LUNAR CAPITAL MANAGEMENT ADVISORS LTD.

Thesis

Lunar Capital Management is an independent firm founded in 2007, specializing in mid-market investments in consumer companies across China. The firm operates with a philosophy of "keeping things small" to enhance its effectiveness as an investor, focusing on disciplined deal-making and capital constraints. Lunar Capital targets consumer-related companies, with a particular interest in those focused on consumer products and services (B2C), apparel and accessories, consumer non-durables, manufacturing, and media industries. The firm has a strategic focus on both established and emerging consumer markets within China, including opportunities in central and western China, recognizing the growth potential of a burgeoning middle class in these regions. Lunar Capital also seeks opportunities globally within the luxury and lifestyle sectors, leveraging its industry expertise in art, culture, design, fashion, dining, hospitality, experiences, and wellness. The firm's strategy often involves co-investing alongside its limited partners, enabling it to pursue deals requiring substantial funding. Lunar Capital Partners IV, a 2015 vintage buyout fund, exemplifies this strategy, targeting consumer products and services, apparel, and manufacturing. The firm aims for a base case internal rate of return of 20%. Lunar Capital manages approximately $250 million in assets under management. The firm's second fund, a $200 million vehicle, is nearly half invested. Lunar Capital Partners III, a 2009-vintage fund, had a corpus of $150 million. The firm is considering raising a new fund around $200 million, similar in size to its current second fund. Lunar Capital typically invests between $25 million and $100 million per deal. The firm's investment focus is on mid-market companies, and its Lunar Capital Partners IV fund is a buyout fund.

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