On Shore China RMB private equity

c) Thailand private equity

• Over 70 investments and 38 full exits

• Experienced in both Growth Capital (e.g., China, India) and Control Buyouts (e.g., Korea and China)

Vast majority of capital is from third party, institutional funds (pension funds, SWF, FOF, endowments, financial institutions,
family offices, etc..,)

Morgan Stanley also very active in Real Estate, Infrastructure and Fund of Funds investing throughout Asia

1. Data as of September 30, 2019

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The Challenges and Opportunities of Investing Across Asia
Many Complexities…
• Diverse geographically

• Each country with a unique industry sector overlay

• Multiple currencies, legal systems, cultures

• Wide continuum of potential investment structures, investment strategies

• Equally wide continuum of return generation and value propositions

• Less developed HR markets

• Opaque, less transparent diligence environment

• Extreme and frequent macro volatility

The opinions above are those of the presenter(s) as of the date of the presentation and are
subject to change at any time due to changes in market or economic conditions

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The Challenges and Opportunities of Investing Across Asia
But Thankful For…
• Secular growth

• Opportunity for emerging leaders

• Continuing corporate reorganization

• Increasing succession-driven divestitures

• Low hanging fruit, from an operational perspective

• Large liquid capital markets and thoughtful regulatory regimes

• Secular growth in the LP base targeting Asia

• Opaqueness and Volatility

The opinions above are those of the presenter(s) as of the date of the presentation and are
subject to change at any time due to changes in market or economic conditions

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 26

Volatility Can Be Our Friend

“When Everyone Loves Asia  It pays to be cautious”

“When Everyone Hates Asia  Its never really that bad”

The opinions above are those of the presenter(s) as of the date of the presentation and are
subject to change at any time due to changes in market or economic conditions

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 27

Opaqueness Can be a Virtue

• Opaqueness is an “inefficiency”

• Many deals in Asia are not intermediated nor auctioned

• Often times deals are won based on qualitative, rather than quantitative, factors

• Provides more time to diligence and review deals

• Combined with volatility, opaqueness can allow investors to “make money on the buy”

• Average entry multiples for MSPEA in last five years(1)

– Control – 6.8x EV/EBITDA
– Minority – 11.1x P/E

The opinions above are those of the presenter(s) as of the date of the presentation and are
subject to change at any time due to changes in market or economic conditions.
Please see complete investment track record in the appendix for more information
Past performance is not indicative of future results.
1. Includes MSPEA-advised investments from 2014 onwards as of September 30, 2019.

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 28

MSPEA: Differentiating Capital in Opaque Situations
Driving to One-on-One Discussions on the Buyside
Key Components of Differentiation
Brand
Ability to Add Value Personal Trust and Chemistry

• 26+ Year Track Record: • Morgan Stanley is one of the most • Chairman / CEO
– Driving inorganic growth well-known, trusted and prestigious
through M&A international brands in Asia • Chaebol(1)
– Operating partner value-add,
• Family relationships
including supply chain
management, manufacturing
• Intermediary relationships
streamlining, team-building, etc.
– Governance enhancements
• Depth of industry understanding

• 1 Exclusively Negotiated Deal Completed in Fund V to Date(2)

• 32 Deals Completed in Fund IV to Date – 28 Deals Were Exclusively Negotiated and 4 Deals Through a Limited Process(2)

1. Chaebol organizations are defined as large family-owned business conglomerates.

2. There can be no assurance that any future deal will executed through similar processes. Exclusivity: a process whereby MSPEA had exclusivity to complete due diligence and negotiate final terms. Limited Process: a process whereby
MSPEA completed due diligence and negotiated final terms together with limited competitors.

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 29

MSPEA: Key Drivers to Value Creation

Low Entry Price from Exclusive Deals Focus on Market Leaders Fast Top-line Growth

• Asia is more “opaque” than US and Europe • MSPEA has focused its investments • MSPEA focuses on mid-cap, fast
• Deals in Asia are often won on “qualitative” on market leaders in attractive growing businesses
factors, rather than just price growth industries • Investing in sectors at the cusp of
• Exclusive deal sourcing translates to lower • The Morgan Stanley “brand” provides consolidation
entry pricing credibility to attract the best companies • Taking market share points is the key
to top-line growth
MSPEA Industries:
• Healthcare
MSPEA Pricing in Past 5 Years (1):
• Education
• Vocational Training
Exclusive Deals: 90%
• Retail Finance
Control Pricing: 6.8x EV/EBITDA
• Business Services
Minority Pricing: 11.1x P/E • Lifestyle
• Consumer Products
• Childcare spending

Past performance is not indicative of future results.

1. Includes MSPEA-advised investments from 2014 onwards as of September 30, 2019.

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Fast Growing Asia Services
Four of the MSPEA Portfolio Companies in Asia Services Experienced Positive Growth in the Last Five Years

CDP Holdings KNX Human Resources Consulting

RMB (MM), by Revenue RMB (MM), by Revenue
900 781 400 344
240
600 418
200 150
270 102 112
300 203
125

0 0
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Source: Company Management Source: Company Management

Anhui One & Only Five Star Business Finance

RMB (MM), by Revenue INR (MM), by Revenue
600 492 533 1,504
381 1,600

300 633
147 800
93 232 337

0 0
2014 2015 2016 2017 2018 2015 2016 2017 2018
Source: Company Management Source: Company Management

For more information on the other MSPEA portfolio companies in this sector, please see complete investment track record in the appendix

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 31

Increasing Childcare Spending as Income Rise
Four of the MSPEA Portfolio Companies in Childcare Industries Experienced Positive Growth in the Last Five Years

Noah Education Baijia

RMB (MM) by Revenue RMB (MM) by Revenue
800 727 1,500 1,245
1,158
484 925
374 639
400 255 292 750 551

0 0
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Source: Company Management Source: Company Management

Feihe Nspira Management Service

RMB (MM) by Revenue INR (MM) by Revenue
12,000 10,420 12,000 10,693
8,541
5,886
6,000 6,000 4,866
3,583 3,615 3,724

0 0
2014 2015 2016 2017 2018 2016 2017 2018
Source: Company Management Source: Company Management

For more information on the other MSPEA portfolio companies in this sector, please see complete investment track record in the appendix

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 32

Our Key Investing Principles

• Pay entry prices below the US and Europe, taking advantage of opaqueness

• Lower pricing leads to less aggressive capital structure (compared to US and European PE)

• Focus on Industry Leaders – companies which cannot be easily replicated

• Primarily focus on businesses catering to domestic markets, rather than exporters

• Buy historical cashflow and earnings

• Focus on businessess which don’t rely on external capital to grow

– SEEK TO INVEST IN COMPANIES WHICH DON’T NEED YOUR MONEY

The opinions above are those of the presenter(s) as of the date of the presentation and are
subject to change at any time due to changes in market or economic conditions

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 33

APPENDIX

Detailed Fund Performance

Detailed Investment Performance
Fund V (1)
$ IN MM INVESTMENT INVESTMENT CASH PUBLIC PRIVATE TOTAL MULTIPLE GROSS
COMPANY COUNTRY INDUSTRY DATE(S) AMOUNT REALIZED SECURITIES (2) SECURITIES (2) VALUE (2) OF COST (2) IRR (2)
1. Kogta Financial India Financial Services Nov-18 $16.4 - - $29.7 $29.7 1.8x 100.4%

Total Asia Fund V $16.4 - - $29.7 $29.7 1.8x 100.4%

NET IRR: (9.9)% (3)

Source: MSPEA. The results above are not intended to predict the performance of any specific investment and no performance of any specific investment and no performance of any fund is predicted. Similarly, there can be no assurance that
any fund similar to any described above or otherwise will achieve, or be able to achieve, comparable results or its investment objectives or avoid substantial losses. Please refer to the Endnotes on Investment Track Record in Section 6 for
important disclosures regarding the financial information in this presentation.
Past performance is not a guarantee of future results.
1. North Haven Private Equity Asia V, L.P. (“Fund V”), commenced operations on September 24, 2018. This chart includes co-investments as well as all realized and unrealized investments made by Fund V as of September 30, 2019, except
. where otherwise noted. Please see “Company Specific Notes” later in this section for notes on the valuation of specific portfolio companies.
2. Values above (other than net IRR information) are presented on a gross basis, and have not been adjusted to reflect the deduction of management fees, expenses and carried interest, if any.
3. Although this disclosure is required by reporting guidelines, the General Partner believes that the internal rate of return of -9.9%, at this point in the Funds’ term, is not a meaningful measure of performance of the Funds due to the short
duration of the Funds’ investment activities and the long-term nature of the Limited Partners’ investment in the Funds. Fund V commenced operations in September 2018.

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 35

Detailed Investment Performance (cont’d)
Fund IV (1)
$ IN MM INVESTMENT INVESTMENT CASH PUBLIC PRIVATE TOTAL MULTIPLE GROSS
COMPANY COUNTRY INDUSTRY DATE(S) AMOUNT REALIZED SECURITIES (2) SECURITIES (2) VALUE (2) OF COST (2) IRR (2)
1. Wendu Education China Education Services Dec-18 $31.0 $47.3 $- $- $47.3 1.5x 89.3%
2. Microlife Corporation Taiwan Healthcare Nov-18 77.8 - - 96.4 96.4 1.2 19.9%
3. Golden Cloud Technology (3) China Corporate Services Oct-18 71.5 - - 82.9 82.9 1.2 16.4%
4. Anhui One & Only China Healthcare Jul-18 25.8 - - 26.4 26.4 1.0x 1.9%
5. Nspira Management Services India Education Services Jul-18 66.4 - - 79.1 79.1 1.2 14.8%
6. Hyperon China Industrial Products May-18 26.4 1.0 - 36.5 37.5 1.4 28.7%
7. Sino-Canada Education China Education Services Mar-18 33.2 - - 28.2 28.2 0.9 -
8. Korres S.A. Greece Consumer Products Jan-18 51.5 - - 49.5 49.5 1.0 -
9. Southern Health Foods India Consumer Products Jan-18 24.3 - - 18.9 18.9 0.8 -
10. Sahajanand Medical India Healthcare Jan-18 24.5 - - 29.8 29.8 1.2 15.1%
11. Q&K International China Consumer Services Jul-17 30.6 - - 41.5 41.5 1.4 15.1%
12. Shanghai KNX China Corporate Services Feb-17 16.2 - - 22.5 22.5 1.4 12.5%
13. ZCL Chemicals India Health Care Dec-16 25.8 0.2 - 23.3 23.5 0.9 -
14. China Showyu China Consumer Products Nov-16 41.7 10.9 - 25.4 36.3 0.9 -
15. CDP Holdings China Corporate Services Oct-16 20.5 - - 35.9 35.9 1.7 20.9%
16. DSG (Cayman) Thailand Consumer Products Oct-16 57.7 107.0 - 4.1 111.2 1.9 31.2%
17. Coinage International China Education Services Sep-16 135.1 71.0 - 136.7 207.7 1.5 19.2%
18. IVD Medical Holding China Health Care Jul-16 24.9 0.3 35.1 - 35.4 1.4 11.7%
19. Five Star India Financial Services Jun-16 / Aug-17/ Aug-18 40.0 46.1 - 100.1 146.2 3.7 67.0%
20. DSG Management China Consumer Products Jan-16 25.8 - - 25.2 25.2 1.0 -

Source: MSPEA. The results above are not intended to predict the performance of any specific investment and no performance of any specific investment and no performance of any fund is predicted. Similarly, there can be no assurance that
any fund similar to any described above or otherwise will achieve, or be able to achieve, comparable results or its investment objectives or avoid substantial losses. Please refer to the Endnotes on Investment Track Record in Section 6 for
important disclosures regarding the financial information in this presentation.
Past performance is not a guarantee of future results.
1. North Haven Private Equity Asia IV, L.P. (“Fund IV”), commenced operations on November 29, 2012. This chart includes co-investments as well as all realized and unrealized investments made by Fund IV as of September 30, 2019, except
where otherwise noted. Please see “Company Specific Notes” later in this section for notes on the valuation of specific portfolio companies.
2. Values above (other than net IRR information) are presented on a gross basis, and have not been adjusted to reflect the deduction of management fees, expenses and carried interest, if any.
3. Formerly / also referred to as Jinyun in other / prior MSPEA materials

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 36

Detailed Investment Performance (cont’d)
Fund IV (cont’d) (1)
$ IN MM INVESTMENT INVESTMENT CASH PUBLIC PRIVATE TOTAL MULTIPLE GROSS
COMPANY COUNTRY INDUSTRY DATE(S) AMOUNT REALIZED SECURITIES (2) SECURITIES (2) VALUE (2) OF COST (2) IRR (2)
21. Royal Dynasty China Consumer Products Aug-15 $41.3 $- $- $51.9 $51.9 1.3x 5.8%
22. China Kang Fu China Financial Services Aug-15 61.3 6.0 37.1 - 43.1 0.7 -
23. Omni Remotes China Consumer Products Apr-15 43.0 55.1 - 35.5 90.6 2.1 37.2%
24. Renfang Medical China Health Care Dec-14 / Nov-15 / Apr-16 100.4 - - 92.9 92.9 0.9 -
25. Baijia China Health Care Dec-14 38.4 - - 109.4 109.4 2.8 23.1%
26. Sino Gas China Utilities Nov-14 42.6 74.2 - 0.0 74.2 1.7 23.4%
27. AMTD China Financial Services Oct-14 25.8 114.1 - 45.3 159.3 6.2 243.5%
28. Hanwha South Korea Industrial Products Aug-14 145.6 319.3 - - 319.3 2.2 19.2%
29. Innocean South Korea Corporate Services Aug-14 133.4 - 135.2 - 135.2 1.0 0.3%
30. Noah Education China Education Services Jul-14 / Dec-14 94.7 29.7 - 146.8 176.5 1.9 15.0%
Aug-13 / Nov-14 / Mar-16 /
31. Jana Small Finance Bank India Financial Services 44.9 1.2 - 30.4 31.6 0.7 -
Nov-17
32. Ssangyong C&B Monalisa South Korea Consumer Products Apr-13 51.8 34.4 - 92.4 126.8 2.4 15.6%
Total Asia Fund IV $1,674.0 $917.9 $207.4 $1,466.9 $2,592.2 1.5x 15.3%
Currency Hedges (4) 46.7 15.6 - 18.6 34.2 NM NM
Total Fund IV Net Currency Hedge $1,720.7 $933.5 $207.4 $1,485.5 $2,626.4 1.5x 15.0%
NET IRR: 8.1% (3)

Source: MSPEA. The results above are not intended to predict the performance of any specific investment and no performance of any specific investment and no performance of any fund is predicted. Similarly, there can be no assurance that
any fund similar to any described above or otherwise will achieve, or be able to achieve, comparable results or its investment objectives or avoid substantial losses. Please refer to the Endnotes on Investment Track Record in Section 6 for
important disclosures regarding the financial information in this presentation.
Past performance is not a guarantee of future results.
1. North Haven Private Equity Asia IV, L.P. (“Fund IV”), commenced operations on November 29, 2012. This chart includes co-investments as well as all realized and unrealized investments made by Fund IV as of September 30, 2019, except
where otherwise noted. Please see “Company Specific Notes” later in this section for notes on the valuation of specific portfolio companies.
2. Values above (other than net IRR information) are presented on a gross basis, and have not been adjusted to reflect the deduction of management fees, expenses and carried interest, if any.
3. Net IRR figure excludes co-investments and reflects gross IRR less deductions for management fees and expenses actually charged to the fund and accrued carried interest related to gain or loss embedded in the remaining portfolio.
4. The fund reports in USD and conducts its capital calls and distributions in USD. Thus, the fund has executed an FX strategy to reduce its FX exposure from the non-USD denominated investments. Currency hedges include both OTC FX
Forwards and OTC FX Options (purchased and sold).

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 37

Detailed Investment Performance (cont’d)
Fund III (1)
$ IN MM INVESTMENT INVESTMENT CASH PUBLIC PRIVATE TOTAL MULTIPLE GROSS
COMPANY COUNTRY INDUSTRY DATE(S) AMOUNT REALIZED SECURITIES (2) SECURITIES (2) VALUE (2) OF COST (2) IRR (2)
Aug-13 / Nov-14 / Mar-16/
1. Jana Small Finance Bank India Financial Services $44.9 $1.2 $- $30.4 $31.6 0.7x -
Nov-17
2. China Feihe China Consumer Products Jun-13 33.7 197.4 - 970.6 1,168.0 34.7 77.8%
3. Ssangyong C&B Monalisa South Korea Consumer Products Apr-13 51.4 34.4 - 92.4 126.8 2.5 15.8%
4. Beijing Hi-24 China Consumer Products Dec-12 / Dec-16 33.6 59.3 - 0.0 59.3 1.8 13.3%
(3)
5. Tianhe Chemicals Group China Industrial Products Mar-12 307.7 4.6 27.5 0.0 32.1 0.1 -
6. Nolboo South Korea Consumer Products Dec-11 77.7 - - 40.2 40.2 0.5 -
7. CreditEase China Financial Services Sep-11 15.8 - - 55.0 55.0 3.5 16.9%
8. China XD Plastics China Industrial Products Sep-11 103.3 - 30.4 - 30.4 0.3 -
9. Yongye China Agricultural Products Jun-11 71.7 - - - - - -
10. Buchang Pharmaceutical China Pharmaceuticals Nov-10 101.6 13.9 85.1 - 99.0 1.0 -
11. Sparkle Roll China Consumer Products Sep-10 29.3 41.8 - - 41.8 1.4 11.3%
12. Tongkun Group China Industrial Products Mar-10 32.3 128.5 - - 128.5 4.0 27.9%
13. Sihuan China Pharmaceuticals Dec-09 51.2 368.1 - - 368.1 7.2 52.2%
14. Biotor Industries India Industrial Products Dec-08 39.9 - - - - - -
15. Jeonju Paper South Korea Industrial Products Sep-08 165.6 - - 200.0 200.0 1.2 1.7%
16. E.Sun Taiwan Financial Services Jul-08 61.4 164.7 - - 164.7 2.7 17.6%
17. ABC Learning Australia Education Services Jun-08 75.6 16.0 - - 16.0 0.2 -
18. Nature Home China Consumer Products May-08 51.4 72.5 - - 72.5 1.4 4.1%
19. CTBC Taiwan Financial Services Jan-08 134.9 213.6 - - 213.6 1.6 4.5%
20. Shanshui China Industrial Products Oct-07 38.2 154.1 - - 154.1 4.0 85.2%
Total Asia Fund III $1,521.1 $1,469.9 $143.0 $1,388.5 $3,001.5 2.0x 10.3%
Currency Hedges (5) 84.1 25.3 - 36.4 61.7 NM NM
Total Fund III Net Currency Hedge $1,605.2 $1,495.2 $143.0 $1,424.9 $3,063.1 1.9x 10.1%
NET IRR: 7.6%(4)
Source: MSPEA. The results above are not intended to predict the performance of any specific investment and no performance of any specific investment and no performance of any fund is predicted. Similarly, there can be no assurance that any fund similar to any
described above or otherwise will achieve, or be able to achieve, comparable results or its investment objectives or avoid substantial losses. Please refer to the Endnotes on Investment Track Record in Section 6 for important disclosures regarding the f inancial
information in this presentation.
Past performance is not a guarantee of future results.
1. North Haven Private Equity Asia III, L.P. (“Fund III”), commenced operations on May 18, 2007. This chart includes co-investments as well as all realized and unrealized investments made by Fund III as of September 30, 2019, except where otherwise noted. Please
see “Company Specific Notes” later in this section for notes on the valuation of specific portfolio companies.
2. Values above (other than net IRR information) are presented on a gross basis, and have not been adjusted to reflect the deduction of management fees, expenses and carried interest, if any.
3. Investment remains suspended from trading.
4. Net IRR figure excludes co-investments and reflects gross IRR less deductions for management fees and expenses actually charged to the fund and accrued carried interest related to gain or loss embedded in the remaining portfolio.
5. The fund reports in USD and conducts its capital calls and distributions in USD. Thus, the fund has executed an FX strategy to reduce its FX exposure from the non-USD denominated investments. Currency hedges include both OTC FX Forwards and OTC FX
Options (purchased and sold).

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 38

Detailed Investment Performance (cont’d)
Fund II (1)
$ IN MM INVESTMENT INVESTMENT CASH PUBLIC PRIVATE TOTAL MULTIPLE GROSS
COMPANY COUNTRY INDUSTRY DATE(S) AMOUNT REALIZED SECURITIES (2) SECURITIES (2) VALUE (2) OF COST (2) IRR (2)
1. Ni & Co. China Industrial Products Jul-07 $32.6 $28.3 $- $- $28.3 0.9x -
2. Samsung Life South Korea Financial Services Jun-07 28.8 42.0 - - 42.0 1.5 5.3%
3. ACR Singapore Financial Services Nov-06 41.5 0.5 - 40.5 41.0 1.0 -
4. Rotem South Korea Industrial Products Oct-06 239.4 588.4 - - 588.4 2.5 8.9%
5. Dongxiang China Consumer Products May-06 40.1 367.5 - - 367.5 9.2 241.4%
6. CTCI Taiwan Corporate Services May-06 42.4 168.5 - - 168.5 4.0 26.6%
7. Ssangyong South Korea Corporate Services Apr-06 53.7 100.3 - - 100.3 1.9 21.3%
8. Shanshui China Industrial Products Nov-05 / Sept-07 / Oct-07 92.2 376.0 - - 376.0 4.1 54.6%
9. Belle China Consumer Products Sept-05 / Jun-06 36.7 259.8 - - 259.8 7.1 121.7%
Total Asia Fund II $607.3 $1,931.2 - $40.5 $1,971.8 3.2x 36.6%
HSI Put Options N/A N/A 41.7 99.0 - - 99.0 2.4 229.4%
KRW Put/Call Options N/A N/A 1.3 17.1 - - 17.1 12.8 292.5%
Currency Hedges (4) 31.9 18.2 - - 18.2 NM NM
Total Fund II Net Currency Hedge $682.2 $2,065.5 - $40.5 $2,106.0 3.1x 39.2%
NET IRR: 33.3% (3)

Source: MSPEA. The results above are not intended to predict the performance of any specific investment and no performance of any specific investment and no performance of any fund is predicted. Similarly, there can be no assurance that
any fund similar to any described above or otherwise will achieve, or be able to achieve, comparable results or its investment objectives or avoid substantial losses. Please refer to the Endnotes on Investment Track Record in Section 6 for
important disclosures regarding the financial information in this presentation.
Past performance is not a guarantee of future results.
1. Morgan Stanley Private Equity Asia L.P. (“Fund II”), commenced operations on April 25, 2005. This chart includes co-investments as well as all realized and unrealized investments made by Fund II as of September 30, 2019, except where
otherwise noted. Please see “Company Specific Notes” later in this section for notes on the valuation of specific portfolio companies.
2. Values above (other than net IRR information) are presented on a gross basis, and have not been adjusted to reflect the deduction of management fees, expenses and carried interest, if any.
3. Net IRR figure excludes co-investments and reflects gross IRR less deductions for management fees and expenses actually charged to the fund and accrued carried interest related to gain or loss embedded in the remaining portfolio.
4. The fund reports in USD and conducts its capital calls and distributions in USD. Thus, the fund has executed an FX strategy to reduce its FX exposure from the non-USD denominated investments. Currency hedges include both OTC FX
Forwards and OTC FX Options (purchased and sold).

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 39

Detailed Investment Performance (cont’d)
The Early MS Funds (1)(2)
$ IN MM INVESTMENT INVESTMENT CASH PUBLIC PRIVATE TOTAL MULTIPLE GROSS
COMPANY COUNTRY INDUSTRY DATE(S) AMOUNT REALIZED SECURITIES SECURITIES VALUE (3) OF COST (3) IRR (3)
1. Paradise China Consumer Products Jan-05 / Oct-05 $59.3 $197.3 $- $- $197.3 3.3x 109.6%
2. Jinbang South Korea Industrial Products Mar-04 14.9 22.1 - - 22.1 1.5 12.7%
3. Ping An Club (5) China Financial Services Mar-03 8.1 178.7 - - 178.7 22.2 62.2%
4. Mengniu China Consumer Products Sep-02 / Oct-03 41.9 222.2 - - 222.2 5.3 158.7%
5. HTL Singapore Consumer Products Sep-02 11.6 34.4 - - 34.4 3.0 66.6%
6. Landmark South Korea Financial Services May-02 / Feb-05 45.1 279.8 - - 279.8 6.2 46.8%
7. EnerSys Global Industrial Products Mar-02 30.0 63.6 - - 63.6 2.1 18.5%
8. Itest South Korea Tech / Telecom Aug-01 / Mar-03 7.3 18.1 - - 18.1 2.5 25.2%
9. Pihana Pan-Asia Tech / Telecom Oct-00 30.3 5.4 - - 5.4 0.2 -
10. Hengan China Consumer Products Jul-00 15.3 26.4 - - 26.4 1.7 26.4%
11. eAccess Japan Tech / Telecom Feb-00 / Feb-01 / Sep-01 17.1 64.8 - - 64.8 3.8 39.1%
12. Nanfu Battery China Consumer Products Nov-99 / Dec-01 / Jan-02 20.9 57.9 - - 57.9 2.8 54.6%
13. Tech Holdings Pan-Asia Tech / Telecom Aug-99 - Oct-00 10.8 1.2 - - 1.2 0.1 -
14. Ometraco Indonesia Industrial Products Feb-95 / Aug-95 27.1 7.1 - - 7.1 0.3 -
15. Ping An China Financial Services Jun-94 / Jan-97 36.9 526.9 - - 526.9 14.3 31.2%
16. CIMIC/SCH China Industrial Products Mar-93 - Jan-96 21.9 50.5 - - 50.5 2.3 4.8%
Total Early MS Funds $398.3 $1,756.4 $- $- $1,756.4 4.4x 25.8%
NET IRR: 21.2% (4)
Source: MSPEA. The results above are not intended to predict the performance of any specific investment and no performance of any specific investment and no performance of any fund is predicted. Similarly, there can be no assurance that
any fund similar to any described above or otherwise will achieve, or be able to achieve, comparable results or its investment objectives or avoid substantial losses. Please refer to the Endnotes on Investment Track Record in Section 6 for
important disclosures regarding the financial information in this presentation.
Past performance is not a guarantee of future results.
1. Includes co-investments. Gross performance information has not been adjusted to reflect the deduction of management fees, expenses and carried interest, if any. Certain of these funds may have different expenses and management fees
from each other and from the Fund. Please see “Company Specific Notes” later in this section for notes on the valuation of specific portfolio companies.
2. Early MS Funds includes investments made by Morgan Stanley Global Emerging Markets Private Investment Fund (“GEM”) and investments managed or advised by MSPEA prior to the formation of GEM including investments made by the
following Morgan Stanley-sponsored funds: (i) Morgan Stanley Capital Partners III, L.P. (“CP III”), which commenced operations on July 21,1994 and (ii) Morgan Stanley Leveraged Equity Fund II, L.P. (“LEF II”), which commenced
operations on October 19, 1987 (in each case including managed or advised co-investments and co-investments with Morgan Stanley’s own capital).
3. Values above (other than net IRR information) are presented on a gross basis, and have not been adjusted to reflect the deduction of management fees, expenses and carried interest, if any.
4. Net IRR excludes co-investments and reflects gross IRR less deductions for management fees and expenses actually charged to the fund and accrued carried interest related to gain or loss embedded in the remaining portfolio.
5. MSPEA sourced this investment and acted as an advisor to a third party who made the investment.

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 40

Detailed Investment Performance (cont’d)
Company Specific Notes
FOR ALL PORTFOLIO COMPANIES, PRIVATE SECURITY CARRIED AT FAIR VALUE BASED UPON ANALYSIS OF RELEVANT FACTORS, INCLUDING ORIGINAL PURCHASE
PRICE, MARKET COMPARABLES, COMPANY OPERATING RESULTS AND CASH FLOWS, AS DEEMED APPROPRIATE BY THE GENERAL PARTNER, WITH THE
FOLLOWING EXCEPTIONS:
• IVD Medical: Publicly traded on The Stock Exchange of Hong Kong. • Shanshui Cement: Publicly traded on The Stock Exchange of Hong Kong. Investment has been fully realized.
• Wendu Education: Investment has been fully realized through trade sale. • Belle: Publicly traded on The Stock Exchange of Hong Kong. Investment has been fully realized.
• Hanwha L&C: Investment has been fully realized through trade sale. • HSI Put Options: In December 2007, Fund II purchased put options on the Hang Seng Index as part of the hedging strategy to mitigate
• DSG (Cayman): Investment has been fully realized through trade sale. risk exposure to the public markets in Asia.
• China Kang Fu: Publicly traded on China’s National Equities Exchange and Quotations (NEEQ). • KRW Put/Call Options. These options were entered into to hedge currency exposure in connection with Korean investments.
• Sino Gas: Investment has been fully realized through trade sale. • Paradise: Acquired by Gome Electrical Appliances Holding Limited, a publicly traded company on The Stock Exchange of Hong Kong.
Investment has been fully realized through secondary market sales.
• AMTD: Investment has been substantially realized through trade sales.
• Jinbang: Investment has been fully realized.
• Innocean Worldwide: Publicly traded on the Korea Stock Exchange.
• Ping An Club: Co-investment in Public A-Share investment. Investment has been fully realized through a block trade. MSPEA sourced
• Beijing Hi-24: Investment has been fully realized through trade sale. this investment and acted as an advisor to a third party who made the investment.
• Tianhe Chemicals: Publicly traded on The Stock Exchange of Hong Kong, less a discount to reflect suspension status. The investment • Mengniu Dairy: Publicly traded on The Stock Exchange of Hong Kong. Investment has been fully realized through secondary market
remains suspended from trading. sales.
• China XD Plastics: Publicly traded on the NASDAQ. • HTL: Publicly traded on the Singapore Stock Exchange. Investment has been fully realized through secondary market sales.
• Yongye: Investment has been fully written off. • Landmark: Investment has been fully realized through a trade sale.
• Buchang Pharmaceutical: Publicly traded on the Shanghai Stock Exchange. • EnerSys: Publicly traded on the New York Stock Exchange. Investment has been fully realized through a secondary market sale.
• Sparkle Roll: Publicly traded on The Stock Exchange of Hong Kong. Investment has been fully realized. Realized value includes cash proceeds of $18.1MM realized through a recapitalization transaction.
• Tongkun Group: Publicly traded on the Shanghai Stock Exchange. Investment has been fully realized. • ITest: Investment has been fully realized through a trade sale.
• Sihuan Pharmaceutical: Publicly traded on The Stock Exchange of Hong Kong. Investment has been fully realized through secondary • Pihana: Acquired by Equinix, Inc., which is publicly traded on the NASDAQ. Investment has been fully realized through secondary
market sales. market sales.
• Biotor Industries: Investment has been fully written off. • Hengan: Publicly traded on The Stock Exchange of Hong Kong. Investment has been fully realized through privately negotiated sales
• E.Sun: Publicly traded on the Taiwan Stock Exchange. Value of public securities is adjusted for acquisition debt, interest rate swaps and and secondary market sales.
dividends received. Investment has been fully realized. • eAccess: Publicly traded on the Tokyo Stock Exchange (MOTHERS Section). Investment has been fully realized through secondary
• ABC Learning: Investment has been fully written off. market sales.
• Nature Home: Publicly traded on The Stock Exchange of Hong Kong. Investment has been fully realized through a trade sale. • Nanfu Battery: Investment has been fully realized through a trade sale.
• CTBC: Publicly traded on the Taiwan Stock Exchange. Investment has been fully realized through secondary markets. • Tech Holdings: Includes three small internet-related investments completed during 1999 and 2000: (i) ECnet: $2.7MM invested,
investment fully written off; (ii) ecVision: $4.0MM invested, fully realized; (iii) YesAsia: $4.1MM invested, fully written off.
• Ni & Co.: Investment has been fully realized through trade sale.
• Ometraco: Publicly traded on the Jakarta Stock Exchange. Cash realized represents proceeds from foreign currency hedge, the
• Samsung Life: Publicly traded on the South Korea Stock Exchange. Investment has been fully realized. investment has been fully written off.
• Hyundai Rotem: Publicly traded on the Korea Stock Exchange. Investment has been fully realized through secondary markets. • Ping An Insurance: Publicly traded on The Stock Exchange of Hong Kong. Investment has been fully realized through private and
• Dongxiang Sports: Publicly traded on The Stock Exchange of Hong Kong. Investment has been fully realized. secondary market sales.
• CTCI: Publicly traded on the Taiwan Stock Exchange. Investment has been fully realized. • CIMIC/SCH: Represents indirect ownership of Shanghai CIMIC Holdings Co. Ltd. Publicly traded on the Shenzhen Stock Exchange.
• Ssangyong: Publicly traded on the Korean Stock Exchange. Investment has been fully realized. Investment has been fully realized.

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 41

Endnotes on Investment Track Record

The performance information described herein covers investments by funds managed by MSPEA, and certain co-investments managed or advised by MSPEA. Prospective investors
should not assume that investments made by any future MSPEA fund will be profitable or will perform similarly to the investments included in this presentation. Past performance is
not a guarantee of future results.
Unrealized investments have generally been valued by MSPEA in accordance with the following guidelines except where otherwise noted: (i) publicly traded securities are valued as
of September 30, 2019 market prices; and (ii) private securities are valued by MSPEA as of September 30, 2019 based upon analysis of relevant factors including market
comparables, income and earnings, and cost, as deemed appropriate by MSPEA. There can be no assurance that the values reported herein are indicative of the values ultimately
realized. Actual returns on unrealized investments will depend on a number of factors, including future operating results and the value of the assets and market conditions at the time
of realization, all of which may differ significantly from the assumptions and circumstances upon which the values reported herein are based. Further information on valuations is
available upon request.
Gross IRR reflects returns before deducting certain expenses borne by investors, including management fees and carried interest, if any. Net IRR reflects returns after deducting
certain expenses, including management fees and carried interest, if any. Net IRR has been calculated separately for each fund on a pro forma basis and may not reflect the amount
an investor in such fund would have actually realized on its investments. To the extent an investment has any unrealized value, such amount is treated as a cash flow to the relevant
fund occurring on September 30, 2019, except where otherwise noted. Additional information regarding IRR calculations is available to prospective investors upon request.
Transaction summaries and other selected investments are intended as examples of how MSPEA has successfully leveraged its resources, relationships and franchise to make
attractive investments. They are not intended to be complete or representative of investments made by prior funds. There can be no assurance that future MSPEA funds will be
successful in identifying similar investments.
Since MSPEA was established, certain investment professionals associated with MSPEA have changed. The current investment team does not necessarily represent all investment
professionals associated with the investments made by the Predecessor Funds described herein. Individuals involved in making prior investment and divestment decisions may no
longer be associated with MSPEA.

IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 42

Distribution
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Ireland: Morgan Stanley Investment Management (Ireland) Limited. Registered Office: The Observatory, 7-11 Sir John Rogerson's, Quay, Dublin 2, Ireland. Registered in Ireland under company number 616662. Regulated by the Central Bank
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IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 43

For Professional Clients Only This presentation and the information contained herein (collectively referred to as the “Presentation”) is for exclusive use at the MSIM Ideas Conference (12 – 13 February 2020). This Presentation was issued
and approved in the United Kingdom by Morgan Stanley Investment Management Limited (“MSIM”), 25 Cabot Square, Canary Wharf, London E14 4QA. Authorised and regulated by the Financial Conduct Authority.

The views and opinions expressed here are of the presenting portfolio managers and are subject to change based on market conditions. They are not the views of all the portfolio managers of MSIM or of the firm as a whole. Except as otherwise
indicated herein, the views and opinions expressed herein are based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently
becomes available or circumstances existing, or changes occurring, after the date hereof.

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Past performance is no guarantee of future results. Any information regarding expected market returns and market outlook is based on the research, analysis, and opinions of the presenter. They are based on current market conditions and
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IDEAS CONFERENCE 2020 OPPORTUNITIES IN ASIAN PRIVATE EQUITY 44