PegBio Co., Ltd. — Capital/Financing Update 2018

Sep 3, 2018

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your Shares in CMBC CAPITAL HOLDINGS LIMITED , you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker, or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities.

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CMBC CAPITAL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

(1) CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE AND (2) NOTICE OF SPECIAL GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed “Definitions” in this circular. A letter from the Board is set out on pages 5 to 12 of this circular.

A notice convening the special general meeting of the Company to be held at Units 6601A & 6607-8, Level 66, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong on Thursday, 20 September 2018 at 10:30 a.m. is set out at pages 32 to 34 of this circular. Whether or not you are able to attend such meeting, please complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Company’s Hong Kong share registrar and transfer office, Tricor Tengis Limited, at Level 22, Hopewell Centre 183 Queen’s Road East Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding such meeting (or adjourned meeting thereof as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting at the meeting (or adjourned meeting thereof as the case may be) should you so wish.

3 September 2018

CONTENTS

Pages	Pages
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . .	13
LETTER FROM GRAM CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
APPENDIX – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
NOTICE OF SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32

– i –

DEFINITIONS

In this circular, the following expressions shall have the same meanings set out below unless the context requires otherwise:

• “AGM 2018”

• the annual general meeting of the Company held on 29 June 2018 at which, among other things, a resolution for the grant of the general mandate to the Directors was duly passed by the Shareholders

• “Announcement”

• the announcement of the Company dated 3 July 2018 in relation to, among other things, the Subscription

• “Board”

• the board of directors of the Company

• “Business Day(s)”

• any day (not being Saturday, Sunday or public holiday) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours

• “Company”

• CMBC Capital Holdings Limited (民銀資本控股有限 公司) (Stock Code: 1141), a company incorporated in Bermuda with limited liability and the Shares of which are listed on the main board of the Stock Exchange

• “connected person(s)”

• has the meaning ascribed thereto under the Listing Rules

• “Director(s)” the director(s) of the Company

• “Group”

• the Company and its Subsidiaries

• “HK$”

• Hong Kong dollar(s), the lawful currency of Hong Kong

• “Hong Kong”

• the Hong Kong Special Administrative Region of the People’s Republic of China

– 1 –

DEFINITIONS

• “Independent Board Committee”

• “Independent Financial Adviser” or “Gram Capital”

• “Independent Shareholders”

• “Last Trading Day”

• “Latest Practicable Date”

• “Listing Rules”

• “Long Stop Date”

• “PRC”

• “SFO”

• the independent Board committee, comprising all independent non-executive Directors, namely Mr. Lee, Cheuk Yin Dannis, Mr. Wu Bin, and Mr. Wang Lihua, which has been formed to advise the Independent Shareholders in respect of the Specific Mandate, the Subscription and the transactions contemplated thereunder

• Gram Capital Limited, a licensed corporation to carry out Type 6 (advising on corporate finance) regulated activity under the SFO, being the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders on the terms of the Subscription Agreement and the Subscription to be provided thereunder

• Shareholders other than the Subscriber and its associates

• 3 July 2018, being the last trading day of the Shares before the date of the Announcement

• 24 August 2018, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• the Rules Governing the Listing of Securities on the Stock Exchange

• 30 September 2018

• the People’s Republic of China

• Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

– 2 –

DEFINITIONS

• “SGM”

• the special general meeting of the Company to be convened and held at Units 6601A & 6607-8, Level 66, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong on Thursday, 20 September 2018 at 10:30 a.m. for the Shareholders to consider and, if thought fit, approve, among other things, the Specific Mandate, the Subscription and the respective transactions contemplated thereunder

• “Share(s)” ordinary share(s) of HK$0.01 each in the capital of the Company

• “Shareholder(s)” holder(s) of the Shares

• “Specific Mandate” the specific mandate for the allotment and issue of the Subscription Shares, which is subject to approval by the Independent Shareholders voting by way of poll at the SGM

• “Stock Exchange”

• The Stock Exchange of Hong Kong Limited

• “Subscriber”

• CMBC International Investment Limited, a company incorporated in the British Virgin Islands with limited liability and a substantial shareholder of the Company which holds 27,568,649,093 Shares, representing approximately 59.47% of the issued share capital of the Company as at the Latest Practicable Date

• “Subscription”

• subscription of Subscription Shares by the Subscriber at the Subscription Price pursuant to the Subscription Agreement

• “Subscription Agreement”

• the conditional subscription agreement dated 3 July 2018 entered into between the Company and the Subscriber in respect of the Subscription

• “Subscription Completion”

• completion of the Subscription in accordance with the terms and conditions of the Subscription Agreement

• “Subscription Price”

• HK$0.363 per Subscription Share

– 3 –

DEFINITIONS

• “Subscription Shares” 1,350,000,000 new Shares to be allotted and issued by the Company to the Subscriber under the Subscription

• “Subsidiary” a company which is for the time being and from time to time a subsidiary (within the meaning of section 15 of the Companies (Chapter 622 of the Laws of Hong Kong)) of the Company whether incorporated in Hong Kong or elsewhere

• “Substantial Shareholder(s)” has the meaning ascribed to it under the Listing Rules

• “Trading Day” a day when the Stock Exchange or the case may be, an alternative stock exchange, is open for dealing business, provided that if no closing price is reported for one or more consecutive dealing days such day or days will be disregarded in any relevant calculation and shall be deemed not have existed when ascertaining any period of dealing days

• “%” per cent.

– 4 –

LETTER FROM THE BOARD

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CMBC CAPITAL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

Executive Directors: Mr. Li Jinze (Chairman) Mr. Ding Zhisuo Mr. Ng Hoi Kam

Non-executive Directors: Mr. Ren Hailong Mr. Liao Zhaohui

Independent non-executive Directors: Mr. Lee, Cheuk Yin Dannis Mr. Wu Bin Mr. Wang Lihua

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Principal place of business in Hong Kong: Units 6601A and 6607-6608 Level 66 International Commerce Centre 1 Austin Road West Kowloon Hong Kong

3 September 2018

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE

INTRODUCTION

Reference is made to the Announcement.

On 3 July 2018, the Company entered into the Subscription Agreement with the Subscriber pursuant to which the Subscriber has conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue 1,350,000,000 new Shares at the Subscription Price of HK$0.363 per Subscription Share. The Subscription is subject to the conditions set out below in the paragraph headed “Conditions precedent to the Subscription”.

– 5 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you, among other things, (i) further details of the Subscription; (ii) a letter from the Independent Board Committee in relation to the Subscription and the transactions contemplated thereunder; (iii) a letter of advice from Gram Capital in relation to the Subscription and the transactions contemplated thereunder; and (iv) a notice convening the SGM.

THE SUBSCRIPTION

The Subscription Agreement

Date

3 July 2018

Parties

Issuer: The Company

Subscriber:

CMBC International Investment Limited, a company incorporated in the British Virgin Islands with limited liability and a substantial shareholder of the Company which holds 27,568,649,093 Shares, representing approximately 59.47% of the issued share capital of the Company as at the Latest Practicable Date.

Subscription Shares

The Subscriber has conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue 1,350,000,000 new Shares at the Subscription Price. The aggregate nominal value of the Subscription Shares under the Subscription is HK$13,500,000. The Subscriber shall make or procure the making of payments to the Company in an amount equivalent to the Subscription Price multiplied by the total number of the Subscription Shares upon Subscription Completion.

The 1,350,000,000 Subscription Shares represent (i) approximately 2.91% of the existing issued share capital of the Company of 46,355,977,729 Shares as at the Latest Practicable Date; and (ii) approximately 2.83% of the issued share capital of the Company of 47,705,977,729 Shares as enlarged by the allotment and issue of the maximum number of the Subscription Shares (assuming there will be no other changes in the issued share capital of the Company).

– 6 –

LETTER FROM THE BOARD

After the Subscription Completion, the Subscriber will hold 28,918,649,093 Shares, representing approximately 60.62% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares in aggregate (assuming there will be no other changes in the issued share capital of the Company).

Ranking of Subscription Shares

The Subscription Shares will rank pari passu in all respects among themselves and with Shares in issue as at the date of allotment and issue of the Subscription Shares.

Conditions precedent to the Subscription

Subscription Completion is conditional upon the satisfaction of the following conditions on or prior to 4:00 p.m. on the Long Stop Date (or such late date as may be agreed by the Subscriber and the Company in writing):

• (i) the listing committee of the Stock Exchange granting the listing of and permission to deal in the Subscription Shares;

• (ii) the passing of resolution(s) by the Independent Shareholders to approve the Subscription Agreement and the transactions contemplated thereunder at the SGM;

• (iii) the submission to the Stock Exchange and the Hong Kong Securities and Futures Commission (if applicable) or other relevant regulatory authorities all documents held by the Company or the Subscriber and required under the Listing Rules or any applicable law and regulation; and

• (iv) no representation, warranty or undertaking under the Subscription Agreement having been breached by the Company or is otherwise rendered inaccurate, untrue or misleading in any material respect, in each case on or prior to the Subscription Completion.

In the event that the conditions of the Subscription are not fulfilled on or before the Long Stop Date (or such later time and/or date as the Company and the Subscriber may mutually agree), the Subscription Agreement shall lapse and the obligations of the parties thereunder shall cease and determine and neither party of the Subscription Agreement shall have any claim against the other save in respect of any antecedent breaches of the Subscription Agreement prior to the date of such lapse.

None of the above conditions can be waived by any party to the Subscription Agreement.

As at the Latest Practicable Date, none of the conditions of the Subscription have been fulfilled.

– 7 –

LETTER FROM THE BOARD

Subscription Completion

Subscription Completion shall take place on the tenth Business Day (or such other date as mutually agreed between the Company and the Subscriber) after the fulfillment all the conditions set out above or such other later date as may be agreed by the Company and the Subscriber in writing.

Subscription Price

The Subscription Price represents:

• (i) a discount of approximately 18.4% to the closing price of HK$0.445 per Share as quoted on the Stock Exchange on 3 July 2018, being the date on which the terms of the Subscription was fixed;

• (ii) a discount of approximately 18.4% to the closing price of HK$0.445 per Share as quoted on the Stock Exchange on the Last Trading Day; and

• (iii) a discount of approximately 19.5% to the average closing price of HK$0.451 per Share as quoted on the Stock Exchange for the last five trading days up to and including the Last Trading Day.

The Subscription Price was negotiated on an arm’s length basis between the Company and the Subscriber and was determined with regard to the current trading price of the Shares and the business prospects of the Group.

In assessing the fairness and reasonableness of the Subscription Price, the Board has reviewed the Subscription Price with the historical highest and lowest closing prices and the average daily closing price of the Shares as quoted on the Stock Exchange in each month during the period commencing from 5 July 2017, being twelve months prior to the signing of the Subscription Agreement, up to and including the Last Trading Day (the “ Review Period ”). During the Review Period, the closing prices of Shares ranged from the lowest of HK$0.265 per Share on 21 July 2017 to the highest of HK$0.73 per Share on 25 September 2017. The Subscription Price is thus within the said historical price range of the Shares during the Review Period.

As such, the Directors consider that (i) the Subscription Price of HK$0.363 under the Subscription Agreement was arrived at after arm’s length negotiation, and are on normal commercial terms; and (ii) the entering into the Subscription Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 8 –

LETTER FROM THE BOARD

GENERAL

Information of the Group

As at the date of this circular, the Group is principally engaged in the securities business, investment and financing and asset management and advisory business.

Information of the Subscriber

The Subscriber is an investment company incorporated in the British Virgin Islands with limited liability and a substantial shareholder of the Company which holds 27,568,649,093 Shares, representing approximately 59.47% of the issued share capital of the Company as at the Latest Practicable Date. The Subscriber is an indirect wholly-owned subsidiary of China Minsheng Banking Corp., Ltd, which is principally engaged in corporate and personal banking, treasury business, finance leasing, asset management and other financial services in the PRC.

Specific Mandate

The Subscription Shares will be issued under the Specific Mandate proposed to be granted to the Directors at the SGM to allot, issue and otherwise deal with the Subscription Shares.

Implications of the Listing Rules

As at the Latest Practicable Date, the Subscriber is a substantial shareholder which holds 27,568,649,093 Shares, representing approximately 59.47% of the issued share capital of the Company. Since the Subscriber is a substantial shareholder and hence a connected person of the Company under Rule 14A.07(1) of the Listing Rules, the Subscription will constitute a connected transaction for the Company and is subject to the announcement, reporting and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. The SGM will be convened and held for the purpose of considering and, if thought fit, approving the Subscription.

– 9 –

LETTER FROM THE BOARD

According to Note 1 to the Rule 13.36(2)(b) of the Listing Rules, other than where independent shareholders’ approval has been obtained, an issue of securities to a connected person pursuant to a general mandate given under rule 13.36(2)(b) is only permitted in the circumstances set out in rule 14A.92. As (i) the SGM will be convened for the purpose of considering and approving the Subscription and the respective transaction contemplated thereunder; (ii) the Subscriber (being the connected person) will abstain from voting on the relevant resolutions at the SGM; and (iii) the Company will appoint an Independent Financial Adviser to advise the Independent Board Committee and Independent Shareholders in relation to the Subscription and the respective transaction contemplated thereunder, the Company will ensure that no Shares will be issued under the Subscription prior to obtaining of the Independent Shareholders’ approval at the SGM and the Company will be able to fulfill the requirements under Note 1 to the Rule 13.36(2)(b) of the Listing Rules.

SGM

The SGM will be convened for the purpose of considering and, if deemed appropriate, approving, among other things, the Subscription and the respective transactions contemplated thereunder.

A notice convening the SGM of the Company to be held at Units 6601A & 6607-8, Level 66, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong on Thursday, 20 September 2018 at 10:30 a.m. is set out at pages 32 to 34 of this circular. Whether or not you are able to attend such meeting, please complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Company’s Hong Kong share registrar and transfer office, Tricor Tengis Limited, at Level 22, Hopewell Centre 183 Queen’s Road East Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding such meeting (or adjourned meeting thereof as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting at the meeting (or adjourned meeting thereof as the case may be) should you so wish.

In accordance with the Listing Rules, any Shareholder who has a material interest in the Subscription shall abstain from voting on the resolution(s) to approve the Subscription and the respective transactions contemplated thereunder at the SGM. The Subscriber holding a total of 27,568,649,093 Shares will abstained from voting on the relevant resolution(s) at the SGM accordingly. Save for the Subscriber, to the best of knowledge, information and belief of the Directors, no other Shareholder has a material interest in the transactions contemplated under the Subscription Agreement and will be required to abstain from voting on the resolution(s) to approve the Subscription and the respective transactions contemplated thereunder at the SGM.

The ordinary resolution to approve the Subscription and the transactions contemplated thereunder at the SGM will be taken by poll and an announcement will be made by the Company after the SGM on the results of the SGM.

– 10 –

LETTER FROM THE BOARD

Application for listing

Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in and the Subscription Shares.

USE OF PROCEEDS AND THE REASONS FOR THE SUBSCRIPTION

Assuming the maximum Subscription Shares are subscribed for, the net proceeds of the Subscription will be approximately HK$490 million and the net Subscription Price per Share is estimated to be HK$0.363. The Company currently intends to use the net proceeds from the Subscription in the following manner: (i) 60% of the proceeds from the Subscription will be used for the expansion of loan and financing business of the Group; (ii) 10% of the proceeds from the Subscription will be used to further strengthen the Group’s brokerage service capability; (iii) 10% of the proceeds from the Subscription will be used for the expansion of the Group’s corporate finance advisory business of the Group; (iv) 10% of the proceeds from the Subscription will be used for the development of asset management business; and (v) 10% of the proceeds from the Subscription will be used for general working capital of the Group, out of which, (a) 2.5% of the proceeds from the Subscription will be used for the upgrading of the Group’s information technology system; (b) 5% of the proceeds from the Subscription will be used for the recruitment of talents by the Group; and (c) 2.5% of the proceeds from the Subscription will be used for office renovation and enhancement of the Group’s working environment.

The Directors consider that the Subscription reflects the confidence and commitment of the Subscriber, who is also the controlling Shareholder of the Company, towards the long-term and sustainable development of the Company, and that the continuing support of the controlling Shareholder of the Company is crucial to ensure the business stability and long-term development of the Group. The Subscription will also accelerate the Company’s growth by further strengthening the capital base and financial position of the Company and laying down a more solid foundation for the future business development, mergers and acquisitions.

The Directors consider that the Subscription Agreement was entered into on normal commercial terms following arm’s length negotiations between the relevant parties and that the terms of the Subscription Agreement are fair and reasonable based on the current market conditions, and the Subscription are in so far as the interests of the Company and the Shareholders as a whole. As Mr. Li Jinze, Mr. Ding Zhisuo, Mr. Ng Hoi Kam, Mr. Ren Hailong and Mr. Liao Zhaohui, all being Directors, hold positions in the Subscriber and/or its associates, they have abstained from voting for the approval of the transactions under the Subscription Agreement at the Board meeting. Save for the above, no other Directors have any material interests in the transactions contemplated under the Subscription Agreement or were otherwise required to evade or abstain from voting in respect of the relevant Board resolutions.

FUND RAISING ACTIVITY IN THE PAST TWELVE MONTHS

The Company has not conducted any capital raising activities in the 12 months immediately before the Latest Practicable Date.

– 11 –

LETTER FROM THE BOARD

EFFECTS ON SHAREHOLDING STRUCTURE

Assuming that the maximum number of Subscription Shares will be issued, the expected changes in the share capital and shareholding structure of the Company resulting from the Subscription are as follows:

Name of Shareholder CMBC International Investment Limited public shareholders Total	At the Latest Practicable Date No. of Shares % 27,568,649,093 59.47 18,787,328,636 40.53 46,355,977,729 100.00	Immediately after the Subscription Completion No. of Shares % 28,918,649,093 60.62 18,787,328,636 39.38 47,705,977,729 100.00	Immediately after the Subscription Completion No. of Shares % 28,918,649,093 60.62 18,787,328,636 39.38 47,705,977,729 100.00
			100.00

RECOMMENDATION

The Independent Board Committee, having taken into account the advice of Gram Capital, considers that the transactions contemplated under the Subscription Agreement, though not in the ordinary and usual course of business of the Company, are on normal commercial terms, and the terms are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the resolutions to approve the Subscription Agreement, the transactions contemplated thereunder and the grant of Specific Mandate. The text of the letter from Independent Board Committee is set out on page 13 of this circular.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendix to this circular.

Yours faithfully, By order of the Board CMBC Capital Holdings Limited Li Jinze Chairman

– 12 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter from the Independent Board Committee setting out its recommendation to the Independent Shareholders in relation to the Subscription Agreement and the transactions contemplated thereunder:

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CMBC CAPITAL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

3 September 2018

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE

We refer to the circular dated 3 September 2018 (the “ Circular ”) to the shareholders of the Company of which this letter forms part. Unless otherwise specified, terms defined in the Circular shall have the same meanings in this letter.

As the Independent non-executive Directors who are independent of the parties to the Subscription Agreement and the transactions contemplated thereunder, we have been appointed to form this Independent Board Committee to advise you as to whether, in our opinion, the transactions contemplated under the Subscription Agreement, though not in the ordinary and usual course of business of the Company, are on normal commercial terms, and the terms are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Gram Capital has been appointed as the Independent Financial Adviser to advise this Independent Board Committee on the fairness and reasonableness of the respective terms of the Subscription Agreement and the transactions contemplated thereunder.

– 13 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

We wish to draw your attention to the letter from the Board, as set out on pages 5 to 12 of the Circular, and the letter of advice from Gram Capital, as set out on pages 15 to 25 of the Circular, both of which provide details of the Subscription Agreement and the transactions contemplated thereunder. Having considered the advice rendered by Gram Capital and the principal factors and reasons taken into consideration by it in arriving its advice, we are of the opinion that the transactions contemplated under the Subscription Agreement, though not in the ordinary and usual course of business of the Company, are on normal commercial, and the terms are fair and reasonable and in the interests of the Company and the Shareholders as a whole as far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions which will be proposed at the SGM to approve the respective terms of the Subscription Agreement and the transactions contemplated thereunder and the grant of Specific Mandate.

Yours faithfully,

For and on behalf of Independent Board Committee

Lee, Cheuk Yin Dannis Independent non-executive Director

Wu Bin Independent non-executive Director

Wang Lihua Independent non-executive Director

– 14 –

LETTER FROM GRAM CAPITAL

Set out below is the text of a letter received from Gram Capital, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Subscription for the purpose of inclusion in this circular.

Room 1209, 12/F. Nan Fung Tower 88 Connaught Road Central/ 173 Des Voeux Road Central Hong Kong

3 September 2018

• To: The independent board committee and the independent shareholders of CMBC Capital Holdings Limited

Dear Sir/Madam,

CONNECTED TRANSACTION SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE INVOLVING CONNECTED PERSON

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Subscription, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 3 September 2018 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

On 3 July 2018, the Company entered into the placing agreement with the placing agents pursuant to which the placing agents have conditionally agreed with the Company to place, through the placing agents, on a best effort basis, up to 830,000,000 new Shares to not less than six placees at the placing price (the “ Placing Price ”) of HK$0.363 per new Share (the “ Placing ”).

– 15 –

LETTER FROM GRAM CAPITAL

On the even date, the Company entered into the Subscription Agreement with the Subscriber. Pursuant to the Subscription Agreement, the Company has conditionally agreed to allot and issue, and the Subscriber has conditionally agreed to subscribe for, 1,350,000,000 new Shares. The Subscription Shares will be issued at the Subscription Price which is equal to the Placing Price (i.e. HK$0.363). The Placing was completed on 20 July 2018.

With reference to the Board Letter, the Subscription constitutes a connected transaction of the Company and is subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee comprising Mr. Lee, Cheuk Yin Dannis, Mr. Wu Bin and Mr. Wang Lihua (all being independent non-executive Directors) has been established to advise the Independent Shareholders on (i) whether the terms of the Subscription are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Subscription is in the interests of the Company and the Shareholders as a whole; and (iii) how the Independent Shareholders should vote in respect of the resolution(s) to approve the Subscription at the SGM. We, Gram Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. Our opinion is based on the Directors’ representation and confirmation that there are no undisclosed private agreements/arrangements or implied understanding with anyone concerning the Subscription. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules.

– 16 –

LETTER FROM GRAM CAPITAL

The Circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or the Circular misleading. We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Circular, save and except for this letter of advice.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, the Subscriber or their respective subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the Subscription. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Shareholders should note that subsequent developments (including any material change in market and economic conditions) may affect and/or change our opinion and we have no obligation to update this opinion to take into account events occurring after the Latest Practicable Date or to update, revise or reaffirm our opinion. In addition, nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, it is the responsibility of Gram Capital to ensure that such information has been correctly extracted from the relevant sources while we are not obligated to conduct any independent in-depth investigation into the accuracy and completeness of those information.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Subscription, we have taken into consideration the following principal factors and reasons:

1. Background of and reasons for the Subscription

Business overview of the Group

With reference to the Board Letter, the Group is principally engaged in the securities business, investment and financing and asset management and advisory business.

– 17 –

LETTER FROM GRAM CAPITAL

Set out below are the audited consolidated financial information of the Group for the year ended 31 March 2017 and the nine months ended 31 December 2017 as extracted from the annual report of the Company for the financial period ended 31 December 2017 (the “ 2017 Annual Report ”):

	For the nine
	months	For the year
	ended	ended
	31 December	31 March
	2017	2017
	HK$’000	HK$’000
		(restated)
Revenue from continuing operation	165,180	83,705
– Securities	73,059	83,705
– Investment and financing	49,069	nil
– Asset management and advisory	43,052	nil
Profit/(loss) for the period/year from
continuing operation	118,363	(1,048,037)
	As at	As at
	31 December	31 March
	2017	2017
	HK$’000	HK$’000
Cash and bank balances	616,902	207,979
Accounts payable arising from the
ordinary course of business of
securities brokerage, futures and
options dealing services	319,176	106,103
Net assets	1,280,186	1,148,849

Note: With reference to the announcement of the Company dated 14 July 2017, the financial year end date of the Company changed from 31 March to 31 December.

– 18 –

LETTER FROM GRAM CAPITAL

According to the above table, the Group recorded revenue from continuing operation of approximately HK$165.18 million for the nine months ended 31 December 2017, representing an increase of approximately 97.34% as compared to that for the year ended 31 March 2017. With reference to the 2017 Annual Report, such increase in revenue was mainly due to the contribution from the investment and financing segment and the asset management and advisory segment. The Group recorded a profit from continuing operation of approximately HK$118.36 million for the nine months ended 31 December 2017 as compared a loss of approximately HK$1.05 billion for the year ended 31 March 2017. With reference to the 2017 Annual Report, such turnaround in loss position was primarily attributed to the increase in revenue; net gains on investments at fair value through profit or loss; and the decrease in other losses arising from impairment and disposal of available-for-sales investments, change in fair value of contingent consideration and early settlement of promissory notes.

As at 31 December 2017, the Group had cash and bank balances; accounts payable arising from the ordinary course of business of securities brokerage, futures and options dealing services; and net assets of approximately HK$616.90 million, HK$319.18 million and HK$1.28 billion respectively.

Information on the Subscriber

With reference to the Board Letter, the Subscriber is an investment company incorporated in the British Virgin Islands with limited liability and a substantial Shareholder of the Company and is indirectly wholly-owned by China Minsheng.

As further mentioned in the Board Letter, China Minsheng is principally engaged in corporate and personal banking, treasury business, finance leasing, asset management and other financial services in the PRC. With reference to the annual report of China Minsheng for the year ended 31 December 2017, China Minsheng and its subsidiaries (“ China Minsheng Group ”) mainly provide corporate and personal banking, treasury business, finance leasing, asset management and other financial services in the PRC. China Minsheng Group recorded total assets and net profit of approximately RMB5,902,086 million as at 31 December 2017 and RMB50,922 million for the year ended 31 December 2017 respectively. As at 31 December 2017, the sales network of China Minsheng had covered 125 cities in the PRC, including 131 branch-level institutions, 1,145 business outlets of sub-branches, 1,622 community sub-branches, 154 small business sub-branches and 4,485 self-service banks in the PRC.

– 19 –

LETTER FROM GRAM CAPITAL

Reasons for and benefits of the Subscription and use of proceeds

With reference to the Board Letter, the Subscription reflects the confidence and commitment of the Subscriber, the controlling Shareholder, towards the long-term and sustainable development of the Company, and that the continuing support of the controlling Shareholder of the Company is crucial to ensure the business stability and long-term development of the Group. The Subscription will also accelerate the Company’s growth by further strengthening the capital base and financial position of the Company and laying down a more solid foundation for the future business development, mergers and acquisitions.

As advised by the Directors, the Group has considered various methods, namely debt financing and equity financing, for fund raising. Given that the Directors prefer not to create additional debt liabilities and interest burden onto the Group for fund raising, debt financing was not considered by the Directors. As for equity financing, the Directors are of the opinion that placing/ subscription of new Shares to be more preferable methods of fund raising available to the Group as the completion of placing/ subscription of new shares can take place within a relatively shorter period and with less administrative burden compared to open offer/ rights issue. Having considered the benefits of the support and commitment from the controlling Shareholder, the Directors also consider the Subscription to be an appropriate fund raising method.

As further mentioned in the Board Letter, the gross proceeds from the Subscription are expected to be approximately HK$490 million (based on the Subscription Price of HK$0.363 per Share). The Company intends to use the proceeds from the Subscription in the following manner: (i) 60% of the proceeds from the Subscription will be used for the expansion of loan and financing business of the Group; (ii) 10% of the proceeds from the Subscription will be used to further strengthen the Group’s brokerage service capability; (iii) 10% of the proceeds from the Subscription will be used for the expansion of the Group’s corporate finance advisory business of the Group; (iv) 10% of the proceeds from the Subscription will be used for the development of asset management business; and (v) 10% of the proceeds from the Subscription will be used for general working capital of the Group (out of which, (a) 2.5% will be used for upgrading of the Group’s information technology system; (b) 5% will be used for recruitment of talents by the Group; and (c) 2.5% will be used for office renovation and enhancement of the Group’s working environment).

With reference to the 2017 Annual Report, the Group had built a cooperative development system with China Minsheng in a regular and efficient manner, through which the Group can leverage the vast network and the enormous customer base of China Minsheng to facilitate the comprehensive and rapid development of the Group in the areas of securities trading and brokerage, asset management, investment banking, structured finance, direct investment, etc. Leveraging on the strong reputation, expertise and capability of China Minsheng, and the licenses the Group possesses, the Group achieved rapid growth in its financial performance.

– 20 –

LETTER FROM GRAM CAPITAL

We noted that the Group conducted a number of business activities with China Minsheng Group in 2017 and 2018. With reference to the announcement of the Company dated 3 October 2017, the Company entered into a service agreement with CMBC International Holdings Limited (“ CMBCI ”), a direct wholly-owned subsidiary of China Minsheng, pursuant to which (i) the Group agreed to provide asset management services or ancillary services to CMBCI, its associates or any third parties who are deemed to be connected with the Company under Rule 14A.20 of the Listing Rules; and (ii) CMBCI and its subsidiaries (other than the members of the Group) agreed to introduce, refer and communicate underwriting opportunities offered by independent third parties to the Group. With reference to the announcements of the Company dated 23 July 2017, 27 December 2017 and 2 May 2018, the Company obtained unsecured loan facilities (up to a maximum aggregate amount of HK$7 billion) from CMBCI for the purpose of, inter alia, developing the Group’s securities investment and provision of finance businesses.

As mentioned above, the Group recorded an increase in revenue and a turnaround in loss position from continuing operation for the nine months ended 31 December 2017 as compared to the year ended 31 March 2017. For the nine months ended 31 December 2017, total revenue (from continuing operation) from the securities segment (representing the business line of provision of brokerage services, securities margin financing services, futures and options contracts dealing services and securities underwriting services to clients) and the investment and financing segment (representing investment and trading activities in equity securities, futures, bonds, funds and provision of loan financing services) amounted to approximately HK$122.13 million.

As further mentioned in the 2017 Annual Report, the Group intended to further expand its loan and financing business by offering more diversified structured finance services mainly targeting on high-profile private enterprise customers in the comprehensive health, mass consumption, emerging technology and featured manufacturing industry thereby generating stable revenue stream, as well as facilitating the rapid development of the Group’s merger and acquisition advisory and sponsor services, debt and equity underwriting business as well as asset management business. Accordingly, the intended use of proceeds from the Subscription is in line with the Group’s business strategies.

Having considered that (i) the Subscription is in line with the Group’s strategy as mentioned in the 2017 Annual Report; (ii) the background of the Subscriber and its ultimate controlling shareholder, China Minsheng; (iii) the strong reputation, expertise and capability of China Minsheng had contributed to the Group’s improved financial performance (i.e. increase in revenue and turnaround in loss position); and (iv) the support from the Subscriber through the Subscription would ensure the business stability and long-term development of the Group, we are of the view that the Subscription is in the interest of the Company and the Shareholders as a whole.

– 21 –

LETTER FROM GRAM CAPITAL

2. Principal terms of the Subscription

The Subscription Agreement

Date 3 July 2018 Parties The Company (as the issuer)

CMBC International Investment Limited (as the Subscriber)

Subscription Shares

Pursuant to the Subscription Agreement, the Company has conditionally agreed to allot and issue, and the Subscriber has conditionally agreed to subscribe for, 1,350,000,000 new Shares at the Subscription Price.

The 1,350,000,000 Subscription Shares represents (i) approximately 2.91% of the existing issued share capital of the Company of 46,355,977,729 Shares as at the Latest Practicable Date; and (ii) approximately 2.83% of the issued share capital of the Company of 47,705,977,729 Shares as enlarged by the allotment and issue of the maximum number of the Subscription Shares (assuming there will be no other changes in the issued share capital of the Company).

Subscription Price

The Subscription Price of HK$0.363 represents:

• (a) a discount of approximately 17.50% to the closing price of HK$0.440 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

• (b) a discount of approximately 18.43% over the closing price of HK$0.445 per Share as quoted on the Stock Exchange on the Last Trading Day; and

• (c) a discount of approximately 19.51% over the average closing price per Share of HK$0.451 for the last five consecutive trading days up to and including the Last Trading Day.

With reference to the Board Letter, the Subscription Price was negotiated on an arm’s length basis between the Company and the Subscriber and was determined with regard to the current trading price of the Shares and the business prospects of the Group.

– 22 –

LETTER FROM GRAM CAPITAL

In order to assess the fairness and reasonableness of the Subscription Price, we reviewed the daily closing price of the Shares as quoted on the Stock Exchange from 1 July 2017 up to and including 3 July 2018 (the “ Review Period ”), being a period of approximately one year prior to the date of the Subscription Agreement, which is commonly used for analysis purpose. The comparison of daily closing prices of the Shares and the Subscription Price is illustrated as follows:

==> picture [360 x 202] intentionally omitted <==

Source: the Stock Exchange’s website

During the Review Period, the lowest and highest closing prices of the Shares as quoted on the Stock Exchange were HK$0.265 recorded on 21 July 2017 and HK$0.73 per Share recorded on 25 September 2017 respectively. The Subscription Price of HK$0.363 is within the range of the lowest and highest closing prices of the Shares as quoted on the Stock Exchange during the Review Period. The closing prices of the Shares showed a decreasing trend since the start of the Review Period and reached HK$0.265 on 21 July 2017. Since then, the closing prices of the Shares surged and reached their peak at HK$0.73 on 25 September 2017. From 26 September 2017 to 3 July 2018, being the date of the Subscription Agreement, the closing price of Shares fluctuated and showed a general decreasing trend.

As part of our analysis, we have further identified transactions in relation to the subscription of new shares under specific mandate (listed on the Stock Exchange) for cash which were announced by companies listed on the Stock Exchange from 4 April 2018 up to 3 July 2018, being a period of three months prior to the date of the Subscription Agreement (the “ Comparables ”). To the best of our knowledge and as far as we are aware of, we found 7 transactions which met the said criteria. We have not subjectively carved out any Comparables which met the aforesaid selection criteria. Accordingly, we consider the Comparbales to be fair and representative samples. Shareholders should note that the businesses, operations and prospects of the Company are not the same as the Comparables.

– 23 –

LETTER FROM GRAM CAPITAL

		Premium/(discount) of the
		issue price to closing price per
		share on the date of agreement
		in relation to the respective
	Date of	issuance/subscription of
Company name (stock code)	announcement	shares
		%
Ausnutria Dairy Corporation Ltd (1717)	6 April 2018	(20.67)
TUS International Limited (872)	17 April 2018	(11.97)
Asia Resources Holdings Limited (899)	17 April 2018	201.20
Cosmos Machinery Enterprises Limited (118)	30 April 2018	11.11
China Baofeng (International) Limited (3966)	24 May 2018	(13.33)
China Grand Pharmaceutical and Healthcare	24 May 2018	(21.14)
Holdings Limited (512)
China Grand Pharmaceutical and Healthcare	1 June 2018	(15.86)
Holdings Limited (512)
Maximum		201.20
Minimum		(21.14)
The Company		(18.43)

We noted from the above table that the subscription prices of the Comparables ranged from a discount of approximately 21.14% to a premium of approximately 201.20% to/over the respective closing prices of their shares on the date of agreement in relation to the respective subscription of new shares (the “ Discount/Premium Market Range ”). As such, the Subscription Price, which represents a discount of approximately 18.43% to the closing price of the Shares on the Subscription Agreement, falls within the Discount/Premium Market Range. Therefore, we are of the opinion that the Subscription Price is in line with the recent market practice.

In addition, we noted from the announcement of the Company dated 20 July 2018 regarding the completion of Placing that an aggregate of 577,220,000 Placing Shares (representing approximately (i) 1.26% of the then existing issued share capital of the Company immediately before the completion of Placing; and (ii) 1.25% of the issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares immediately after the completion of Placing) were successfully placed to not less than six placees who and whose ultimate beneficial owners are independent third parties at the Placing Price of HK$0.363 per Placing shares. The Subscription Price is the same as the Placing Price for placing of shares to independent third parties under the Placing.

– 24 –

LETTER FROM GRAM CAPITAL

Having taken into account that (i) the Subscription Price of HK$0.363 is within the range of the lowest and highest closing prices of the Shares as quoted on the Stock Exchange during the Review Period; (ii) Subscription Price is in line with the recent market practice; and (iii) the Subscription Price is the same as the Placing Price to independent third parties under the Placing, we consider the Subscription Price to be fair and reasonable.

For further details and terms of the Subscription, please refer to the section headed “The Subscription Agreement” of the Board Letter.

Taking into account the principal terms of the Subscription as highlighted above and that the Subscription Price is equal to the Placing Price, we are of the view that the terms of the Subscription are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

3. Possible dilution effect on the shareholding interests of the public Shareholders

With reference to the shareholding table in the section headed “Effect on shareholding structure” of the Board Letter and the Announcement, (i) the shareholding interests of the then existing public Shareholders as at the date of Announcement (excluding Shares held by the placees of Placing) would be diluted by approximately 1.14 percent point as a result of the Subscription without taking into account of the Placing; (ii) the shareholding interests of the existing public Shareholders (including Shares held by the placees of Placing) would be diluted by approximately 1.15 percent point as a result of the Subscription; and (iii) for information only, the shareholding interests of the then existing public Shareholders as at the date of Announcement (excluding Shares held by the placees of Placing) would be diluted by approximately 1.61 percent point as a result of the Subscription and the Placing. In this regard, taking into account (i) the reasons for the Subscriptions; and (ii) the terms of the Subscription Agreement being fair and reasonable, we are of the view that the said level of dilution to the shareholding interests of the public Shareholders as a result of the Subscription is acceptable.

RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that (i) the terms of the Subscription are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Subscription is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolution(s) to be proposed at the SGM to approve the Subscription and we recommend the Independent Shareholders to vote in favour of the resolution(s) in this regard.

Yours faithfully, For and on behalf of Gram Capital Limited Graham Lam Managing Director

– 25 –

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. SHARE CAPITAL, SHARE OPTIONS AND CONVERTIBLE SECURITIES

(i) Share Capital

Set out below are the authorised and issued share capital of the Company (i) as at the Latest Practicable Date; (ii) immediately upon the Subscription Completion, assuming that the maximum number of Subscription Shares are issued and no other new Shares will be issued from the Latest Practicable Date to the Subscription Completion.

Authorized: 100,000,000,000 Shares as at the Latest Practicable Date Issued and fully paid or credited as fully paid: 46,355,977,729 Shares as at the Latest Practicable Date 1,350,000,000 Allotment and issue of the Subscription Shares 47,705,977,729	HK$ 1,000,000,000.00
	463,559,777.29 13,500,000.00
	477,059,777.29

All the issued Shares including the Subscription Shares will rank pari passu with each other in all respects including the rights in respect of capital, dividend and voting.

Save for the issuance of 577,220,000 shares in the Company of HK$0.363 each pursuant to a placing agreement dated 3 July 2018 (for further details, please refer to the announcement of the Company dated 3 July 2018), there has been no increase in the issued share capital of the Company since 3 July 2018 and up to and including the Latest Practicable Date.

– 26 –

GENERAL INFORMATION

APPENDIX

(ii) Share options

As at the Latest Practicable Date, the Company did not have any outstanding options.

(iii) Warrants/convertible securities

As at the Latest Practicable Date, the Company had no warrants or convertible securities in issue.

As at the Latest Practicable Date, the Company had no other outstanding options, warrants or conversion rights affecting the Shares.

3. DISCLOSURE OF INTEREST

Interests of the Directors and chief executive in the Company and its associated corporations

As at the Latest Practicable Date, none of the Directors nor chief executive of the Company or their respective associates had any interest or short position in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO, which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or which were required to be and were recorded in the register required to be kept by the Company under section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules.

Interests of substantial shareholders

As at the Latest Practicable Date, according to the register kept by the Company pursuant to Section 336 of the SFO and, so far as is known to the Directors or chief executive of the Company, the following shareholders (other than a Director or chief executive of the Company) had interests or short positions in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who was, directly or indirectly, interested in 10% or more of

– 27 –

APPENDIX

GENERAL INFORMATION

the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

			Approximate
		Number of	total percentage
		shares of	of interest in
Name	Nature of interest	the Company	the Company
The Subscriber	Beneficial owner	27,568,649,093	59.47%
China Minsheng Banking	Interest of controlled	27,568,649,093	59.47%
Corp., Ltd	corporation
CMBC International Holdings	Interest of controlled	27,568,649,093	59.47%
Limited	corporation

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or the chief executive of the Company was aware of any other person, other than a Director or the chief executive of the Company, who had interests or short positions in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group, or which was recorded in the register required to be kept by the Company pursuant to section 336 of the SFO.

4. DIRECTORS’ INTERESTS

• (a) As at the Latest Practicable Date, none of the Directors had any interest, either directly or indirectly, in any assets which have, since 31 December 2017 (being the date to which the latest published audited consolidated financial statements of the Group were made up), been acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by, or leased to, any member of the Group.

• (b) As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement subsisting and which is significant in relation to the business of the Group.

• (c) As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group which will not expire or is not determinable by the employer within a year without payment of compensation (other than statutory compensation).

• (d) As at the Latest Practicable Date, so far as the Directors are aware of, none of the Directors and their respective associates had any interests in business which competes, or are likely to compete, either directly or indirectly, with the businesses of the Group.

– 28 –

GENERAL INFORMATION

APPENDIX

5. LITIGATION

As at the Latest Practicable Date, so far as was known to the Directors, none of the members of the Group was engaged in any litigation, arbitration or administration proceedings of material importance and there was no litigation, arbitration or administration proceedings or claim of material importance known to the Directors to be pending or threatened against any member of the Group.

6. MATERIAL CONTRACTS

The members of the Group had, after the date of two years immediately preceding the date of this circular, entered into the following contracts which were or might be material, other than contracts in the ordinary course of business of the Group:

• (a) the China Soft Power Technology Holdings Limited (“ CSPT ”) disposal agreement dated 28 November 2016 in relation to (i) the disposal of one (1) share in the issued share capital of Sky Eagle Global Limited and (ii) the loan owing or incurred by Sky Eagle Global Limited to Gold Mission Limited to Celestial Lodge & Limited for an aggregate consideration of HK$227,000,000 and the CSPT supplemental agreement dated 7 March 2017 and entered into between the Celestial Lodge Limited and the Gold Mission Limited to amend certain terms of the CSPT disposal agreement;

• (b) the conditional subscription agreement dated 7 March 2017 and entered into between the Company as issuer and the Subscriber and Brilliant Decent Limited as subscribers in relation to the Subscription;

• (c) a conditional placing agreement entered into between the Company and certain placing agents (CCB International Capital Limited, Haitong International Securities Company Limited, Zhongtai International Securities Limited and CMBC Securities Company Limited) dated 3 July 2018 in relation to the placing of up to 830,000,000 Shares; and

• (d) the Subscription Agreement.

7. GENERAL

• (a) The secretary of the Company is Mr. Dong Qizhen who is a solicitor qualified in Hong Kong.

• (b) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

– 29 –

GENERAL INFORMATION

APPENDIX

• (c) The Company’s head office and principal place of business in Hong Kong is at Units 6601A and 6607-6608, Level 66 International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong.

• (d) The branch share registrar of the Company is Tricor Tengis Limited at Level 22, Hopewell Centre 183 Queen’s Road East Hong Kong.

• (e) The English language text of this circular shall prevail over the Chinese language in case of inconsistency.

8. NO MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors confirm that there had been no material adverse change in the financial or trading position of the Company since 31 December 2017, the date to which the latest published audited consolidated financial statements of the Company have been made up.

9. DOCUMENTS AVAILABLE FOR INSPECTION

A copy of each of the following documents will be available for inspection at the principal place of business of the Company in Hong Kong at Units 6601A and 6607-6608, Level 66, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong for a period of 14 days from the date of this circular:

• (a) the memorandum of association and the bye-laws of the Company;

• (b) the annual reports of the Company for the years ended 31 March 2017 and the nine months ended 31 December 2017;

• (c) the letter from the Independent Board Committee, the texts of which are set out on pages 13 to 14 in this circular;

• (d) the letter of advice from Gram Capital to the Independent Board Committee and the Independent Shareholders, the text of which are set out on pages 15 to 25 of this circular;

• (e) the written consent of Gram Capital as referred to in the paragraph headed “10. Experts” of this appendix;

• (f) the material contracts referred to in the paragraph headed “6. Material Contracts” in this appendix; and

• (g) this circular.

– 30 –

GENERAL INFORMATION

APPENDIX

10. EXPERTS

The qualification of the expert who has given its opinion or advice which is contained in this circular is set out below:

Name

Qualification

Gram Capital Limited

A licensed corporation to carry out Type 6 (advising on corporate finance) regulated activity under the SFO

As at the Latest Practicable Date, Gram Capital (i) had no shareholding in any member of the Group and did not have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group; (ii) had no direct or indirect interest in any assets which had been, since 31 December 2017 (the date to which the latest published audited consolidated financial statements of the Group were made up), acquired, disposed of by, or leased to any member of the Group, or were proposed to be acquired, disposed of by, or leased to any member of the Group; and (iii) has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and the reference to its name included herein in the form and context in which it appears.

– 31 –

NOTICE OF SGM

==> picture [218 x 43] intentionally omitted <==

CMBC CAPITAL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the “ SGM ”) of CMBC Capital Holdings Limited (the “ Company ”) will be held at Units 6601A & 6607-8, Level 66, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong on Thursday, 20 September 2018 at 10:30 a.m. to consider and, if thought fit, pass with or without modification the following resolution as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

1. “ THAT :

2. (A) subject to and conditional upon the fulfilment of the conditions in the subscription agreement dated 3 July 2018 (“ Subscription Agreement ”) entered into between the Company as issuer and CMBC International Investment Limited (“ Subscriber ”), a substantial shareholder of the Company as the subscriber, in relation to the proposed subscription of a maximum of 1,350,000,000 shares of HK$0.01 each in the share capital of the Company (each a “ Subscription Share ”, and collectively, the “ Subscription Shares ”) at a subscription price of HK$0.363 per Subscription Share (a copy of the Subscription Agreement is marked “B” and signed by the chairman of the SGM for identification purpose has been tabled at the meeting), the form and substance of the Subscription Agreement be and are hereby approved, ratified and confirmed and any one Director be and is hereby authorised to approve any changes and amendments thereto as he may consider necessary, desirable or appropriate;

3. (B) the grant of specific mandate (the “ Specific Mandate ”) to the directors (the “ Directors ”) of the Company to allot and issue the Subscription Shares to the Subscriber pursuant to the Subscription Agreement; and the Specific Mandate is in addition to, and shall not prejudice nor revoke any general or specific mandate(s) which has/have been granted or may from time to time be granted to the Directors by the shareholders of the Company prior to the passing of this resolution;

– 32 –

NOTICE OF SGM

• (C) subject to the fulfillment of the conditions of the Subscription Agreement, any one Director be and is hereby authorised to exercise all the powers of the Company and to take all steps as might in his opinion be desirable or necessary in connection with the Subscription Agreement to, including without limitation, allot and issue the Subscription Shares; and

• (D) all other transactions contemplated under the Subscription Agreement be and are hereby approved and any one Director be and is authorised to do all such acts and things, to sign and execute such documents or agreements or deeds on behalf of the Company and to do such other things and to take all such actions as he considers necessary, appropriate, desirable or expedient for the purposes of giving effect to or in connection with the Subscription Agreement, the allotment and issue of the Subscription Shares and to agree to such variation, amendments or waiver of matters relating thereto as are, in the opinion of the such Director, in the interests of the Company and its shareholders as a whole.”

Yours faithfully, By order of the Board CMBC Capital Holdings Limited Li Jinze Chairman

Hong Kong, 3 September 2018

Registered office: Principal place of business Clarendon House in Hong Kong: 2 Church Street Units 6601A and 6607-6608 Hamilton HM 11 Level 66 Bermuda International Commerce Centre 1 Austin Road West Kowloon Hong Kong

– 33 –

NOTICE OF SGM

Notes:

• 1 A member of the Company entitled to attend and vote at the SGM convened by the above notice is entitled to appoint one or if he/she is the holder of two or more shares, more than one proxy to attend and, subject to the provisions of the memorandum of association and articles of association of the Company, to vote on his/her behalf. A proxy need not be a member of the Company but must be present in person at the SGM to represent the member. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.

• 2 In order to be valid, the form of proxy must be deposited together with a power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority, at the office of the Company’s branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited, at Level 22, Hopewell Centre 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding the meeting or adjourned meeting. Completion and return of the form of proxy will not preclude a member of the Company from attending and voting in person at the SGM or any adjournment thereof, should he so wish.

• 3 Completion and return of an instrument appointing a proxy will not preclude a member of the Company from attending and voting in person at the meeting and/or any adjournment thereof and in such event, the instrument appointing a proxy shall be deemed to be revoked.

• 4 As required under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, the above resolutions will be decided by way of poll.

• 5 The form of proxy for use at the SGM is enclosed herewith.

As at the date hereof, the executive Directors are Mr. Li Jinze, Mr. Ding Zhisuo and Mr. Ng Hoi Kam, the non-executive Directors are Mr. Ren Hailong and Mr. Liao Zhaohui, and the independent non-executive Directors are Mr. Lee, Cheuk Yin Dannis, Mr. Wu Bin and Mr. Wang Lihua.

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