Overview TB Alternative Assets Ltd. (“TBAA”, the “Firm”, “We”, “Our”, or “Us”) is a wholly owned subsidiary
of TBP Public Limited. TBAA was incorporated in the Cayman Islands on 5 December 2007, and is
domiciled in the Cayman Islands.
Funds Structure
TBAA serves as the Investment Manager (“IM”) to Trustbridge Select Opportunities Fund (“Master
Fund”) and its two feeder funds, Trustrbridge Select Opportunities Offshore Feeder and Trustbridge
Select Opportunities US Feeder, both of which are organized as private pooled investment vehicles
(“The Funds”). TBAA also serves as an IM to several separately managed accounts (“SMAs” and
collectively with the Funds, the “Clients”).
TBAA sub-contracts part of the investment advisory
responsibilities to TBP Investment Advisory (HK) Limited, which serves as the Sub-Investment Advisor
(“IA”). Together with the IA, TBAA holds discretionary authority to manage the Clients, including the
authority to determine which investments are bought and sold and the amounts of such investments
that are appropriate for each Client. TBAA and the IA act as one in the provision of investment
advisory services. Any limitation on such authority is described in Clients’ governing documents and/or
investment management agreements. TBAA manages the Clients in accordance with the investment
guidelines set forth in the offering documents and/or investment management agreements of Clients.
TBAA had approximately US$ 1047
million of assets under management as of 31 December 2018, all
of which it manages on a discretionary basis.
Principal Owners
TBAA is a wholly owned subsidiary of TBP Public Limited, which is majority owned by Mr. Shujun Li.
Types of Services Offered As the IM, TBAA manages the Clients on a discretionary basis, subject to investment policies and
restrictions set out by the constituent documents, and primarily focuses on PRC securities listed on
stock exchanges in Hong Kong, China and the United States.
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General
With respect to the Funds, pursuant to the offering documents and advisory agreements, TBAA
receives an annual management fee of 1.5% of the assets under management attributable to Class A
shares (no management fee is payable out of the assets attributable to Class B shares). This fee is
deducted from the account. We are generally paid management fees on a monthly basis in arrears
based on the end market value of the assets in the account as of the end of each month.
With respect to the SMAs, pursuant to the advisory agreements, TBAA may receive an annual
management fee of around 1% to 2% of the Client’s assets under management. This fee is deducted
from the Client’s account. We are generally paid such management fees on a quarterly basis at the end
of each calendar quarter based on the end market value of the assets in the account as of the end of
each calendar month.
Neither we nor any of our “supervised persons” accept compensation for the sale of securities or
other investment products.
Performance-Based Compensation
With respect to the Funds, pursuant to the offering documents and advisory agreements, we receive
performance-based fees/allocations equal to 20% of the Fund’s investment return above certain
benchmark. We are generally paid performance-based fees on an annual basis at the end of each
calendar year based on the end market value of the assets in the account as of the end of each calendar
year.
With respect to the SMAs, pursuant to the advisory agreements, we generally receive performance-
based fees/allocations equal to 15% of the Clients’ investment return above certain benchmark. We are
generally paid performance-based fees on an annual basis at the end of each calendar year based on the
end market value of the assets in the account as of the end of each calendar year.
We charge all of our Clients both asset-based fees and performance-based fees/allocations. We do not
participate in side-by-side management arrangements. TBAA’s policy is to allocate investment
opportunities fairly and equitably on the basis of various factors including the Client’s investment
objectives and strategies; existing portfolio composition; net asset value; cash levels and cash availability;
market exposure; industry sector exposure; and the suitability of investments for each of our Clients.
Refunds and Fee Waivers
In the event of the termination of a Client’s advisory contract during a quarterly period, the Client,
without request, will receive a pro rata refund of the portion of the asset management fee paid in
advance for the remaining balance of the quarter. Additionally, we assess a pro rata fee to any Client
account created on any date other than the first day of any calendar quarter.
We may, in our sole discretion, waive all or part of any fees or expenses payable by or attributable to
the Funds or any Fund investor.
Other Costs
Clients will incur brokerage and other transaction costs. Please see Item 12, “Brokerage Practices”
below for a discussion of certain brokerage expenses.
Clients are also responsible for other third-party expenses, including, but not necessarily limited to,
administrative fees, accounting costs and expenses, and legal fees incurred for the benefit of such Client.
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We serve as the IM to the Funds which are pooled investment vehicles whose underlying investors are
exclusively “accredited investors” (as defined in Rule 501(a) of Regulation D under the U.S. Securities
Act of 1933) and “qualified purchasers” (as defined in Section 2(a) (51) of the U.S. Investment
Company Act of 1940). Underlying investors of the Funds are generally endowments, foundations, non-
profit organizations, pensions, family offices and trusts.
Advisory Agreements
All SMAs will enter into a written Investment Management Agreement (“IMA”) before establishing an
advisory relationship with the IM. We may not assign such agreements.
Minimum Account Size
As related to the Funds, there is an initial minimum capital contribution requirement of US$5,000,000
for Class A Shares and US$100,000 for Class B Shares. However, we reserve the right to accept a less
or subscription amount at our sole discretion.
We generally do not require SMAs to maintain a minimum investment to continue an advisory
relationship, but we do reserve the right to terminate an account based on its size if the account has
decreased because of substantial investor withdrawals.
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Methods of Analysis
Our research process employs fundamental, quantitative, and qualitative analysis, including cyclical
analysis. We focus on developing a deep, fundamental understanding of investment opportunities
through rigorous due diligence and analysis.
Our bottom-up approach to analysis and research is generally conducted on a company-by-company
basis, but may extend to competitors and industries. We evaluate the upside and downside of the
companies and opportunities identified and monitor them closely. We also conduct on-site visits,
cross-checks, and detailed financial analysis of investment opportunities. Our analysis includes vigilant
monitoring that continues the due diligence process after an investment is entered into the client’s
portfolio. Our extensive due diligence process also assists us in discovering and exploring previously
unknown investment opportunities.
Sources of Information
TBAA combines local expertise stemming from grassroots research to generate independent and
proprietary views that drive our investment strategy. We generally adhere to an exhaustive research
framework, including face-to-face communication with management, analysis of publications and other
media, site visits, and dialogue with suppliers, customers, and competitors.
Investment Strategies Our strategy and investment approach rests on four pillars.
First and foremost, we have a singular focus on high-quality businesses that can deliver sustainable
growth. In our investment framework, industry and management are the most deciding factors of
quality, which not only define upside but also provide downside protection. Everything we do centers
on how to continuingly improve our ability to identify and invest in high-quality businesses that will
grow consistently and sustainably.
Secondly, we believe focus and specialization can deliver long-term, sustainable competitive advantage,
especially in a fast growing market like China, and we have established a multiple-year’s track-record of
successful investment in three sectors, namely technology, consumer and healthcare.
Thirdly, we adopt a “PE-driven” approach to pursue deep, fundamental business research focusing on
enterprise value per share. We believe the best risk management in this context is to know and assess
each investment thoroughly and on the basis of independent verification.
Lastly, we have a keen focus on catalysts, as certain short-term events that will not change the
fundamental value of the investment targets but cause meaningful or significant price dislocation due to
different market participants’ perception, knowledge, expectation and characteristics.
Risk of Loss
Clients should be aware that any investment in securities involves a high degree of risk and is suitable
only for investors of substantial means who have no need for liquidity with respect to the amount
invested and can afford to lose all of their investment. There can be no assurances that our Clients will
receive a return of, or on, their capital.
TBAA does not guarantee the future performance of any Fund, the success of any investment decision
or strategy that TBAA may employ, or the success of TBAA’s overall management of any Fund. Any
investment in a Fund involves significant risk, including the risk of loss of all or substantially all capital
invested. Clients should be prepared to bear the loss of the entire amount of their investment.
Investment risks include the following:
• Emerging Markets Risk: Investing in an emerging market involves additional risks and special
considerations not typically associated with investing in other more established economies or
securities markets (including economic, financial, legal, political and tax related considerations);
• Strategy Risk: Our long-term growth strategy may not take advantage of short-term gains that
could be profitable;
• Equity Risk: Because of the nature of our investment strategies, Clients are subject to the risk
that prices will fall over short or extended periods of time, and Clients could lose all, or a
substantial portion, of the value of their investments;
• Business Risk: Individual companies in which our Clients invest may report poor results and
industry and/or economic trends and developments could have a greater impact on certain
companies in comparison to the market as a whole;
• Liquidity Risk: Some companies or investments in which our Clients invest may have low
liquidity, and as such securities issued by such companies may be difficult to buy or sell and the
value of such securities may rise and/or fall substantially before such securities may be bought
or sold;
• Derivative Instruments Risk: We may invest Client assets in derivative instruments. The prices
of derivative instruments, including futures and options, are highly volatile;
• Short-Selling Risk: We may engage in short-selling securities on behalf of our Clients, which
may involve: (i) selling securities which may or may not be owned by the short seller; and (ii)
borrowing them for delivery to the purchaser, with an obligation to replace the
borrowed securities at a later date.
As a China-focused IM, our business is exposed to the securities market and the legal and regulatory
framework in place in the PRC, which are at an early stage of development and where uncertainties
remain across a number of key parameters, including liquidity and exchange controls, taxation,
repatriation and currency conversion.
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TBAA has not been subject to any disciplinary action, whether criminal, civil or administrative
(including regulatory) in any jurisdiction. Likewise, no persons involved in the management of TBAA
have been subject to such action.
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TBAA is part of a group of related entities known as the Trustbridge Partners Group. Within that
group, TBAA has an affiliation with TB Early Management Limited and TB Management Holdings
Limited that are Investment Managers (and filed with the SEC as Exempt Reporting Advisers), managing
a private equity fund house focusing on investing in late-stage growth opportunities in China with
limited investment exposure to publicly traded securities. This private equity group currently manages
multiple private equity funds. Mr. Shujun Li, who is TBAA’s portfolio manager, is also the managing
partner within the private equity group and a member of its investment committee.
TBAA is also related to TB China QFII Investments Ltd., an SEC registered investment adviser to a
SMA investing in a China QFII structure and TBP Investment Advisory (HK) Limited acting as a sub-
advisor to certain Clients.
While TBAA and the above related entities have separate investment teams, they may share financial,
legal, compliance and operational support. In addition, TBAA and the private equity group may invest in
the same or similar underlying investments. Different performance or management compensation
structures or incentives may apply to shared personnel, which may also create a conflict of interest.
TBAA has however adopted policies and procedures, including a Code of Ethics, to address these
potential conflicts of interests. Decisions related to the allocation of such products will never be made
on the basis of management and/or performance-based fees. Please see Item 5, “Fees and
Compensation” above for information regarding how our Clients compensate us, the potential conflict
of interest created by allocating investment opportunities among Clients, and how we address the
potential conflict of interest.
All related entities have been fully disclosed on each entity’s respective ADV, where required.
Neither TBAA nor any member of its management is registered, or has an application pending to
register, as a broker-dealer, a registered representative of a broker-dealer, a futures commission
merchant (“FCM”), commodity pool operator (“CPO”), a commodity trading advisor (“CTA”), or an
associated person of a registered FCM, CPO, or CTA. TBAA or related entities act as a CPO or CTA
for some of the Funds and/or SMAs, but are exempt from registration with the Commodity Futures
Trading Commission (“CFTC”) pursuant to CFTC Rule 4.13(a)(3) or 4.14(a)(8) under the Commodity
Exchange Act. These exemptions are based primarily upon the Funds’ and SMA’s limited commodity
interest trading.
TBAA does not recommend or select other investment advisers for our Clients. In addition, TBAA
does not, directly or indirectly, pay or receive compensation to or from third parties in connection
with recommending advisory services. Other than as referenced above, we are not aware of any other
material affiliations.
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Trading General Code of Ethics
We expect our employees to be responsible for maintaining the highest ethical standards when
conducting business. In keeping with these standards, our employees must always place our Clients’
interests ahead of their own. Moreover, our employees should adhere to the spirit as well as the
letter of the law and be vigilant in guarding against anything that could inappropriately skew their
judgment.
Pursuant to Rule 204A-1 under the Advisers Act, TBAA has adopted a Code of Ethics (the “Code”)
which sets forth standards of business and personal conduct for all Trustbridge employees, and
addresses conflicts of interest that may arise from personal trading by employees or gifts and
entertainment received or provided by employees. The Code sets forth, among other things,
standards for the purpose of deterring wrongdoing and promoting: (i) honest and ethical reporting;
(ii) full, fair, accurate, timely, and understandable disclosure in reports and documents; (iii) compliance
with applicable laws, rules, and regulations; (iv) prompt internal reporting of violations of the Code;
and (v) accountability for adherence to the Code. Clients or potential Clients may obtain a copy of
the Code free of charge by writing to our Chief Compliance Officer at the address on the cover page
of this brochure.
Compliance Training
We provide all employees orientation training upon joining the firm, as well as compliance training
both on a regular (annual) and ad hoc basis, covering broad topics or developments as well as specific
regulations and/or topics as needed.
Participation or Interest in Client Transactions
TBAA and its employees and related persons may invest alongside the other investors in the Funds.
Those investments may be in the same or similar securities as those held by the investors in the
Funds, but acquired at different times, at lower or higher prices or valuations, and on different terms.
The different prices paid for, or terms of, securities held by the other TBAA Investors may create
conflicts of interest. In addition, TBAA may invest in the same securities in the same companies for
the private equity group also invests. TBAA has policies and procedures in place to mitigate any
conflicts. TBAA has also adopted an aggregation and allocation policy to help assure investment
opportunities are allocated in a fair and equitable manner.
Personal Trading
The Code is designed to assure that the personal securities transactions, activities, and interests of
our employees do not interfere with their judgment in advising our Clients. We discourage our
employees from personal trading due to the conflicts of interest (real and apparent) that such
trading may present. All employees must receive pre-clearance for all personal securities
transactions and must provide post-trading details of all personal trades.
All employees also must provide us with detailed information regarding their personal securities
holdings, which they must update on a mo nt h l y basis. Although employees are not prohibited
from personal trading, employees are prohibited from short-term trading or speculation.
To minimize the risk of potential conflicts of interests, employees and their immediate family
members may not, directly or indirectly, make personal trades in any security, company, asset, or
investment product (i) located in or having a substantial business relation to China, or (ii) under
research, traded in, or contemplated to be traded in by TBAA, in each case without consent of the
Chief Compliance Officer.
A copy of the Code of Ethics is available upon request.
Service on Board of Directors Representatives of TBAA or its other affiliates, may, from time to time, serve as a director with
respect to public and/or private companies in which a Fund invests (“portfolio companies”).
With respect to the private equity group, a TBAA related person may serve as a director for a
portfolio company in which a Fund or SMAs may invest and therefore may also have a fiduciary
duty to the portfolio company, as well as to the Fund and SMAs These separate fiduciary obligations
may create conflicts of interest that must be mitigated to ensure the TBAA related person serving
as director does not breach his or her fiduciary obligations.
In addition, if TBAA obtains material, non-public information by virtue of a representative serving as
director of a portfolio company, we may be precluded from trading with respect to the securities of
the portfolio company. TBAA has adopted internal policies and procedures to address conflicts of
interest that may arise in connection with service on the board of a portfolio company.
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We choose various brokers for more efficient and/or less expensive transactions, or for non-financial
relationship reasons. We endeavor to obtain the best execution for securities transactions so that a
Client’s total costs or proceeds in each transaction are the most favorable under the circumstances
(“Best Execution”).
In selecting brokers to effect portfolio transactions, we consider various factors, including the following:
price; quality of execution (including the level of accuracy and confidentiality in executing orders);
extensiveness of the broker’s distribution network; commission rates; degree of our access to the
broker’s trading desk; the broker’s familiarity with our investment practices; and the value of certain
brokerage or research services. We do not consider whether we receive referrals from a broker-
dealer or third party in selecting a broker.
Soft Dollar Arrangements We may enter into “soft dollar arrangements” whereby we receive research or other products or
services (other than execution) from a broker dealer or third party in connection with Client
securities transactions. These research products and services would be intended to provide us with
valuable research and services that we would otherwise have to produce or purchase from third
parties with our own Funds.
Any transaction in which soft dollar benefits are being received will be carefully evaluated to determine
that the transaction complies with our duty to seek best execution. However, as a result of any soft
dollar benefits we receive, we may have an incentive to select or recommend a broker based on
receipt of such benefits.
We have instituted certain procedures governing soft dollar benefits. We will use reasonable best
efforts to ensure the use of soft dollars to pay for research products or services will fall within the safe
harbor created by Section 28(e) of the Securities Exchange Act.
Trade Aggregation We generally aggregate Client orders when doing so will result in a better execution for our Clients’
trades.
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Review of Accounts
We review and evaluate each Fund’s investment objectives and performance on an ongoing basis, and
more formally on a semi-annual basis. We also review strategies to ensure compliance with investment
objectives and restrictions. Reviews are conducted by senior management, comprising the relevant
portfolio manager, the Chief Investment Officer and other senior members of our research team.
Reporting
We provide Fund investors with an annual report containing audited financial statements in accordance
with US GAAP following the end of the Fund’s fiscal year. Fund investors also receive relevant tax
information for the Fund in which they are invested. In addition, our third-party administrator delivers
to investors an unaudited statement of an estimate of the account and account balance(s) and any
capital contributions or withdrawals since the preceding month-end within 30 days after the end of
each calendar month or as soon thereafter as is reasonably possible. These written financial statements
and reports do not typically include a listing of portfolio investments.
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Neither TBAA nor a related person of TBAA, directly or indirectly, compensates any person for Client
referrals. Should TBAA or a related person of TBAA determine to enter into a solicitation
arrangement for Client referrals, TBAA will disclose the arrangement in writing as required by Rule
206(4)-3 under the Advisers Act and will comply with all other applicable requirements of the Rule.
No person, other than our Clients, provides us with an economic benefit for providing advisory
services to our Clients.
TBAA may receive director’s fees in connection with services provided where a TBAA manager was to
serve as a director on the board of a public or private company in which the Funds invest. Item 11
(“Code of Ethics, Participation or Interest in Client Transactions, and Personal Trading”) further
describes TBAA’s process for addressing conflicts of interest created by its managers serving as
directors.
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TBAA does not maintain direct custody over Client Funds or securities. All assets are held at qualified
custodians in accordance with Rules 206(4)-2 of the Advisers Act. Our Chief Compliance Officer is
responsible for ensuring that any qualified custodian with custody of Client assets is properly qualified.
The audited financial statements are prepared and delivered to Fund investors within 180 days of the
Fund’s fiscal year end.
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TBAA has discretionary portfolio management authority over the Clients (through its sub-advisory
relationship with the IA) including authority to determine which investments are bought and sold and
the amounts appropriate for each Fund and SMA.
Any limitation on the IM’s authority is described in the written investment management agreements
and/or the Funds’ governing documents. We only purchase and sell securities or other financial
instruments consistent with the Funds’ objectives. Our Chief Investment Officer, in consultation when
appropriate with our Chief Compliance Officer, is primarily responsible for ensuring that the securities
or other financial instruments recommended are consistent with the respective Fund’s investment
objectives.
Further, before new Clients are accepted, our Chief Investment Officer and our Chief Compliance
Officer will jointly assess and approve our management of such Client investments.
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Where TBAA and its affiliates have responsibility for voting proxies, the Firm will take measures
reasonably designed to ensure that they are voted in the best interest of its clients, which generally
means voting with a view to enhancing the value of client securities. Financial interest of clients is the
primary consideration in determining how their proxies should be voted. TBAA and its affiliates may
refrain from voting in certain circumstances.
The Firm determines whether and how to vote proxies on a case-by-case basis and will apply the
following guidelines, as applicable:
• The Firm will attempt to consider all aspects of the vote that could affect the value of the
issuer or that of the Client;
• The Firm will vote in a manner that it believes is consistent with the Client’s stated objectives;
and
• The Firm will generally vote in accordance with the recommendation of the issuing company’s
management on routine and administrative matters, unless the Firm has a particular reason to
vote to the contrary.
The Firm and its affiliates generally also accept the authority to vote proxy on behalf of the SMAs.
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TB Alternative Assets Ltd. has no financial commitment that impairs its ability to meet contractual and
fiduciary commitments to Clients and has not been the subject of a bankruptcy proceeding.
There is no financial condition that is reasonably likely to impair our ability to meet our contractual
commitments to Clients.
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Open Brochure from SEC website