The FINANCIAL — IFC, a member of the World Bank Group, has put together a $300 million financing package for China Gas Holdings Ltd. (“China Gas”) to help expand the supply of cheaper and cleaner energy to millions of Chinese households, with the aim of improving their living conditions and reducing respiratory illnesses.
IFC will provide an $86 million loan from its own account and $64 million from the IFC Managed Co-Lending Portfolio Program, a new syndications platform that offers institutional investors the ability to passively participate in IFC’s future senior loan portfolio. The package also includes a $150 million syndicated loan from 19 commercial financial institutions, which was underwritten by The Royal Bank of Scotland plc, according to IFC.
The financing is intended to support China Gas’ expansion of city gas distribution infrastructure and the building of new natural gas refilling stations. Switching to gas will help reduce the use of polluting coal and other fuels that are more carbon intensive for industrial, household, and road transportation use, thus improving the environment for people living in crowded cities.
“IFC’s support provides us with the necessary capital to pursue our expansion plans, including investment in more than 30 new city-gas projects and the construction of 200 natural gas stations every year,” said Liu Ming Hui, Executive Chairman, Managing Director, and President of China Gas. “IFC’s global vision and sector expertise made this multi-party financing package possible.”
China’s strong economic growth in recent decades has lifted millions of people out of poverty but also created environmental challenges, including air pollution.
The investment is part of IFC’s strategic focus on natural gas as an economical and environmentally friendly fuel that offers an opportunity to improve access to reliable energy while reducing pollution and lowering greenhouse-gas emissions.
“Natural gas holds great potential for supporting China’s continued economic growth,” said Lance Crist, IFC’s Global Head of Oil and Gas. “IFC’s long-term financing will help China Gas make this clean-burning fuel available in more places at a time when Chinese cities are growing quickly.”
The syndicated loan, which was jointly arranged by IFC and RBS, received strong support from the banking community.
“The syndicated loan received very strong interest from a wide variety of banks, with demand exceeding the deal size three times. It is a testament to the strong quality of the company, RBS’ confidence in underwriting, IFC’s stamp of approval, and the credibility of IFC’s B-loan program,” said Aditya Agarwal, Head of Loan Markets, APAC, RBS.