The Carlyle Group and China Merchant Fortune Ventures Co-lead US$14 Million Investment in Runstar, a Leading Chinese Electronic Games Company

Beijing, China - Global private equity firm The Carlyle Group, China Merchant Fortune Ventures and Sino-Korean Wireless Fund today announced the closing of a US$14 million investment in Runstar International, one of China’s leading online electronic games company. Carlyle invested in Runstar through Carlyle Asia Venture Partners II, its Asia venture capital fund.

Based in Shanghai, Runstar is a leading provider of online electronic games and digital entertainment products. By the end of 2004, Runstar will launch two major Massive Multiplayer Online Role Play Games (MMORPGs). Also, Runstar has a series of differentiated online games and other online entertainment products in the pipeline for the next twelve months, ensuring a broad product portfolio that will support a business model with highly diversified and recurring revenue.

Key to the Runstar business model is the establishment of a portal site for online game services that provides a variety of attractive entertainment content on a unified platform, thus enabling it to generate multiple revenue streams.

“This investment by Carlyle, China Merchant Fortune Ventures and Sino-Korean Wireless Fund is an important endorsement of our current strategy, execution, and overall business approach,” said Zijie Wang, Chief Executive Officer of Runstar. “We already have several leading online game products and online entertainment services in the growing China market and this investment will enable us to strengthen our overall presence in the digital entertainment industry. We look forward to the added value and global perspective that Carlyle and the other two investors bring.”

“An increasingly affluent consumer class in China creates significant investment opportunities in the technology-enabled creative consumer services industry, including the Internet-based online electronic games and digital entertainment space,” said Wayne Tsou, Managing Director of The Carlyle Group and Head of the Carlyle Asia Venture group. “We will actively engage with Runstar’s management to build the company into the leading online entertainment destination in China,” added Nicholas Shao, Vice President of The Carlyle Group.

China has the second largest Internet user base in the world, trailing only the U.S. According to the China Internet Network Information Center, at the end of 2003, Internet users in China reached 79.5 million with about 31 million computers linked to the Internet. The number of users online is expected to reach more than 200 million by the year 2015. Runstar’s diversified portfolio of massive multiplayer online games as well as leisure games, its vertical portal strategy and strong internal R&D capabilities position it to become one of the leaders of the rapidly growing digital entertainment industry in China.

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