RMB 550 Million (US$81 Million) Strategic Investment by TPG Capital in Daphne International

HONG KONG, May 25 /PRNewswire-Asia-FirstCall/ — Daphne International
Holdings Limited (HKSE: 210, “Daphne” or “the Company”), the owner of the
“Daphne” and “Shoebox” brands and a leading retailer of ladies’ footwear in
the PRC, announced today that the Company has entered into an agreement with
TPG Capital (“TPG”), under which TPG will make a strategic investment in
Daphne through the subscription of RMB 550 million convertible bonds with
warrants.

Mr. Chen Ying-Chieh, Chairman of Daphne said, “We are delighted to have
TPG as our strategic partner. We believe that TPG shares the same strategic
vision of our Company and expect this partnership to not only help us in
further solidifying our leadership position in the domestic market in China
but also contribute to transforming Daphne to become a world-class company.”

Mr. Chen Hsien Min, Managing Director of Daphne added, “We view this as a
long-term partnership and intend to work closely with TPG to further
strengthen our financial management, operational efficiency and corporate
governance. We will also fully leverage TPG’s global network to explore new
opportunities and enhance Daphne’s overall competitive position in the
marketplace.”

Under the agreement, TPG has agreed to subscribe for unsecured convertible
bonds due 2014 in the aggregate principal amount of RMB 550 million. The bonds
carry an annual coupon of 3.125% payable semi-annually, and will be
convertible, subject to certain conditions, into Daphne’s new ordinary shares
at an initial conversion price of HK$3.50 per ordinary share. The bonds will
be redeemed at par if not converted.

In addition, TPG will receive 100 million warrants with the right to
subscribe for one ordinary share each, with an initial exercise price of
HK$4.00 per warrant. The warrants have a maturity of five years. If exercised
in full, TPG will receive 100 million new ordinary shares in Daphne.

TPG will hold 278,510,572 ordinary shares, equivalent to approximately
14.5% of the total enlarged issued share capital of Daphne, assuming the bonds
are fully converted and the warrants are fully exercised.

Upon closing, the Company will receive the US-dollar equivalent of RMB 550
million (or approximately US$81 million) of gross proceeds from the issuance
of the convertible bonds with warrants which will be used for further
expansion of its “Daphne” and “Shoebox” store network in the PRC. In addition,
the Company expects to raise a further HK$400 million (or approximately US$52
million) upon the full exercise of the warrants, which will be used for
general working capital purposes.

Ms. Mary Ma, Managing Director of TPG said, “We are confident in the long-
term growth prospects of the consumer retail sector in China. We believe that
Daphne, with its widely recognized ‘Daphne’ and ‘Shoebox’ brands, has every
ingredient needed to grow from strength-to-strength and to accomplish even
greater success in the future.”

Mr. Stephen Peel, Managing Partner, Greater China, Eurasia, India and SE
Asia of TPG added, “This investment is consistent with TPG’s philosophy of
supporting high-growth Chinese consumer-oriented companies to achieve world-
class operating standards. We believe our capital and operational expertise
will contribute to a successful partnership with Daphne.”

Merrill Lynch (Asia Pacific) Limited acted as the sole financial advisor
to Daphne and Nomura International (Hong Kong) Limited acted as the sole
financial advisor to TPG on this transaction.

This announcement is not an offer of securities for sale in the United
States. Securities may not be offered or sold in the United States absent
registration or an exemption from registration. Any public offering of
securities to be made in the United States will be made by means of an
information memorandum that may be obtained from the Company and will contain
detailed information about the Company and management, as well as financial
statements. The Company does not intend to register any part of the offering
in the United States.

About Daphne International Holdings Limited

Established in 1987, Daphne International Holdings Limited (formerly known
as Prime Success International Group Limited) was listed on the Main Board of
The Stock Exchange of Hong Kong Limited in 1995 and has been admitted as one
of the constituent stocks of the Hang Seng Composite Mainland Index, effective
on 11 September 2006. The Group is principally engaged in the manufacturing,
marketing and distribution of footwear, apparel and accessories products under
its own and licensed brands and on an OEM basis. Its major markets include
China and the US. In 1990, the Group launched its footwear business in China
under the brand name “Daphne” which is now a leading ladies’ footwear brand in
China. Currently the Group operates over 3,000 outlets, comprising “Daphne”,
“Shoebox”, “adidas”, “Nike”, “Arezzo”, “Sofft” and “Born” brands, in Mainland
China and Taiwan.

About TPG Capital

TPG Capital is the global buyout group of TPG, a leading private
investment firm founded in 1992 with approximately US$45 billion of assets
under management and offices in San Francisco, London, Hong Kong, New York,
Fort Worth, Menlo Park, Washington, D.C., Melbourne, Moscow, Mumbai, Paris,
Luxembourg, Beijing, Shanghai, Singapore and Tokyo. TPG Capital has extensive
experience with global public and private investments executed through
leveraged buyouts, recapitalizations, spinouts, joint ventures and
restructurings. Please visit http://www.tpg.com .

    For media enquiries:

    Daphne International Holdings Limited
    Strategic Financial Relations Limited
     Esther Chan
     Tel:   +852-2864-4825
     Email: esther.chan@sprg.com.hk

     Doris Chan
     Tel:   +852-2114-4950
     Email: doris.chan@sprg.com.hk

     Fax:   +852-2804-2789 / +852-2527-1196

    TPG Capital
     Owen Blicksilver Public Relations
     Carol Makovich
     Tel:   +1-203-622-4781
     Email: carol@blicksilverpr.com

     Ogilvy Public Relations Worldwide
     Scott Kronick
     Tel:   +86-1370-100-4595
     Email: scott.kronick@ogilvy.com

SOURCE Daphne International Holdings Limited