After receiving approval to expand its capacity by building two additional cement production lines, Sichuan Zhiquan Cement Group approached our Chengdu office seeking financing. Zhiquan needed $40M first round financing to complete two modern rotary clinker production lines. Bank financing was out of the question since Zhiquan was not big enough to get favorable loans. Chairman Chen Zhiquan commented, "Eos offered us the investment capital we needed on reasonable terms. Eos not only invested but also managed the entire process. As my company's needs grew, Eos secured the investment and support of Merrill Lynch, one of the largest investment banks in the world."

The $40M investment in Zhiquan closed on September 26, 2008. What was remarkable about the investment was the fact that it was made at the original agreed on valuation decided in January, prior to the Chinese stock market's more than 50% fall. Eos honored its agreed valuation and saw no reason to demand a lower valuation just because the Chinese market had collapsed. Eos invests strictly based on value and growth potential. While Zhiquan's relative value had fallen, its growth potential had become more certain and was then worth even more.

Furthermore, when the Wenchuan earthquake destroyed one of Zhiquan's plants late in the investment process, Eos's president, Jon Carnes, immediately visited the site of the destruction and pledged to do everything possible to complete the investment on the original agreed terms. Despite the loss of earnings, Eos saw the long term potential to rebuild the region and advised investors to fund the investment at the original agreed valuation and also donated money to support the employees who had lost their homes.

As expected, Zhiquan's first round of financing was a lengthy and difficult process. The company had to be restructured into an entity suitable for foreign investment. Chairman Chen came to realize that "despite the extremely complicated process, Eos always maintained great confidence of the ultimate success and now that the process is complete our second round of financing will be much easier and I am positioned to have access to all the capital I need to become the dominant cement manufacturer in the region".

Eos is also preparing Zhiquan for an IPO either in Hong Kong or America and is confident of receiving eventual government approval. Eos president Jon Carnes explains, "I am confident that CSRC will again allow foreign IPO's and Zhiquan will be one of the first due to the company's great performance." Sow in spring and Reap in autumn. Sichuan Zhiquan Cement Group and investors together expect the harvest season.