THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR …€¦ · A letter from the Board of the Company is set out on pages 6 to 21 of this circular. A letter from the Independent Board Committee,

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

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 securities in CIAM Group Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

CIAM Group Limited事安集團有限公司*

(A subsidiary of CITIC International Assets Management Limitedincorporated in Bermuda with limited liability)

(Stock Code: 378)

DISCLOSEABLE AND CONNECTED TRANSACTIONSIN RELATION TO

THE DISPOSAL OF TRUST PLAN INTERESTSAND HENAN FUND MANAGEMENT CO. INTERESTS

Financial Adviser to the Company

Independent Financial Adviser to the Independent Board Committee andthe Independent Shareholders

A letter from the Board of the Company is set out on pages 6 to 21 of this circular. A letter from the Independent Board Committee, containing its recommendation to the Independent Shareholders, is set out on pages 22 and 23 of this circular. A letter from OSK Capital, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 24 to 36 of this circular.

A notice (the “Notice”) of the special general meeting of the Company (the “SGM”) to be held at 23rd Floor, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong on 15 June 2011 (Wednesday) at 10:30 a.m. (or as soon thereafter as the annual general meeting convened for the same day and place shall have been concluded or adjourned) is set out on pages 43 and 44 of this circular.

A form of proxy for use at the SGM is enclosed. Whether or not you intend to attend the SGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

* For identifi cation purpose only

14A.59(1)

14A.58(3)(b)

App1B(1)

13.51A

27 May 2011

CONTENTS

Page

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 22

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . . . . . . . . . 24

APPENDIX — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

NOTICE OF THE SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

1

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:

“Agricultural Fund” 河南農業開發產業投資基金 (Henan Agricultural Development Industrial Investment Fund*), a fund which is managed and invested by Henan Fund Management Co. in the manner as set out in the paragraph headed “Background”

“Announcement” announcement of the Company dated 22 June 2009

“Associate(s)” has the meaning ascribed thereto under the Listing Rules

“Board” the board of Directors

“Business Day” a day (other than a Saturday, a Sunday and a public holiday) on which banks in Hong Kong are open to conduct business generally through their normal business hours

“Bye-laws” the Bye-laws of the Company

“CIAM Parent” CITIC International Assets Management Limited, a company incorporated in Hong Kong which indirectly holds 72.77% shareholding interests in the Company

“CITIC YBN” CITIC YBN Capital Limited, a company incorporated in Hong Kong, which is owned as to 55% and 45% respectively by CIAM Parent and an independent third party investor

“Company” CIAM Group Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the main board of the Stock Exchange

“Completion” Trust Plan Completion and Henan Fund Completion, or where the context requires, refers to any one of them

“Completion Date” Trust Plan Completion Date and Henan Fund Completion Date or where the context requires, refers to any one of them

“Conditions Precedent” the conditions precedent to the completion of the Trust Plan Transaction and/or the disposal of Henan Fund Management Co. Interests as set out in the Master Agreement

“Connected Person(s)” has the meaning ascribed to it under the Listing Rules

2

DEFINITIONS

“Connected Transaction(s)” the transfer of the Trust Plan Interests and the transfer of Henan Fund Management Co. Interests pursuant to the Master Agreement, or where the context requires, refers to any one of them

“Defi nitive Agreements” collectively the Investment Consultancy Services Agreement, the Trust Plan Interests Transfer Agreement and Henan Fund Management Co. Interests Transfer Agreement

“Deposit” the upfront payment of RMB22 million paid by YBN Investment or such other person as appointed by CITIC YBN to YBN Shenzhen within two months after entering into the Master Agreement

“Director(s)” the director(s) of the Company, including the independent non-executive directors of the Company

“Disposal” the proposed disposal of the interests and liabilities of YBN Shenzhen in the Trust Plan (including both interests and liabilities as settlor and benefi ciary of the Secondary Trust Units as well as being the investment consultant for the Trust Plan) and Henan Fund Management Co. pursuant to the Master Agreement

“Group” the Company together with its subsidiaries from time to time, and a member of the Group means any one of them

“Henan Fund Completion” completion of the execution and delivery of the Henan Fund Management Co. Interests Transfer Agreement and the payment of the consideration for the transfer of the Henan Fund Management Co. Interests

“Henan Fund Completion Date” the 14th day (or such other date as the parties to the Master Agreement may agree in writing) after the date on which the last of the Conditions Precedent for the disposal of the Henan Fund Management Co. Interests has been fulfi lled or waived pursuant to the terms of the Master Agreement but in any event not later than 14 November 2011

“Henan Fund Management Co.” 河南農開投資基金管理有限責任公司 (Henan Agricultural Developing Investment Fund Management Co., Ltd.*), a domestic fund management company established in the PRC which is currently held as to 30% by YBN Shenzhen

3

DEFINITIONS

“Henan Fund Management Co. Interests”

the thirty percent (30%) equity interests in Henan Fund Management Co. held by YBN Shenzhen

“Henan Fund Management Co. Interests Transfer Agreement”

Henan Fund Management Co. interests transfer agreement to be entered into by YBN Shenzhen as transferor and YBN Investment or such other person as appointed by CITIC YBN as transferee in respect of transfer of Henan Fund Management Co. Interests

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“Hong Kong” the Hong Kong Special Administrative Region of the PRC

“Independent Board Committee” an independent committee of the Board that has been established to advise the Independent Shareholders on the Connected Transactions, comprising all independent non-executive Directors, namely, Messers. Hung Chi Yuen Andrew, Sit Fung Shuen Victor and Toh Hock Ghim

“Independent Financial Adviser” or “OSK Capital”

OSK Capital Hong Kong Limited, a licensed corporation to carry on business in type 1 (dealing in securities) and type 6 (advising on corporate fi nance) regulated activities under the SFO, which has been appointed by the Company to act as the independent fi nancial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Connected Transactions

“Independent Shareholders” Shareholders other than CIAM Parent and its Associates

“Investment Consultancy Services” the consultancy services to be provided by YBN Investment to YBN Shenzhen in respect of the management of the Trust Plan as contemplated under the Investment Consultancy Services Agreement

“Investment Consultancy Services Agreement”

the investment consultancy services agreement to be entered into by YBN Shenzhen and YBN Investment for the provision of the Investment Consultancy Services

“Latest Practicable Date” 23 May 2011, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

“Long Stop Date” 31 October 2011, or such other date as the parties to the Master Agreement may agree in writing

4

DEFINITIONS

“Master Agreement” the master agreement dated 6 May 2011 entered into between the Company and CITIC YBN in relation to the Disposal

“PRC” the People’s Republic of China excluding Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan for the purpose of this circular

“Preferred Trust Unit(s)” the preferred trust unit(s) of the Trust Plan of RMB1 each which was formerly referred to as “Preferred Share(s)” in the Announcement

“RMB” Renminbi, the lawful currency of PRC

“RPL” Right Precious Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of CIAM Parent

“Secondary Trust Unit(s)” the secondary trust unit(s) of the Trust Plan of RMB1 each which was formerly referred to as “Second Class Share(s)” in the Announcement

“SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

“SGM” a special general meeting of the Company to be held on 15 June 2011 to approve the Connected Transactions

“Share(s)” share(s) of HK$1.00 each in the share capital of the Company

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

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“subsidiary(ies)” has the meaning ascribed thereto in section 2 of the Companies Ordinance (Cap. 32 of the Laws of Hong Kong)

“substantial shareholder” has the meaning ascribed thereto under the Listing Rules

“Trust Plan” 中信信逸一號中小企業發展集合資金信托計劃 (CITIC XINYI SME Development Pooled Fund Trust Plan No. 1*)

“Trust Plan Completion” completion of the execution and delivery of the Trust Plan Interests Transfer Agreement and the Investment Consultancy Services Agreement and the payment of the consideration for the transfer of the Trust Plan Interests

5

DEFINITIONS

“Trust Plan Completion Date” the 14th day (or such other date as the parties to the Master Agreement may agree in writing) after the date on which the last of the Conditions Precedent for the Trust Plan Transaction has been fulfi lled or waived pursuant to the terms of the Master Agreement but in any event not later than 14 November 2011

“Trust Plan Documents” the explanatory memorandum and trust agreement in respect of the Trust Plan

“Trust Plan Interests” all interests and liabilities of YBN Shenzhen as the settlor and benefi ciary in the Secondary Trust Unit(s)

“Trust Plan Interests Transfer Agreement”

the Trust Plan interests transfer agreement to be entered into by YBN Shenzhen as transferor and YBN Investment as transferee in respect of the transfer of the Trust Plan Interests

“Trust Plan Transaction” the transfer of the Trust Plan Interests and the provision of the Investment Consultancy Services pursuant to the Master Agreement

“YBN Investment” 逸百年（中國）投資有限公司 (YBN (China) Investment Co. Ltd.*), an investment company established and wholly owned by CITIC YBN in the PRC

“YBN Shenzhen” 逸百年投資諮詢（深圳）有限公司 (YBN Investment Consulting Limited*), a wholly foreign-owned enterprise established in Shenzhen, the PRC and an indirect wholly owned subsidiary of the Company

“%” per cent.

For illustrative purpose only and unless otherwise specifi ed, RMB is translated to HK$ at the rate of RMB1.00 = HK$1.18. Such transactions should not be construed as representation that any amounts in RMB have been or could be converted at the above rate or at any other rates or at all.


6

LETTER FROM THE BOARD



(Stock Code: 378)

Chairman:Dou Jianzhong

Executive Vice-chairman:Lo Wing Yat Kelvin

Executive DirectorYip Chi Chiu

Non-Executive Directors:Lu ZhichengCarolyn Anne ProwseGraham Roderick WalkerWong Yau Kar DavidZhao Tieliu

Independent Non-Executive Directors:Hung Chi Yuen AndrewSit Fung Shuen VictorToh Hock Ghim

Registered Offi ce:Canon’s Court22 Victoria StreetHamilton HM 12Bermuda

Principal Place of Business in Hong Kong:23rd FloorBank of America Tower12 Harcourt RoadCentral, Hong Kong

27 May 2011

To the Shareholders

Dear Sir or Madam,



INTRODUCTION

Reference is made to the announcement of the Company dated 6 May 2011 in relation to, amongst the others, the entering into of the Master Agreement pursuant to which the Company, as the parent

13.51A

2.14


7


company of the seller, conditionally agreed to sell and CITIC YBN, as the parent company of the buyer, conditionally agreed to purchase the Trust Plan Interests and the Henan Fund Management Co. Interests.

The purpose of this circular is to provide Shareholders, among other things, (i) further details of the Connected Transactions; (ii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in connection with the transactions contemplated under the Master Agreement; (iii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders; and (iv) a notice of the SGM to consider and if thought fi t, to approve the Master Agreement and the transactions contemplated thereunder.

THE MASTER AGREEMENT

Background

As noted in the announcement of the Company dated 25 February 2009 and the Announcement, YBN Shenzhen was appointed as the investment consultant for the Trust Plan and subscribed for all the Secondary Trust Units of the Trust Plan. As disclosed in the Announcement, the total fund size of the Trust Plan was RMB300 million (equivalent to about HK$354 million) divided into 300 million units of RMB1 each, of which RMB250 million (equivalent to approximately HK$295 million) was divided into 250 million Preferred Trust Units of RMB1 each and RMB50 million (equivalent to about HK$59 million) was divided into 50 million Secondary Trust Units of RMB1 each. Further details of the Trust Plan and the respective rights of the holders of the Preferred Trust Units and Secondary Trust Units (including their respective ratios of return on investment) were set out in the Announcement.

Apart from investment made in the Trust Plan as aforesaid, YBN Shenzhen has also invested RMB12.6 million (approximately HK$14.9 million) for 30% equity interests in Henan Fund Management Co. which has a registered capital of RMB42 million. Henan Fund Management Co. was the fund manager of the Agricultural Fund. The size of the domestic phase one of the Agricultural Fund is RMB600 million comprising RMB40 million from Henan Fund Management Co., RMB360 million from the public and RMB200 million from the Finance Bureau (財政部) of Henan Province and a state-owned enterprise. An annual management fee at the rate of 2% of the RMB200 million (from the local government of Henan Province and a state-owned enterprise investment) and 1% of RMB400 million (from the other investors) is payable by the Agricultural Fund to Henan Fund Management Co. on quarterly basis.

PRINCIPAL TERMS OF THE MASTER AGREEMENT

Date:

6 May 2011

Parties:

(i) the Company, as the parent company of the seller for the Trust Plan Interests and the Henan Fund Management Co. Interests; and

(ii) CITIC YBN, as the parent company of the buyer for the Trust Plan Interests and the Henan Fund Management Co. Interests.

14A.59(2)(a)

8


Connected Transactions

(I) Disposal of Trust Plan Interests

Pursuant to the Master Agreement, the Company has conditionally agreed, among other things, to procure YBN Shenzhen to transfer the Trust Plan Interests to YBN Investment. On the Trust Plan Completion Date, YBN Shenzhen and YBN Investment will enter into the Trust Plan Interests Transfer Agreement governing the said transfer.

Consideration

The consideration of RMB50 million for the transfer of the Trust Plan Interests, pursuant to the Master Agreement, is determined on an arm’s length basis with reference to the amount of the investment cost of YBN Shenzhen made in the Trust Plan plus the amount of (i) the accrued returns (信托利益) payable by the Trust Plan according to the Trust Plan Documents but not collected by YBN Shenzhen for the period from the establishment of the Trust Plan up to the Trust Plan Completion Date; (ii) the consultancy fees of 0.5% on the amount of the total fund size of the Trust Plan for the period from its establishment date up to the Trust Plan Completion Date (to the extent not collected by YBN Shenzhen); and (iii) the consultancy fees of 0.5% on the amount of the total fund size of the Trust Plan from the Trust Plan Completion Date up to 22 June 2012 (being the expected maturity date of the Trust Plan).

According to the Trust Plan Documents, the accrued returns (信托利益) payable by the Trust Plan to YBN Shenzhen, being the holder of all the Secondary Trust Units of the Trust Plan, are calculated based on the investment income of the Trust Plan deducted by custodian fee (保管費), the trust plan management fee (信托管理費), the investment consultancy fee and due diligence costs on the investment projects of the Trust Plan and then distribute according to the following mechanism:

(i) an annual return of 8% on YBN Shenzhen’s investment cost (after distribution of 8% annual return to the holders of the Preferred Trust Units). If the annual return of the Trust Plan falls below 8%, the holders of the Preferred Trust Units shall have the priority to collect their entire investment costs with annual returns of 8% in the Trust Plan. The remaining amount (after distribution to the holders of the Preferred Trust Units) will be distributed to the YBN Shenzhen as the holder of the Secondary Trust Units;

(ii) a 20% share of the excess return after distribution of the return as mentioned in item (i) above if the annual return of the Trust Plan is between 8% and 12%;

(iii) a 40% share of the excess return after distribution of the return in item (ii) above if the annual return of the Trust Plan is between 12% and 15%; and

(iv) a 60% share of the excess return after distribution of the return in item (iii) above if the annual return of the Trust Plan is above 15%.

14A.59(2)(c)

9


For the period from the establishment of the Trust Plan up to the earliest possible completion date on 29 June 2011, which is the 14th calendar day after all conditions precedent being fulfi lled, the amount of the accrued returns payable by the Trust Plan according to the Trust Plan Documents but not collected by YBN Shenzhen is approximately RMB18.9 million; the consultancy fees of 0.5% on the amount of the total fund size of the Trust Plan for the period from its establishment date up to the earliest possible completion date (to the extent not collected by YBN Shenzhen) is approximately RMB0.32 million; and the consultancy fees of 0.5% on the amount of the total fund size of the earliest possible completion date up to 22 June 2012 (being the expected maturity date of the Trust Plan) is approximately RMB1.48 million. The consideration is approximately RMB70.7 million and the disposal gain of Trust Plan Interests shall be RMB6.4 million.

The amount of the accrued returns payable by the Trust Plan according to the Trust Plan Documents but not collected by YBN Shenzhen for the period from the establishment of the Trust Plan up to the Trust Plan Completion Date is approximately RMB22.4 million; the consultancy fees of 0.5% on the amount of the total fund size of the Trust Plan for the period from its establishment date up to the Trust Plan Completion Date (to the extent not collected by YBN Shenzhen) is approximately RMB0.2 million; and the consultancy fees of 0.5% on the amount of the total fund size of the Trust Plan Completion Date up to 22 June 2012 (being the expected maturity date of the Trust Plan) is approximately RMB0.9 million. The consideration is approximately RMB73.5 million and the disposal gain of Trust Plan Interests shall be RMB9.2 million.

The above illustrates the calculation of the minimum and maximum Trust Plan Interests’ consideration in the event that the possible completion date falls on the earliest possible completion date and the Trust Plan Completion Date.

As contemplated in the Master Agreement, the consideration for the transfer of the Trust Plan Interests is determined based on the value of the Trust Plan Interests calculated in accordance with the prescribed formula as mentioned above as at the Trust Plan Completion Date, which falls on the 14th day (or such other date as the parties to the Master Agreement may agree in writing) after the date on which the last of the Conditions Precedent for the Trust Plan Transaction has been fulfi lled but in any event not later than 14 November 2011. It is agreed by the parties that the consideration for the transfer of the Trust Plan Interests shall be not more than RMB75 million (equivalent to approximately HK$88.5 million). The Board considers that the consideration for the disposal of the Trust Plan Interests is fair and reasonable and in the interests of the Company. The consideration amount for the disposal of the Trust Plan Interests will be fi xed on the Trust Plan Completion Date.

The original acquisition cost to YBN Shenzhen for the Trust Plan Interests was RMB50 million (equivalent to about HK$59 million). Up to the Latest Practicable Date, YBN Shenzhen has collected consultancy fees amounting to RMB2.62 million (equivalent to about HK$3.09 million) from the Trust Plan and the next consultancy fees will be distributed by the Trust Plan to YBN Shenzhen in June 2011.

Part of the consideration for the transfer of the Trust Plan Interests will be settled by the applicable Deposit as set out in the paragraph headed “Deposit”, and the balance of the entire amount of the consideration for the transfer of the Trust Plan Interests will be paid by YBN Investment or its nominee to YBN Shenzhen or its nominee in cash on the Trust Plan Completion Date.

10


(II) Disposal of Henan Fund Management Co. Interests

Pursuant to the Master Agreement, the Company has conditionally agreed, among other things, to procure YBN Shenzhen to transfer the Henan Fund Management Co. Interests to YBN Investment or such other person as appointed by CITIC YBN. On the Henan Fund Completion Date, YBN Shenzhen and YBN Investment or such other person as appointed by CITIC YBN will enter into Henan Fund Management Co. Interests Transfer Agreement governing the said transfer.

Consideration

The consideration of RMB12.6 million for the disposal of the Henan Fund Management Co. Interests was determined on an arm’s length basis with reference to the audited net asset value of Henan Fund Management Co. as at 31 December 2010 plus the estimated net management fees which is approximately RMB1.5 million (equivalent to approximately HK$1.7 million) of the earliest possible completion date of the disposal of Henan Fund Management Co. Interests up to 22 January 2015 (being the expected maturity date of the Agricultural Fund) and approximately RMB1.3 million (equivalent to approximately HK$1.5 million) of the Henan Fund Management Co. attributable to YBN Shenzhen from the Henan Fund Completion Date up to 22 January 2015. The disposal gain of the Henan Fund Management Co. Interests shall be RMB1.5 million and RMB1.3 million respectively.

The above illustrates the calculation of the maximum and minimum Henan Fund Management Co. Interests’ consideration in the event that the possible completion date falls on the earliest possible completion date and the Henan Fund Completion Date.

As contemplated in the Master Agreement, the consideration for the transfer of the Henan Fund Management Interests is determined based on the value of the Henan Fund Management Interests calculated in accordance with the prescribed formula as mentioned above as at the Henan Fund Completion Date, which falls on the 14th day (or such other date as the parties to the Master Agreement may agree in writing) after the date on which the last of the Conditions Precedent for the disposal of the Henan Fund Management Interests has been fulfi lled but in any event not later than 14 November 2011. It is agreed by the parties that the consideration for the transfer of the Henan Fund Management Interests shall be not more than RMB15 million (equivalent to approximately HK$17.7 million). The Board considers that the consideration for the disposal of the Henan Fund Management Co. Interests is fair and reasonable and in the interests of the Company and the Shareholders as a whole. The consideration amount for the disposal of the Henan Fund Management Co. Interests will be fi xed on the Henan Fund Completion Date.

The original acquisition cost to YBN Shenzhen for the Henan Fund Management Co. Interests was RMB12.6 million (equivalent to approximately HK$14.9 million).

If the Trust Plan Completion takes place before or at the same time of the Henan Fund Completion, the entire amount of the Deposit will be applied to the consideration for the transfer of the Trust Plan Interests and accordingly, the entire amount of the consideration for the transfer of Henan Fund Management Co. Interests will be paid by YBN Investment or such other person as appointed by CITIC YBN to YBN Shenzhen or its nominee in cash on the Henan Fund Completion Date. If the Henan Fund Completion takes place earlier than the Trust Plan Completion, the entire amount of the consideration for the transfer of Henan Fund Management Co. Interests will be settled by the Deposit as referred to in the paragraph headed “Deposit”.

11


Net Sale Proceeds

The Board intends to apply the net sale proceeds from the Disposal of RMB85.8 million (equivalent to approximately HK$101.2 million) for general working capital and/or other appropriate investment opportunities.

Deposit

Pursuant to the Master Agreement, CITIC YBN shall procure YBN Investment or such other person as appointed by CITIC YBN to pay the Deposit of RMB22 million (equivalent to approximately HK$26 million) to YBN Shenzhen or its nominee within two months after entering into the Master Agreement. The Deposit will form part of the consideration for the Connected Transaction(s) upon Completion. YBN Shenzhen or its nominee shall have the absolute discretion to decide whether or not to place the Deposit received to any interest bearing account, and in any event any interest accrued shall belong to YBN Shenzhen or its nominee and shall not form part of the consideration for the Connected Transaction(s).

If the Trust Plan Completion takes place before or at the same time of the Henan Fund Completion, the entire amount of the Deposit will automatically be applied to settle the equivalent amount of the consideration for the Trust Plan Transaction. If the Henan Fund Completion takes place earlier than the Trust Plan Completion, the portion of the Deposit that is equivalent to the amount of the consideration for the disposal of Henan Fund Management Co. Interests will automatically be applied to settle that consideration and the balance of the Deposit will be applied to settle the consideration for the disposal of the Trust Plan Interests. However, if only Henan Fund Completion takes place, the remaining deposit (without interest) after settlement of the consideration for the disposal of Henan Fund Management Co. Interests as aforesaid will be refunded to YBN Investment or such other person as appointed by CITIC YBN. If neither Completion takes place in accordance with the terms of the Master Agreement, YBN Shenzhen should refund the entire Deposit (without interest) back to YBN Investment or such other person as appointed by CITIC YBN.

Conditions Precedent

Completion of the Trust Plan Transaction under the Master Agreement is conditional upon the following occurring on or before the Long Stop Date:

(i) the passing of resolutions by the Independent Shareholders at the SGM approving its entering into of the Master Agreement and the entering into by YBN Shenzhen of the Trust Plan Interests Transfer Agreement and the transactions contemplated therein;

(ii) the passing of resolutions by the Board approving its entering into of the Master Agreement and the entering into by YBN Shenzhen of the Trust Plan Interests Transfer Agreement and the Investment Consultancy Services Agreement;

(iii) the passing of resolutions by the board of directors of CITIC YBN approving its entering into of the Master Agreement and the entering into by YBN Investment of the Trust Plan Interests Transfer Agreement and the Investment Consultancy Services Agreement and the transactions contemplated therein;

12


(iv) the passing of necessary resolutions by the board or shareholder of YBN Investment for its entering into of the Trust Plan Interests Transfer Agreement and the Investment Consultancy Services Agreement and the transactions contemplated therein;

(v) the passing of resolutions by the shareholder of YBN Shenzhen approving the entering into by YBN Shenzhen of the Trust Plan Interests Transfer Agreement and the Investment Consultancy Services Agreement and the transactions contemplated therein;

(vi) the representation, warranty and undertaking made by CITIC YBN remaining true and accurate and not misleading; and

(vii) no material breach of the terms of the Master Agreement by CITIC YBN.

If the abovementioned conditions are not fulfi lled or otherwise waived (except the Independent Shareholder approval requirement could not be waived) by the Company by the Long Stop Date, the rights and obligations of the Company and CITIC YBN in respect of the Trust Plan Transaction will lapse and become null and void and all the obligations of the parties in respect of the Trust Plan Transaction under the Master Agreement will be released, save for the liabilities for any antecedent breaches.

Completion of the disposal of the Henan Fund Management Co. Interests under the Master Agreement is conditional upon the following occurring on or before the Long Stop Date:

(i) the passing of resolutions by the Independent Shareholders at the SGM approving its entering into of the Master Agreement and the entering into by YBN Shenzhen of the Henan Fund Management Co. Interests Transfer Agreement and the transactions contemplated therein;

(ii) the passing of resolutions by the Board approving its entering into of the Master Agreement and the entering into by YBN Shenzhen of the Henan Fund Management Co. Interests Transfer Agreement;

(iii) the passing of resolutions by the shareholder of YBN Shenzhen approving the entering into by YBN Shenzhen of the Henan Fund Management Co. Interests Transfer Agreement and the transaction contemplated therein;

(iv) the passing of resolutions by the board of directors of CITIC YBN approving its entering into of the Master Agreement and the entering into by YBN Investment or such other person appointed by CITIC YBN (such other person is currently in the process of incorporation) of the Henan Fund Management Co. Interests Transfer Agreement and the transactions contemplated therein;

(v) the passing of necessary resolution by the board or shareholder of YBN Investment or such other person as appointed by CITIC YBN (such other person is currently in the process of incorporation) for its entering into of the Henan Fund Management Co. Interests Transfer Agreement and the transactions contemplated therein;

13


(vi) the passing of resolutions by the shareholders of Henan Fund Management Co. approving the transfer of Henan Fund Management Co. Interests pursuant to the Master Agreement;

(vii) the representation, warranty and undertaking made by CITIC YBN remaining true and accurate and not misleading; and

(viii) no material breach of the terms of the Master Agreement by CITIC YBN.

If the abovementioned conditions are not fulfi lled or otherwise waived (except the Independent Shareholder approval requirement could not be waived) by the Company by the Long Stop Date, the rights and obligations of the Company and CITIC YBN in respect of the disposal of Henan Fund Management Co. Interests will lapse and become null and void and all the obligations of the parties in respect of the disposal of Henan Fund Management Co. Interests under the Master Agreement will be released, save for the liabilities for any antecedent breaches.

Completion

Completion will take place on the 14th day (or such other date as the parties to the Master Agreement may agree) after all the related Conditions Precedent are so fulfi lled or waived pursuant to the terms of the Master Agreement, provided that the Completion Date shall not be a date later than 14 November 2011. On the Completion Date, YBN Shenzhen and YBN Investment (or such other person as appointed by CITIC YBN in respect of the Henan Fund Management Co. Interests) will execute and exchange the Defi nitive Agreements and YBN Investment or such other person as appointed by CITIC YBN will pay the entire amount of the related considerations for the Trust Plan Interests and/or the Henan Fund Management Co. Interests to YBN Shenzhen or its nominee.

Completion of the disposal of the Trust Plan Interests and the engagement of the Investment Consultancy Services pursuant to the terms of the Master Agreement shall take place simultaneously.

On the other hand, the Trust Plan Completion and the Henan Fund Completion could take place on the same date or on different dates, as the case may be. The failure to complete either transaction in accordance with the terms of the Master Agreement would not affect the completion of the other.

Post Completion Rights and Obligations

The transactions under the Master Agreement are intended to enable the Group to effectively dispose of all its interests and liabilities in the Trust Plan (including both interests and liabilities as settlor and benefi ciary of the Secondary Trust Units as well as being the investment consultant for the Trust Plan) and Henan Fund Management Co. If for whatsoever reasons (save and except for breach of contract or failure to fulfi l the Conditions Precedent) any part of the transactions contemplated under the Defi nitive Agreements could not complete, the Company shall procure YBN Shenzhen, and CITIC YBN shall procure YBN Investment or such other person as appointed by CITIC YBN to enter into such feasible arrangement to achieve the intended purpose.

14


Insofar as transfer of the Trust Plan Interests is concerned, after Trust Plan Completion although YBN Shenzhen will remain as the registered owner of the Trust Plan Interests, YBN Investment will in effect enjoy all the Trust Plan Interests including but not limited to right to receive returns and distributions, right to vote and right to inspect fi nancial statements of the Trust Plan. YBN Shenzhen will, within 3 months or such other period of time as may be agreed by YBN Shenzhen and YBN Investment after its receipt of the payment from the Trust Plan after the Trust Plan Completion, pay to YBN Investment or its nominee all returns or distributions distributed in respect of the Trust Plan. Accordingly, YBN Investment has to perform all the obligations and bear all the liabilities as if it were the registered owner of the Trust Plan Interests.

Insofar as engagement of Investment Consultancy Services is concerned, YBN Investment will, after the Trust Plan Completion, in effect enjoy all the related rights and interests as if it were the investment consultant for the Trust Plan, including but not limited to right to receive consultancy fees receivable by YBN Shenzhen under the Trust Plan. On the other hand, YBN Investment will take up all the obligations and bear all the liabilities as if it were the investment consultant for the Trust Plan.

Insofar as transfer of Henan Fund Management Co. Interests is concerned, YBN Investment, or such other person as appointed by CITIC YBN, after the Henan Fund Completion (notwithstanding whether the transfer is duly registered with the relevant authorities in the PRC) enjoy all the interests and bear all the liabilities arising from the Henan Fund Management Co. Interests.

Accordingly, CITIC YBN shall fully indemnify the Company and/or YBN Shenzhen for any losses that may be incurred by the Company and/or YBN Shenzhen after the Completion as a result of failure by YBN Investment, or if applicable, such other person as appointed by CITIC YBN in assuming the obligation under the Master Agreement.

Other terms

After the Disposal of the Trust Plan, the Secondary Trust Units will still be in the name of YBN Shenzhen because there is no mechanism for transfer of title of units thereunder. On the other hand, in accordance with the PRC regulation, the investment consultant for the Trust Plan must hold no less than 10% trust units of the Trust Plan. Hence, the execution and performance of the Investment Consultancy Services Agreement will enable YBN Investment to effectively substitute YBN Shenzhen as the investment consultant and YBN Investment is to receive all the interests and liabilities in the Trust Plan held by YBN Shenzhen.

Pursuant to the Master Agreement, the Company has also conditionally agreed, among other things, to procure YBN Shenzhen to appoint YBN Investment to provide the Investment Consultancy Services to YBN Shenzhen. On the Trust Plan Completion Date, YBN Shenzhen and YBN Investment will enter into the Investment Consultancy Services Agreement governing the provision of the Investment Consultancy Services. The Investment Consultancy Services will be provided by YBN Investment to YBN Shenzhen from the Trust Plan Completion Date up to 22 June 2012 (being the expected maturity date of the Trust Plan unless YBN Shenzhen ceases to act as the investment consultant for the Trust Plan or the Investment Consultancy Services Agreement is terminated prior to 22 June 2011). In return of the Investment Consultancy Services provided by YBN Investment and its agreement to take up all the obligations and

15


bear all the liabilities of YBN Shenzhen as if it were the investment consultant for the Trust Plan, YBN Shenzhen or its nominee shall pay YBN Investment or its nominee in cash all the quarterly consultancy fees received by it from the Trust Plan from the Trust Plan Completion Date within ten Business Days from its receipt. The annual cap for the Investment Consultancy Services is RMB1.5 million (equivalent to approximately HK$1.77 million) for each of the two fi nancial years ending 31 December 2012.

The provision of the Investment Consultancy Services constitutes a continuing connected transaction for the Company under the Listing Rules. In accordance with Rule 14A.34 of the Listing Rules, based on the calculations of the applicable percentage ratios, the provision of the Investment Consultancy Services is exempted from independent shareholders’ approval but is subject to the annual review and reporting and announcement requirements under Chapter 14A of the Listing Rules. For further details relating to the Investment Consultancy Services, please refer to the announcement of the Company dated 6 May 2011.

CORPORATE STRUCTURES OF THE GROUP

Set out below are the simplifi ed corporate structures of the related Group members (i) as at the Latest Practicable Date; and (ii) immediately after Completion of the Disposal under the Master Agreement:

(i) As at the Latest Practicable Date

The Company

YBN Shenzhen

Trust Plan

CIAM Parent

CITIC YBN

YBN Investment

%55 %77.27

100% 100%

16.67% 30%

An independent third party

45%

Henan Fund Management Co.

16


(ii) upon Completion of both of the Trust Plan Transaction and the transfer of the Henan Fund Management Co. Interests under the Master Agreement

The Company

YBN Shenzhen

Henan Fund Management Co. Trust Plan

CIAM Parent

CITIC YBN

YBN Investment1

%55 %77.27

100% 100%

30% %76.61

An independent third party

45%

Provision of Investment Consultancy Services

1 or such other person as appointed by CITIC YBN in respect of the Henan Fund Management Co. Interests

INFORMATION OF THE GROUP, CITIC YBN, THE TRUST PLAN AND HENAN FUND MANAGEMENT CO.

The Group

The Company is an investment holding company and the Group is primarily engaged in direct investment, private equity and fund management business. Since 2009, the Group has been actively gearing itself towards investments in the environmental friendly related industry with focus on renewable energy and environmental protection business in the PRC. The Group also believes that the focused investment approach on selected segment could be more effective than managing a diversifi ed portfolio.

YBN Shenzhen is principally engaged in fund and asset management and investment advisory business.

CITIC YBN

As established in September 2010, CITIC YBN is an investment holding company in Hong Kong and it is primarily engaged in fund and asset management and investment consultancy through its subsidiaries. CITIC YBN is owned as to 55% by CIAM Parent.

17


YBN Investment

YBN Investment is an investment company established in the PRC in March 2011 which will be primarily engaged in direct investment in the PRC and provision of services including investment consultancy services to the invested companies. YBN Investment is owned as to 100% by CITIC YBN.

Trust Plan

The Trust Plan, 中信信逸一號中小企業發展集合資金信托計劃 (CITIC XINYI SME Development Trust Plan No. 1*), was established in the PRC in June 2009 which aims at fi nancing small to medium sized growth enterprises in the PRC. The duration of the Trust Plan is agreed at 3 years with expected maturity on 22 June 2012. The loan portfolio of the Trust Plan includes medium term loans with duration from 1 year to 2 years and the returns of the Trust Plan is principally interest income from its loan portfolio. As at the Latest Practicable Date, the total investment of the Trust Plan is RMB300 million of which the Group, via YBN Shenzhen, contributed RMB50 million.

For the two fi nancial years ended 31 December 2010, the audited net asset value of the Trust Plan attributed to the Trust Plan Interests was approximately HK$56.8 million and HK$75.9 million respectively. The audited net profi ts of the Trust Plan for the two fi nancial years ended 31 December 2010 amounted to approximately HK$0.9 million and HK$1.8 million respectively.

Henan Fund Management Co.

河南農開投資基金管理有限責任公司 (Henan Agricultural Developing Investment Fund Management Co., Ltd.*) manages and invests investment funds including the Agricultural Fund which have invested in a company listed on the Shanghai Stock Exchange and a private company which is principally engaged in paper manufacture in the PRC. The Group, through YBN Shenzhen, acquired the Henan Fund Management Co. Interests in February 2010. The Agricultural Fund has invested in agricultural related fast-moving consumable goods manufacturing enterprise and a tree plantation and timber processing enterprise. The Agricultural Fund has an investment period of fi ve years to 22 January 2015 (being the expected maturity date of the Agricultural Fund).

As at 31 December 2010, the audited net asset value of Henan Fund Management Co. attributed to Henan Fund Management Co. Interests was approximately RMB12.6 million (equivalent to about HK$14.9 million). The audited net profi ts of Henan Fund Management Co. before and after taxation attributed to Henan Fund Management Co. Interests for the fi nancial year ended 31 December 2010 amounted to approximately RMB413,000 and RMB355,000 respectively.

As at the Latest Practicable Date, the Group holds 30% equity interests in the Henan Fund Management Co.


18


REASONS FOR THE TRANSACTIONS

In order to strengthen the market position of the Group, it is the plan of the Group to further implement its “Green and Growth” strategy. The Group will continue its “Green” investments and seek to co-operate with major local and international players in various green sectors. The Group has invested in various green projects in different industries, including (i) an investment in a 49.5MW wind farm in Shandong province in the PRC; (ii) an investment in a global wind energy developer; (iii) provision of a loan and entering into a memorandum of understanding in relation to a potential acquisition of a wind blade manufacturer in the PRC, and (iv) a pre-IPO investment in a company specializing in electric power and traction sectors.

As mentioned in the 2010 annual report of the Group, the possible change in the fi scal policy on RMB trust plan in the PRC reduced attractiveness of the Group’s asset management segment due to its increasing capital intensity requirement and the uncertainty on further fi scal policy changes which may effectively move into a more complex regulated environment. On the other hand, due to high initial running costs and longer tenor on return from asset management business in general, shifting the Group’s investments in asset management business to other “Green” related direct investments is one of the options that can make better use of resources of the Group in both monetary and human resources terms.

The fund management business will continue to form part of the Company’s business upon the completion of the Disposal. However, the disposal of the Trust Plan Interests and Henan Fund Management Co. Interests will allow the Company to consolidate its resources in the development of its core businesses of direct investment and environmental related projects. This also represents an opportunity for the Company to realize its interest in the non-core businesses at selling prices which are comparable to the prevailing market valuation.

For the reasons mentioned above and taking into account that, after the Disposal, (i) the risk exposure of defaults and losses of the Trust Plan and the Henan Fund Management Co. towards the Company will be extinguished and (ii) the Group will be able to narrow down its business focus into “Green” investments in the future, the Board (including the independent non-executive Directors) is of the opinion that the terms of the Master Agreement are on normal commercial terms and are fair and reasonable and in the interests of the Shareholders as a whole.

FINANCIAL EFFECT ON THE GROUP

The total consideration for the Connected Transactions is not more than RMB90 million. Based on the 2010 annual report of the Group, the net asset value of Henan Fund Management Co. attributed to Henan Fund Management Co. Interests was approximately RMB12.6 million and the carrying value of the Trust Plan was RMB64.3 million. The profi t before and after taxation of Henan Fund Management Co. attributed to Henan Fund Management Co. Interests were RMB413,000 and RMB355,000 respectively for the year ended 31 December 2010 whereas a loss of RMB332,000 was recorded for the year ended 31 December 2009. Upon the disposal of such non-core assets, the Group is expected to record a gain from disposal of Trust Plan Interests and realize profi ts before tax ranging from RMB6.4 million to RMB9.2 million, representing the difference between the consideration for the disposal of Trust Plan Interests received and the carrying value of the Trust Plan as at 31 December 2010, and a gain from disposal of Henan Fund Management Co. Interests and realize profi ts ranging from RMB1.3 million to RMB1.5 million, representing the difference between the consideration for the disposal of Henan Fund Management Co. Interests and the audited net asset value of Henan Fund Management Co. as at 31 December 2010.

14A.59(13)14A.58

14A.59(2)(b)

14A.59(2)(f)

19


Shareholders should note that Completion (if any) will take place on or before 14 November 2011 and the actual gain from the Connected Transactions to be recorded by the Company will depend on the carrying value of the assets of the Trust Plan and the net asset value of Henan Fund Management Co. as at the Completion Date.

LISTING RULES IMPLICATIONS OF THE CONNECTED TRANSACTION

As CITIC YBN is the Connected Person of the Company by virtue of being an Associate of CIAM Parent, a substantial shareholder of the Company, the entering into of the Master Agreement and the transactions contemplated therein constitute connected and continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

In computing the relevant applicable percentage ratios (as defi ned in Rule 14.04(9) of the Listing Rules) for the transactions disclosed herein, the transfer of the Trust Plan Interests and Henan Fund Management Co. Interests are aggregated for the purpose of the Listing Rules. As the applicable percentage ratios exceed 5% and less than 25%, the transfer of the Trust Plan Interests and Henan Fund Management Co. Interests constitutes a discloseable and connected transaction which will be subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

As none of the Directors has any material interest in the Connected Transaction and the transactions contemplated thereunder, they were not required to abstain from voting on the relevant board resolutions in accordance with the Bye-laws of the Company.

Given that CIAM Parent is the Connected Person of the Company and is interested in the Connected Transactions, CIAM Parent and its Associates (including RPL) will abstain from voting at the SGM to approve the Master Agreement and the transactions contemplated thereunder.

The Independent Board Committee (comprising all independent non-executive Directors of the Company which do not have any material interest in the Connected Transaction) has been established to give an opinion to the Independent Shareholders in connection with the Connected Transactions which will take into account the opinion to be given by OSK Capital, the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Connected Transactions are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

SGM

The Company will convene the SGM at 23rd Floor, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong, on 15 June 2011 (Wednesday) at 10:30 a.m. (or as soon thereafter as the annual general meeting convened for the same day and place shall have been concluded or adjourned), at which meeting resolutions will be proposed to consider and if thought fi t, approve the entering into of the Master Agreement by the Company and the entering into of the Trust Plan Interests Transfer Agreement and the Henan Fund Management Co. Interests Transfer Agreement by YBN Shenzhen and the transactions contemplated thereunder. The notice of the SGM is set out on pages 43 and 44 of this circular. The voting on such resolutions will be conducted by way of poll in accordance with Rule 13.39(4) of the Listing Rules.

14A.59(2)(d), (e)

14A.59(5)2.17(1)

14A.59(18)

2.17(1)

20


Under Rule 14A.18 of the Listing Rules, any Connected Persons of the Company with a material interest in the Connected Transactions is required to abstain from voting at the SGM on the resolutions to approve the relevant matters. In view of CIAM Parent’s interests in the Master Agreement and the transactions contemplated thereunder, CIAM Parent and its Associates (including RPL, which holds 323,555,154 Shares, representing approximately 72.77% of the issued share capital of the Company as at the Latest Practicable Date) are required to abstain from voting at the SGM in respect of the aforesaid resolutions.

The Company will publish an announcement on the results of the SGM with respect to whether or not the proposed resolutions have been passed by the Independent Shareholders.

A form of proxy for use by the Independent Shareholders at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM in person, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event no later than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

PROCEDURES FOR DEMANDING A POLL BY SHAREHOLDERS

Pursuant to Bye-law 66 of the Bye-laws, at any general meeting, a resolution put to the vote of a meeting shall be decided on a show of hands unless voting by way of a poll is required by the rules of the designated stock exchange or (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

(a) by the chairman of such meeting; or

(b) by at least three members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or

(c) by a member or members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all members having the right to vote at the meeting; or

(d) by a member or members present in person (or in the case of a member being a corporation by its duly authorised representative) or by proxy and holding Shares conferring a right to vote at the meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all Shares conferring that right.

Pursuant to Rule 13.39(4) of the Listing Rules, all proposed resolutions set out in the Notice must be taken on poll at the SGM.

21


RECOMMENDATION

Having noted and considered the reasons stated under the section “Reasons for the transactions”, the Board (including the independent non-executive Directors whose views have been set out in this circular on pages 22 and 23 after taking into account of the advice of the Independent Financial Adviser) considered that the terms of the Master Agreement, the Connected Transactions and the transaction contemplated thereunder are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Board (including the independent non-executive Directors) recommends the Independent Shareholders to vote in favour of the relevant resolutions to approve the Master Agreement, the Connected Transactions and the transactions contemplated thereunder.

ADDITIONAL INFORMATION

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

Yours faithfully,By Order of the BoardCIAM Group Limited

Dou Jianzhong Chairman

22

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 Master Agreement, the Connected Transactions and the transactions contemplated thereunder:



(Stock Code: 378)

27 May 2011

To the Independent Shareholders

Dear Sir or Madam,



We refer to the circular of the Company dated 27 May 2011 (the “Circular”), of which this letter forms part. Terms defi ned in the Circular will have the same meanings in this letter unless the context otherwise requires.

We have been appointed by the Board as members of the Independent Board Committee to consider and to advise you on the terms of the Master Agreement, the Connected Transactions and the transactions contemplated thereunder, as to the fairness and reasonableness and to recommend whether or not the Independent Shareholders should approve the same. In this connection, OSK Capital has been appointed as the Independent Financial Adviser to advise you and us in this regard. Details of the advice of the Independent Financial Adviser, together with the principal factors and reasons the Independent Financial Adviser have taken into consideration in giving such advice, are set out on pages 24 to 36 of the Circular. Your attention is also drawn to the letter from the Board in the Circular and the general information set out in the appendix thereto.

13.51A


14A.58(3)(c)

14A.59(7)

23

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the principal factors and reasons considered by Independent Financial Adviser, its conclusion and advice, we concur with the view of Independent Financial Adviser and consider the terms the Master Agreement, the Connected Transactions and the transactions contemplated thereunder are fair and reasonable so far as the Independent Shareholders are concerned and also are in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend you to vote in favour of the resolutions to be proposed at the SGM to approve the Master Agreement, the Connected Transactions and the transactions contemplated thereunder.

Yours faithfully,Independent Board Committee

Hung Chi Yuen Andrew Sit Fung Shuen Victor Toh Hock GhimIndependent Independent Independent

Non-executive Director Non-executive Director Non-executive Director

24

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter from OSK Capital, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of incorporation into this circular, setting out its advice to the Independent Board Committee and the Independent Shareholders in respect of the Master Agreement, the Connected Transactions and the transactions contemplated thereunder.

11/F., Hip Shing Hong Centre,55 Des Voeux Road Central, Hong Kong

27 May 2011

The Independent Board Committee and the Independent ShareholdersCIAM Group Limited

Dear Sirs,


THE DISPOSAL OF TRUST PLAN INTERESTS AND HENAN FUND MANAGEMENT CO. INTERESTS

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Disposal under the Master Agreement, details of which are set out in the circular of the Company dated 27 May 2011 (the “Circular”) of which this letter forms part. Capitalised terms used in this letter have the same meanings as defi ned in the Circular, unless the context requires otherwise.

As set out in the letter from the Board in the Circular (the “Letter from the Board”), on 6 May 2011, the Company entered into the Master Agreement with CITIC YBN, pursuant to which, among others, YBN Shenzhen will dispose of (1) the Trust Plan Interests to YBN Investment; and (2) the Henan Fund Management Co. Interests to YBN Investment or such other person as appointed by CITIC YBN. The Disposal constitutes connected transactions for the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and independent shareholders’ approval requirements. CIAM Parent is materially interested in the Master Agreement. CIAM Parent and its Associates will abstain from voting at the SGM in respect of the proposed resolutions approving the Disposal. The Independent Board Committee comprising all the independent non-executive Directors, namely Messrs. Hung Chi Yuen Andrew, Sit Fung Shuen Victor and Toh Hock Ghim, has been established to give advice and recommendation to the Independent Shareholders in relation to the Disposal.

14A.58(3)(d)

14A.59(8)

25


OSK Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Disposal are fair and reasonable and whether the Disposal is on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

In formulating our opinion, we have relied upon the information, facts and representations contained in the announcement of the Company dated 6 May 2011, the Circular and those supplied or made available by the management of the Company (the “Management”) to us. We have assumed that all such information, facts and representations were true and accurate in all respects at the time they were supplied or made and continue to be true and accurate at the date of the Circular and can be relied upon. We have no reason to doubt the truth, accuracy and completeness of such information and representations and have confi rmed with the Management that no material facts have been withheld or omitted from such information and representations.

We have taken all reasonable and necessary steps to comply with the requirements set out in Rule 13.80 of the Listing Rules. We consider that we have been provided with suffi cient information to enable us to reach an informed view. We have not, however, conducted any independent verifi cation of such information or any independent in-depth investigation into the business, affairs, fi nancial position or prospects of the Group nor have we carried out any in-depth research on the Group, CIAM Parent and its Associates.

PRINCIPAL FACTORS CONSIDERED

In formulating our opinion on the Disposal, we have taken into consideration the following principal factors:

Background and reasons for the Disposal

Information on the Group

The Group is primarily engaged in direct investment, private equity and fund management business.

YBN Shenzhen is a wholly foreign-owned enterprise established in the PRC and is indirectly wholly owned by the Company. YBN Shenzhen is principally engaged in fund and asset management and investment advisory business. YBN Shenzhen (i) has been acting as the investment consultant for the Trust Plan and is entitled to receive a consultancy fee of 0.5% calculated on the total fund size of RMB300 million (the “Consultancy Fee”) until the redemption date of the Trust Plan; and (ii) holds all the Secondary Trust Units, representing approximately 17% of the total issued units of the Trust Plan. As at 31 December 2010, the Group’s investment in the Secondary Trust Units was classifi ed as an “available-for-sale investment” in the Company’s consolidated statement of fi nancial position with a carrying value amounting to HK$75.9 million.

26


In addition, YBN Shenzhen holds an equity interest of 30% in Henan Fund Management Co., which is the fund manager of the Agricultural Fund. As at 31 December 2010, the Group’s investment in Henan Fund Management Co. was classifi ed as an “interest in an associate” in the Company’s consolidated statement of fi nancial position with a carrying value amounting to HK$14.9 million.

As stated in the Company’s annual report for the year ended 31 December 2009 (the “2009 Annual Report”), the Group’s core approach to business development, “Green and Growth” was brought into fuller play in 2009. According to the Company’s annual report for the year ended 31 December 2010 (the “2010 Annual Report”), the commitment from the PRC government on developing the green industry and low-carbon economy is evident in its Twelfth Five-Year Plan. With the fi rm government commitment and foreseeable strong market demand for renewable energy and other environmental protection related projects, the Group will continue to take advantage of the extensive business network of CIAM Parent to source better investment opportunities despite the competitions among both international and domestic investors. In 2011, the Group will also continue to actively seek partnership opportunities with major local and international players in various green sectors.

Information on the Trust Plan

The Trust Plan was established in June 2009 with a subsistence period of three years, the expected maturity date of which is on 22 June 2012. It aims to provide short to medium term fi nancing to small and medium sized growth enterprises in the PRC. The Trust Plan has a total fund size of RMB300 million, of which RMB50 million was contributed by YBN Shenzhen through the subscription of all the Secondary Trust Units and the remaining RMB250 million was raised from public investors through the subscription of the Preferred Trust Units. According to the Trust Plan Documents, the Secondary Trust Units are not transferrable. The loan portfolio of the Trust Plan includes medium term fi xed-rate loans with durations of one to two years and the returns of the Trust Plan are principally attributable to interest income derived from the loan portfolio. We understand from the Company that the Trust Plan has invested in four high yield fi nancing transactions one of which has been fully repaid inclusive of interest income. The other three fi nancing transactions are currently outstanding with maturity dates falling in the range from 2 December 2011 to 22 December 2011. The principal amounts in respect of the three outstanding fi nancing transactions in aggregate totals RMB320 million (equivalent to approximately HK$377.6 million).

According to the Trust Plan Documents, the distribution mechanism (the “Distribution Mechanism”) of the Trust Plan is as follows:

(i) Interim distribution

The holders of the Preferred Trust Units are entitled to an interim distribution of 8% per annum, the fi rst payment of which was made in June 2010 (being the anniversary of the commencement date of the Trust Plan) and the next payment is due in June 2011. The holder of the Secondary Trust Units is not entitled to such interim distribution.

27


(ii) Final distribution

Upon the termination of the Trust Plan, its assets will be distributed in the following manner:

(1) If the annual return of the Trust Plan is below 8%, the property of the Trust Plan will be fi rstly distributed to the holders of the Preferred Trust Units being (a) return of their capital (i.e. payment of principal); and (b) the expected return of investment not yet been distributed (i.e. calculated on the basis of 8% per annum) in respect of the Preferred Trust Units, any remaining balance will be distributed to the holder of the Secondary Trust Units covering return of their capital and investment (the “Allocation Basis for below 8% Return”).

(2) If the annual return of the Trust Plan is between 8% and 12%, the property of the Trust Plan will be fi rstly distributed in accordance with the Allocation Basis for below 8% Return, any remaining balance will be distributed in the ratio of 6:2:2 among (i) the holders of the Preferred Trust Units; (ii) the holder of the Secondary Trust Units; and (iii) the trustee (the “Trustee”) of the Trust Plan as its remuneration (the “Allocation Basis for below 12% Return”).

(3) If the annual return of the Trust Plan is between 12% and 15%, the property of the Trust Plan will be fi rstly distributed in accordance with the Allocation Basis for below 12% Return, any remaining balance will be distributed in the ratio of 5:4:1 among (i) the holders of the Preferred Trust Units; (ii) the holder of the Secondary Trust Units; and (iii) the Trustee as its remuneration (the “Allocation Basis for below 15% Return”).

(4) If the annual return of the Trust Plan is over 15%, the property of the Trust Plan will be fi rstly distributed in accordance with the Allocation Basis for below 15% Return, any remaining balance will be distributed in the ratio of 3:6:1 among (i) the holders of the Preferred Trust Units; (ii) the holder of the Secondary Trust Units; and (iii) the Trustee as its remuneration.

Information on Henan Fund Management Co.

Henan Fund Management Co. is a domestic company established in the PRC and is owned as to 30% by YBN Shenzhen. The objectives of Henan Fund Management Co. is to invest in agricultural businesses and to manage the investment portfolio of the Agricultural Fund, which according to the 2009 Annual Report was the fi rst agricultural investment fund established in the PRC as of 22 January 2010. The Agricultural Fund has an investment period of fi ve years to 22 January 2015 (being the expected maturity date of the Agricultural Fund).

28


Based on the 2009 Annual Report, the total target size of the Agricultural Fund is RMB4.8 billion of which 50% will be denominated in domestic currency and the remaining will be raised offshore. The domestic portion is divided into four tranches, each of which will raise RMB600 million with a tenure of fi ve years. The fi rst tranche of the domestic portion totalling RMB600 million was offi cially established on 22 January 2010, of which RMB200 million was invested by the Finance Bureau of Henan Province and a state-owned enterprise, RMB40 million was invested by Henan Fund Management Co. and the remaining RMB360 million was invested by the public. The Agricultural Fund’s primary focus is on equity investment in agricultural businesses in Henan province in the PRC.

The Company has informed us that the Agricultural Fund has currently invested (i) RMB146.4 million (equivalent to approximately HK$172.8 million) in a company listed on the Shanghai Stock Exchange; and (ii) RMB36.45 million (equivalent to approximately HK$43.0 million) in a private company which is principally engaged in paper manufacturing in the PRC.

It is set out in the Agricultural Fund’s management agreement that Henan Fund Management Co. is entitled to receive, on a quarterly basis, an annual management fee of (i) 2% on RMB200 million (from the Finance Bureau of Henan Province and a state-owned enterprise); and (ii) 1% on RMB400 million (from the other investors).

Reasons for the Disposal

As stated in the Letter from the Board, in order to strengthen the market position of the Group, the Group plans to further implement its “Green and Growth” strategy. We understand from the Company that the Group will continue its “Green” investments and seek to co-operate with major local and international players in various green sectors. The Group has invested in various green projects in different industries, including (i) an investment in a wind farm with a capacity of 49.5MW in Shandong Province in the PRC; (ii) an investment in a global wind energy developer; (iii) provision of a loan and entering into a memorandum of understanding in relation to a potential acquisition of a wind blade manufacturer in the PRC; and (iv) and a pre-IPO investment in a company specialising in electric power and traction sectors.

We understand from the Company that the Trust Plan’s target is to provide short to medium term fi nancing to enterprises with strong profi tability, high growth potential and satisfactory collateral coverage whilst Henan Fund Management Co.’s focus is on equity investment in agricultural businesses in Henan Province in the PRC. Given the principal business activities of the Trust Plan and Henan Fund Management Co. no longer completely fi t into the Group’s primary focus of “Green” investments, the Disposal represents a step towards achieving the aforesaid goal which we believe will give the Group a clearer market image. Furthermore, as set out in the 2010 Annual Report, there was a change in the fi scal policy in relation to RMB trust plans in the PRC which reduced the attractiveness of this business to the Group due to the increasing trend of capital requirement and the uncertainty on possible fi scal policy changes which may add complexity to the relevant regulatory requirements. Furthermore, as stated in the Letter from the Board, due to high initial running costs and longer tenor on return from asset management business in general, the Company is of the view that by shifting the Group’s investments in asset management business to other “Green” related direct investments, the Group would be able to make better use of its capital and human resources.

29


The Disposal would allow the Company to consolidate its resources in the development of its core businesses of direct investment and environmental related projects. With the Disposal, the Group would be able to free up the capital currently tied up in respect of the Trust Plan and Henan Fund Management Co. as well as eliminate any potential exposure to possible future capital commitments in respect of both the Trust Plan and Henan Fund Management Co. which is uncertain at this juncture.

The Group would be able to utilise the proceeds from the Disposal for its business plan to source investments and/or business opportunities which are aligned to the Group’s primary focus. As set out in the 2010 Annual Report, the Company is of the view that with the current asset size of the Group, the consolidation and reallocation of resources will be critical in order for the Group to have a meaningful portfolio.

The Disposal also represents an opportunity for the Group to realise its investments in the Trust Plan and Henan Fund Management Co. at reasonable selling prices. The Group is expected to recognise a gain from disposal of the Trust Plan Interests between RMB6.4 million (equivalent to approximately HK$7.5 million) and RMB9.2 million (equivalent to approximately HK$10.8 million), and a gain from disposal of the Henan Fund Management Co. Interests between RMB1.3 million (equivalent to approximately HK$1.5 million) and RMB1.5 million (equivalent to approximately HK$1.7 million), depending on the fi nal considerations which may be adjusted according to the actual Completion Date.

Having considered that (i) the Group will recognise a gain on the Disposal; (ii) the Group’s strategy of streamlining its business to the “Green and Growth” sector and the fact that the Trust Plan Interests and the Henan Fund Management Co. Interests are not completely aligned to the Group’s corporate strategy and are no longer synergetic to the Group’s valuation; and (iii) the Group could redeploy resources currently committed in the Trust Plan and Henan Fund Management Co. to develop business which is more relevant to the Group’s strategic core value, we agree with the Directors’ view that the Disposal is in the interests of the Company and the Shareholders as a whole.

Major terms of the Master Agreement

Disposal of the Trust Plan Interests

Pursuant to the Master Agreement, YBN Shenzhen will transfer its entire Trust Plan Interests to YBN Investment for a consideration of not more than approximately RMB75.0 million (equivalent to approximately HK$88.5 million) on the terms and conditions set out in the Master Agreement. As set out above, the Secondary Trust Units held by YBN Shenzhen are not transferrable. As such, after the Disposal of the Trust Plan, the Secondary Trust Units will still be registered under the name of YBN Shenzhen as there is no mechanism for the transfer of title of the units thereunder. On the other hand, in accordance with the PRC regulations, the investment consultant for the Trust Plan must hold no less than 10% of the units of the Trust Plan. As such, pursuant to the terms of the Master Agreement, YBN Shenzhen and YBN Investment will enter into the Investment Consultancy Services Agreement which will enable YBN Investment to effectively substitute YBN Shenzhen as the investment consultant. Accordingly, after the Trust Plan Completion although YBN Shenzhen will remain as the registered owner of the Trust Plan Interests, YBN Investment will in effect enjoy all the benefi ts of the Trust Plan Interests including but not limited to the right to receive returns and distributions, right to vote and right to inspect fi nancial

30


statements of the Trust Plan. YBN Shenzhen will (i) subject to the signing of the Trust Plan Interests Transfer Agreement, within three months (or such other period of time as may be agreed by YBN Shenzhen and YBN Investment) from its receipt, pay to YBN Investment or its nominee all returns or distributions distributed in respect of the Trust Plan; and (ii) within ten Business Days from its receipt, pay to YBN Investment or its nominee in cash all the quarterly consultancy fees received by it from the Trust Plan after the Trust Plan Completion Date. According to the Master Agreement, YBN Investment shall perform all the obligations and bear all the liabilities as if it were the registered owner of the Trust Plan Interests.

On the Trust Plan Completion Date, YBN Shenzhen and YBN Investment will enter into the Trust Plan Interests Transfer Agreement which sets out the detailed terms of the transfer of the Trust Plan Interests from YBN Shenzhen to YBN Investment.

According to the Master Agreement, the Trust Plan Completion is subject to the fulfi llment of the following conditions precedent on or before the Long Stop Date:

(a) the passing of resolutions by the Independent Shareholders at the SGM approving the entering into by the Company of the Master Agreement and the entering into by YBN Shenzhen of the Trust Plan Interests Transfer Agreement and the transactions contemplated therein;

(b) the passing of resolutions by the Board approving the entering into by the Company of the Master Agreement and the entering into by YBN Shenzhen of the Trust Plan Interests Transfer Agreement and the Investment Consultancy Services Agreement;

(c) the passing of resolutions by the board of directors of CITIC YBN approving its entering into of the Master Agreement and the entering into by YBN Investment of the Trust Plan Interests Transfer Agreement and the Investment Consultancy Services Agreement and the transactions contemplated therein;

(d) the passing of necessary resolutions by the board or shareholder of YBN Investment for its entering into of the Trust Plan Interests Transfer Agreement and the Investment Consultancy Services Agreement and the transactions contemplated therein;

(e) the passing of resolutions by the shareholder of YBN Shenzhen approving the entering into by YBN Shenzhen of the Trust Plan Interests Transfer Agreement and the Investment Consultancy Services Agreement and the transactions contemplated therein;

(f) the representation, warranty and undertaking made by CITIC YBN remaining true and accurate and not misleading; and

(g) no material breach of the terms of the Master Agreement by CITIC YBN.

According to the Master Agreement, the Company may waive the above conditions (b) to (g). The Trust Plan Completion is not conditional on the Henan Fund Completion and vice versa.

31


We understand from the Company that the consideration for the disposal of the Trust Plan Interests (the “Trust Plan Consideration”) was determined on an arm’s length basis with reference to the amount of the investment cost made by YBN Shenzhen in the Trust Plan plus the amount of (i) the accrued returns payable by the Trust Plan according to the Trust Plan Documents but not collected by YBN Shenzhen for the period from the establishment of the Trust Plan up to the Trust Plan Completion Date; (ii) the Consultancy Fee for the period from the establishment date of the Trust Plan up to the Trust Plan Completion Date (to the extent not collected by YBN Shenzhen); and (iii) the Consultancy Fee from the Trust Plan Completion Date up to 22 June 2012 (being the expected maturity date of the Trust Plan). In other words, the Trust Plan Consideration is determined based on (a) the accrued returns payable by the Trust Plan up to the Trust Plan Completion Date; and (b) the Consultancy Fee up to 22 June 2012.

The accrued returns payable by the Trust Plan to YBN Shenzhen are calculated based on the investment income of the Trust Plan deducted by custodian fee, trust plan management fee, investment consultancy fee and due diligence costs on the investment projects of the Trust Plan and then distribute according to the following mechanism (i) an annual return of 8% on YBN Shenzhen’s investment cost (after distribution of 8% annual return to the holders of the Preferred Trust Units). If the annual return of the Trust Plan falls below 8%, the holders of the Preferred Trust Units shall have the priority to collect their entire investment costs with annual returns of 8% in the Trust Plan. The remaining amount (after distribution to the holders of the Preferred Trust Units) will be distributed to the YBN Shenzhen as the holder of the Secondary Trust Units; and (ii) a progressive annual return in accordance with the Distribution Mechanism.

The value of the Trust Plan Consideration derived from the above basis is in effect an approximation of the Trust Plan’s net asset value attributable to the Group based on the underlying assets of the Trust Plan which is its loan portfolio. Given the Trust Plan’s objective is to provide short to medium term fi nancing in the PRC, we consider that the nature of the Trust Plan is like a portfolio of loans and that it is reasonable to value such portfolio with reference to the interest income and fees as if it is a portfolio of loans. We are of the view that the basis of determination of the Trust Plan Consideration is fair and reasonable and that it is not relevant to consider any other means of valuation.

The actual amount of the Trust Plan Consideration is variable subject to the actual Trust Plan Completion Date but in any event shall not exceed RMB75.0 million (equivalent to approximately HK$88.5 million). Assuming the Trust Plan Completion Date falls on 29 June 2011 (which is the possible earliest Trust Plan Completion Date, being 14 days after the SGM), the minimum Trust Plan Consideration will amount to approximately RMB70.7 million (equivalent to approximately HK$83.4 million), representing a premium of approximately HK$7.5 million above the carrying value of HK$75.9 million in the Company’s audited consolidated fi nancial statements as at 31 December 2010. If the Trust Plan Completion Date falls on 14 November 2011 (which is the possible latest Trust Plan Completion Date, being 14 days after the Long Stop Date), the maximum Trust Plan Consideration will amount to approximately RMB73.5 million (equivalent to approximately HK$86.7 million), representing a premium of approximately HK$10.8 million above the carrying value of HK$75.9 million in the Company’s audited consolidated fi nancial statements as at 31 December 2010.

32


We have reviewed the calculation of the Trust Plan Consideration prepared by the Company and note that the principal bases and assumptions made by the Company are as follows:

(a) There is no default in the remaining outstanding loans comprised in the Trust Plan’s loan portfolio; and

(b) Upon maturity of the entire Trust Plan’s loan portfolio as at 22 December 2011, no further loans will be granted.

We consider that it is reasonable for the Company to assume no default in the remaining outstanding loans comprised in the Trust Plan’s loan portfolio for the purpose of determining the maximum upside return in respect of the Trust Plan. All of the outstanding loans are going to be matured in December 2011. Given the Trust Plan will mature in June 2012, we consider that (b) above is reasonable.

For the purpose of determining the applicable Distribution Mechanism, the estimated annual rate of return upon termination of the Trust Plan was calculated based on the above assumptions. The Company has provided us with workings to calculate the estimated rate of return which results in a rate of return falling within the 12% to 15% bracket and as such the Allocation Basis for below 15% Return was applied in the Company’s calculation of the progressive annual return comprised in the Trust Plan Consideration. As described above, under the Allocation Basis for below 15% Return, the property of the Trust Plan will fi rstly be distributed to the holders of the Preferred Trust Units (comprising a return of capital plus a return of 8% per annum) followed by a distribution to the holder of the Secondary Trust Units (comprising a return of capital plus an annual return of 8% per annum), and any remaining balance will be distributed progressively in accordance with the ratios specifi ed in the Allocation Basis for below 12% Return and then the Allocation Basis for below 15% Return. We have reviewed the Company’s calculation and performed the following work done:

(a) checked arithmetical accuracy of the workings provided by the Company;

(b) made reference of the amounts, interest rates and maturity dates of the loan portfolio to the relevant loan agreements;

(c) checked the calculation of the expenses deducted from the Trust Plan, including custodian fee, trust plan management fee, investment consultancy fee and due diligence costs, and made reference of the relevant rates, where appropriate, to the Trust Plan Documents;

(d) checked the calculation of the annual rate of return of the Trust Plan; and

(e) checked the calculation of the accrued returns payable by the Trust Plan to YBN Shenzhen based on the applicable Distribution Mechanism and the respective assumed Trust Plan Completion Date.

We consider that the Company’s calculation has been prepared in accordance with the aforesaid principles.

33


Having considered the above, we agree with the Board’s view that the Trust Plan Consideration is fair and reasonable.

Disposal of the Henan Fund Management Co. Interests

Pursuant to the Master Agreement, YBN Shenzhen will transfer its entire Henan Fund Management Co. Interests to YBN Investment or such other person as appointed by CITIC YBN for a consideration of not more than RMB15.0 million (equivalent to approximately HK$17.7 million) on the terms and conditions set out in the Master Agreement.

On the Henan Fund Completion Date, YBN Shenzhen and YBN Investment or such other person as appointed by CITIC YBN will enter into the Henan Fund Management Co. Interests Transfer Agreement which sets out the detailed terms of the transfer of the Henan Fund Management Co. Interests from YBN Shenzhen to YBN Investment or such other person as appointed by CITIC YBN.

According to the Master Agreement, the Henan Fund Completion is subject to the fulfi llment of the following conditions precedent:

(a) the passing of resolutions by the Independent Shareholders at the SGM approving the entering into by the Company of the Master Agreement and the entering into by YBN Shenzhen of the Henan Fund Management Co. Interests Transfer Agreement and the transactions contemplated therein;

(b) the passing of resolutions by the Board approving the entering into by the Company of the Master Agreement and the entering into by YBN Shenzhen of the Henan Fund Management Co. Interests Transfer Agreement;

(c) the passing of resolutions by the shareholder of YBN Shenzhen approving the entering into by YBN Shenzhen of the Henan Fund Management Co. Interests Transfer Agreement and the transaction contemplated therein;

(d) the passing of resolutions by the board of directors of CITIC YBN approving its entering into of the Master Agreement and the entering into by YBN Investment or such other person as appointed by CITIC YBN of the Henan Fund Management Co. Interests Transfer Agreement and the transactions contemplated therein;

(e) the passing of necessary resolutions by the board of directors or shareholders of YBN Investment or such other person as appointed by CITIC YBN for its entering into of the Henan Fund Management Co. Interests Transfer Agreement and the transactions contemplated therein;

(f) the passing of resolutions by the shareholders of Henan Fund Management Co. approving the transfer of the Henan Fund Management Co. Interests pursuant to the Master Agreement;

34


(g) the representation, warranty and undertaking made by CITIC YBN remaining true and accurate and not misleading; and

(h) no material breach of the terms of the Master Agreement by CITIC YBN.

According to the Master Agreement, the Company may waive the above conditions (b) to (h). The Henan Fund Completion is not conditional on the Trust Plan Completion and vice versa.

The Company has informed us that the consideration for the disposal of the Henan Fund Management Co. Interests (the “Henan Fund Consideration”) was determined on an arm’s length basis with reference to the audited net asset value (“NAV”) of Henan Fund Management Co. as at 31 December 2010 plus the Group’s attributable interest in the estimated net management fees of Henan Fund Management Co. from the Henan Fund Completion Date up to 22 January 2015 (being the expected maturity date of the Agricultural Fund).

The Company has informed us that as the principal investment of Henan Fund Management Co. is only at a preliminary stage and it has not generated any returns to Henan Fund Management Co.. It is currently not feasible to estimate any of such returns, the only income stream of Henan Fund Management Co. at this stage is the management fees which it is entitled to receive for its role as the fund manager of the Agricultural Fund. We have considered the share price performance and liquidity of the shares of the PRC-listed company in which the Agricultural Fund has invested and information relating to the Agricultural Fund’s investment in the paper manufacturing company provided by the Management, including certain operational and fi nancial information of the paper manufacturing company. Based on the fi nancial statements of Henan Fund Management Co. for the year ended 31 December 2010 which was provided by the Management to us, we note that the principal investment of Henan Fund Management Co. has not generated any returns to Henan Fund Management Co.. We concur with the Company’s view that Henan Fund Management Co.’s principal investment is only at a preliminary stage.

The audited NAV of Henan Fund Management Co. as at 31 December 2010 was approximately RMB42.1 million (equivalent to approximately HK$49.7 million). The Henan Fund Consideration derived from the aforesaid basis is higher than the Group’s attributable interest in the audited NAV of Henan Fund Management Co. as at 31 December 2010 of approximately RMB12.6 million (equivalent to approximately HK$14.9 million). YBN Shenzhen owns a minority interest of 30% in the equity of Henan Fund Management Co. and the disposal of such minority interest does not normally justify any material premium. The future cashfl ow and rate of return of the Henan Fund Management Co. is quite uncertain at this stage given the principal investment of Henan Fund Management Co. is only at a preliminary stage. We are of the view that the basis of determination of the Henan Fund Consideration is fair and reasonable and that it is not relevant to consider any other means of valuation.

35


The actual amount of the Henan Fund Consideration is variable subject to the actual Henan Fund Completion Date but in any event shall not exceed RMB15.0 million (equivalent to approximately HK$17.7 million). Assuming the Henan Fund Completion Date falls on 29 June 2011 (which is the possible earliest Henan Fund Completion Date, being 14 days after the SGM), the maximum Henan Fund Consideration will amount to approximately RMB14.1 million (equivalent to approximately HK$16.6 million), representing a premium of approximately HK$1.7 million above the carrying value of HK$14.9 million in the Company’s audited consolidated fi nancial statements as at 31 December 2010. If the Henan Fund Completion Date falls on 14 November 2011 (which is the possible latest Henan Fund Completion Date, being 14 days after the Long Stop Date), the minimum Henan Fund Consideration will amount to approximately RMB13.9 million (equivalent to approximately HK$16.4 million), representing a premium of HK$1.5 million above the carrying value of HK$14.9 million in the Company’s audited consolidated fi nancial statements as at 31 December 2010.

Having considered the above, we agree with the Board’s view that the Henan Fund Consideration is fair and reasonable.

Financial effects of the Disposal to the Group

Earnings

According to the 2010 Annual Report, the audited profi t for the year attributable to Shareholders for the fi nancial year ended 31 December 2010 was approximately HK$44.1 million.

Upon Completion, the Group will not have any interest in the Trust Plan and Henan Fund Management Co.. As stated in the Letter from the Board, an estimated gain of approximately RMB7.7 million (equivalent to approximately HK$9.0 million) to RMB10.7 million (equivalent to approximately HK$12.5 million) (subject to the actual Completion Date) arising from the Disposal will increase the earnings of the Group.

Based on the respective carrying value of the Trust Plan Interests and the Henan Fund Management Co. Interests as at 31 December 2010, the Group is expected to recognise (i) a minimum gain amounting to approximately RMB7.9 million (equivalent to approximately HK$9.2 million) assuming the Completion Date falls on 29 June 2011 (being 14 days after the SGM); and (ii) a maximum gain of approximately RMB10.5 million (equivalent to approximately HK$12.3 million assuming the Completion Date falls on 14 November 2011 (being 14 days after the Long Stop Date).

Net assets

According to the 2010 Annual Report, as at 31 December 2010, the audited net assets of the Group attributable to equity shareholders of the Company was approximately HK$695.0 million.

Upon Completion, the Disposal is expected to increase the net assets of the Group attributable to equity shareholders of the Company by the amount of the gain on the Disposal as the Trust Plan Consideration and the Henan Fund Consideration exceeds the respective carrying values of the Group’s investment in the Secondary Trust Units and in the Henan Fund Management Co. as at 31 December 2010.

36


Working capital

According to the 2010 Annual Report, as at 31 December 2010, the Group was in a net cash position (comprising pledged deposits plus cash and cash equivalents less loan from non-controlling shareholders and bank loans) of approximately HK$209.8 million.

Pursuant to the Master Agreement, the consideration for the Disposal will be settled in cash. The Disposal is expected to increase the net cash position of the Group by the amount of the consideration.

LISTING RULES IMPLICATIONS

As set out in the Letter from the Board, when the Master Agreement was entered into, CIAM Parent through its wholly-owned subsidiary, RPL, owned approximately 72.77% of the issued share capital of the Company and was a substantial shareholder of the Company and thus a Connected Person of the Company under the Listing Rules. CITIC YBN was owned as to 55% by CIAM Parent. Accordingly, CITIC YBN was an Associate of CIAM Parent and thus a Connected Person of the Company for the purpose of the Listing Rules. The Disposal constitutes connected transactions for the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and independent shareholders’ approval requirements.

CONCLUSION

Having considered the above principal factors and reasons, we are of the opinion that the terms of the Disposal are fair and reasonable and the Disposal is on normal commercial terms and in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend that the Independent Shareholders vote in favour of the resolutions to be proposed at the SGM to approve the Disposal.

Yours faithfully,For and on behalf of

OSK Capital Hong Kong LimitedCharlotte Yen

Director

37

APPENDIX GENERAL INFORMATION

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, confi rm 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 in this circular misleading.

2. DIRECTORS’ INTEREST

Save as disclosed below, as at the Latest Practicable Date, none of the Directors and chief executive of the Company had any interests or short position in the Shares, underlying shares and debentures of the Company or any of its associated corporation (within the meaning of Part XV of the SFO) which were required to be notifi ed 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 are taken or deemed to have under such provisions of SFO); or were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers of the Listing Rules, to be notifi ed to the Company and the Stock Exchange:

Name of Director/ chief executive

Number of SharesPersonal Interests

Number of underlying shares held

under equity derivatives Total

Approximate percentage of

issued share capital

(Note)

Dou Jianzhong – 2,500,000 2,500,000 0.56%Hung Chi Yuen Andrew – 400,000 400,000 0.09%Lo Wing Yat Kelvin 35,000 3,800,000 3,835,000 0.86%Lu Zhicheng – 400,000 400,000 0.09%Sit Fung Shuen Victor – 400,000 400,000 0.09%Toh Hock Ghim – 400,000 400,000 0.09%Graham Roderick Walker – 800,000 800,000 0.18%Wong Yau Kar David – 400,000 400,000 0.09%Yip Chi Chiu – 800,000 800,000 0.18%Zhao Tieliu – 400,000 400,000 0.09%

Note: These interests represented the interest in underlying shares in respect of the share options granted by the Company under its share option scheme adopted on 12 October 2007 to these Directors as benefi cial owners.

(a) Save as disclosed above, none of the Directors or proposed directors of the Company (if any) had any interest or short position in the Shares or underlying shares of the Company which would fall to be disclosed to the Company pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO.

App1B(2)

App1B(38)(1)(a) to (c)

14A.59(4)

App1B(34)

38


(b) As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which had, since 31 December 2010, being the date of the latest published audited accounts of the Company, been acquired or disposed of by, or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

(c) There is no contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date in which any Director is materially interested and which is signifi cant in relation to the business of the Group.

3. INTERESTS OF SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS

Save as disclosed below, as at the Latest Practicable Date and so far as was known to the Directors and chief executive of the Company, there were no other persons other than the Directors or chief executive of the Company, who has an interest or short position in the Shares and 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 member of the Group.

Name of Shareholder CapacityNumber of

Shares held

Approximatepercentage of

issued share capital(Note a)

RPL Benefi cial owner 323,555,154 72.77%

CIAM Parent Interest held by controlled corporation (Note b)

323,555,154 72.77%

CITIC International Financial Holdings Limited (“CIFH”)

Interest held by controlled corporation (Note b)

323,555,154 72.77%

China CITIC Bank Corporation Limited (“CNCB”)

Interest held by controlled corporation (Note b)

323,555,154 72.77%

CITIC Group Interest held by controlled corporation (Note b)

323,555,154 72.77%

Dundee Greentech Limited (“Dundee Greentech”)

Benefi cial owner 44,000,000 9.90%

App1B(40)(1)

App1B(40)(2)

39


Name of Shareholder CapacityNumber of

Shares held

Approximatepercentage of

issued share capital(Note a)

Dundee Energy Limited (“Dundee Energy”)

Interest held by controlled corporation (Note c)

44,000,000 9.90%

Radiant Enterprises Group Limited (“Radiant”)


44,000,000 9.90%

The Dundee Merchant Bank (“Dundee Merchant”)


44,000,000 9.90%

Liu Hailong Interest held by controlled corporation (Note c)

44,000,000 9.90%

Dundee Corporation Interest held by controlled corporation (Note c)

44,000,000 9.90%

Notes:

(a) The percentages are calculated based on the total number of issued shares of the Company of 444,633,217 Shares as at the Latest Practicable Date.

(b) By virtue of the SFO, CIAM Parent, CIFH, CNCB and CITIC Group are deemed to be interested in 323,555,154 Shares held by RPL. RPL is a wholly-owned subsidiary of CIAM Parent which CIFH owns 40%. CIFH is 70.32% owned by CNCB which, in turn, is 61.78% owned by CITIC Group.

(c) Dundee Greentech is a wholly-owned subsidiary of Dundee Energy which, in turn, is 50% owned by Radiant and 50% owned by Dundee Merchant. Radiant is 100% owned by Liu Hailong while Dundee Merchant is 100% owned by Dundee Corporation. By virtue of the SFO, Dundee Energy, Radiant, Dundee Merchant, Liu Hailong and Dundee Corporation are all deemed to be interested in 44,000,000 Shares of the Company.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has a service contract with the Company or any of its subsidiaries which is not determinable by the Company or its subsidiaries within one year without payment of compensation (other than statutory compensation). All Directors are subject to retirement by rotation at least once every three years and are eligible for re-election at the annual general meeting in accordance with the Bye-laws of the Company.

App1B(39)

40


5. COMPETING INTERESTS OF DIRECTORS AND ASSOCIATES

As at the Latest Practicable Date, none of the Directors or their respective Associates was interested in any business which competes or is likely to compete, whether directly or indirectly, with the business of the Group as required to be disclosed pursuant to the Listing Rules other than those businesses to which the Directors and his/her Associates were appointed to represent the interests of the Company and/or the Group.

6. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration proceedings of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened against any member of the Group.

7. MATERIAL CONTRACTS

The following contracts have been entered into by the Group (not being contracts entered into in the ordinary course of business) within two years immediately preceding the date of this circular and are or may be material:-

(a) The Trust Plan Documents dated 22 June 2009 entered into between中信信托有限責任公司 (CITIC Trust Company Limited*) and YBN Shenzhen, under which YBN Shenzhen is required to subscribe 50 million Secondary Trust Units in the Trust Plan of value amounting to approximately RMB50,000,000;

(b) The agreement of the initiation of the Henan Management Co. dated 8 July 2009 entered into between YBN Shenzhen and other independent PRC parties, under which YBN Shenzhen invested RMB12.6 million for 30% equity interests in Henan Fund Management Co.;

(c) the entrusted loan agreement dated 27 September 2010 (the “Entrusted Loan Agreement”) entered into between YBN Shenzhen and 雲龍縣鴻信礦業有限責任公司 (Yun Long Xian Hong Xin Mining Limited*) (the “Borrower”), pursuant to which YBN Shenzhen has provided the entrusted loan in the principal amount of RMB50 million to the Borrower;

(d) the personal guarantee dated 27 September 2010 executed by 張正武 (Zhang Zheng Wu) in favour of YBN Shenzhen to secure the punctual repayment of all monies payable by the Borrower under the Entrusted Loan Agreement (including the principal, interest and the Consultancy Fee payable); and

(e) the loan agreement dated 11 August 2010 entered into between Common Ray Limited, a wholly-owned subsidiary of the Company and Century Energy Pte. Ltd. pursuant to which Common Ray Limited has provided to Century Energy Pte. Ltd. a loan in the principal amount of RMB100 million (equivalent to approximately HK$114,943,000) for a period of 2 years.

14A.59(11)


41


8. INTEREST OF DIRECTORS OR EXPERTS IN ASSETS

Since the date to which the latest published audited accounts of the Company were made up until the Latest Practicable Date, there had been no interest of any Director or experts (as listed out in paragraph 9 below) in any assets which had been or were proposed to be acquired or disposed of by or leased to any member of the Group.

9. EXPERT AND CONSENT

The following is the qualifi cation of the expert who has been named in this circular or has given opinion or letter contained in this circular:

Name Qualifi cations

OSK Capital A corporation licensed to carry on type 1 (dealing in securities) and type 6 (advising on corporate fi nance) regulated activities as defi ned under the SFO

As at the Latest Practicable Date, OSK Capital gave and did not withdraw its written consent to the issue of this circular with the inclusion therein of its letter and references to its name, in the form and context in which they appear herein. The letter of advice given by OSK Capital is given as of the date of this circular for incorporation herein.

As of the Latest Practicable Date, OSK Capital did not have any shareholding in any member of the Group and did not have the right to subscribe for or to nominate persons to subscribe for shares in any member of the Group.

As at the Latest Practicable Date, OSK Capital did not have any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2010, being the date to which the latest published audited consolidated fi nancial statements of the Company were made up.

10. GENERAL

(a) The company secretary of the Company is Ms. Wong Yuen Ching Kyna, who is an associate member of The Hong Kong Institute of Chartered Secretaries and The Institute of Chartered Secretaries and Administrators.

(b) The registered offi ce of the Company is Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda.

(c) The principal place of business in Hong Kong of the Company is at 23rd Floor, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong.

App1B(5)(2)

App1B(5)(1)

App1B(5)(3)

42


(d) The branch share registrar and transfer offi ce of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

(e) This circular has been prepared in both English and Chinese, the English text of this circular shall prevail over the Chinese text in the event of inconsistency.

11. MATERIAL ADVERSE CHANGE

The Directors confi rm that, as at the Latest Practicable Date, they are not aware of any material adverse change in the fi nancial or trading position of the Group since 31 December 2010, the date to which the latest published audited consolidated fi nancial statements of the Company were made up.

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal place of business of the Company in Hong Kong at 23rd Floor, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong during normal business hours from 9:00 a.m. to 5:30 p.m. on any Business Day for a period of 14 days from the date of this circular:

(a) this circular;

(b) the Master Agreement;

(c) the Trust Plan Documents;

(d) agreement of the initiation of the Henan Fund Management Co.;

(e) the letter from the Board, the text of which is set out on pages 6 to 21 of this circular;

(f) the letter of recommendation from the Independent Board Committee, the text of which is set out on pages 22 and 23 of this circular;

(g) the letter of advice from the Independent Financial Adviser as set out on pages 24 to 36 of this circular; and

(h) the written consent of the expert as referred to in the paragraph headed “Expert and Consent” in this appendix.

App1B(32)

App1B(43)(2)(b)

43

NOTICE OF SGM



(Stock Code: 378)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the special general meeting (the “SGM”) of CIAM Group Limited (the “Company”) will be held at 23rd Floor, Bank of America Tower,12 Harcourt Road, Central, Hong Kong on 15 June 2011 (Wednesday) at 10:30 a.m. (or as soon thereafter as the annual general meeting convened for the same day and place shall have been concluded or adjourned) for the purpose of considering and, if thought fi t, passing the following resolutions:

Unless otherwise indicated, capitalized terms used herein shall have the same meanings as those defi ned in the circular of the Company dated 27 May 2011.

Ordinary Resolution No. 1

“THAT the entering into of the Master Agreement (a copy of which has been produced to the SGM marked “A” and signed by the chairman of the SGM for the purpose of identifi cation) by the Company and the entering into of the Trust Plan Interests Transfer Agreement by YBN Shenzhen and the transactions contemplated therein in respect of the disposal of the Trust Plan Interests be approved, confi rmed and ratifi ed and any one Director be and is hereby authorised to sign and execute such documents or agreements on behalf of the Company and to do such other things and take such other actions as they consider necessary or desirable for the purposes of giving effect to the Master Agreement and/or the transactions contemplated therein in respect of the disposal of the Trust Plan Interests.”

13.51A


44

NOTICE OF SGM

Ordinary Resolution No. 2

“THAT the entering into of the Master Agreement (a copy of which has been produced to the SGM marked “A” and signed by the chairman of the SGM for the purpose of identifi cation) by the Company and the entering into of the Henan Fund Management Co. Interests Transfer Agreement by YBN Shenzhen and the transactions contemplated therein in respect of the disposal of the Henan Fund Management Co. Interests be approved, confi rmed and ratifi ed and any one Director be and is hereby authorised to sign and execute such documents or agreements on behalf of the Company and to do such other things and take such other actions as they consider necessary or desirable for the purposes of giving effect to the Master Agreement and/or the transactions contemplated therein in respect of the disposal of the Henan Fund Management Co. Interests.”

By Order of the BoardCIAM Group Limited

Kyna Y. C. WongCompany Secretary

Hong Kong, 27 May 2011

Notes:

1. Every Shareholder of the Company entitled to attend and vote at the SGM convened by the above notice is entitled to appoint one or more proxies to attend and, on a poll, vote in his stead provided that if more than one person is authorised, the proxy/authorisation must specify the number of shares in respect of which each such person is so authorised. The proxy need not be a member of the Company.

2. A form of proxy for use at the SGM convened by the above notice is enclosed herewith. To be valid, a form of proxy and the power of attorney or other authority (if any) under which it is signed (or a notarially certifi ed copy of that power of attorney or authority) must be completed, signed and deposited at the offi ce of the Company’s Branch Share Registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof.

3. Delivery of an instrument appointing a proxy shall not preclude a member of the Company from attending and voting in person at the SGM (or any adjourned meeting hereof) or poll concerned and, in such event, the instrument appointing a proxy shall be deemed to be revoked.