The International Finance Corporation (IFC), a member of the World Bank Group, on April 30 announced that it has put together a US$300 million financing package for China Gas Holdings to help expand the supply of cheaper and cleaner energy to millions of Chinese households with the aim improving their living conditions and reducing respiratory illnesses.
IFC will provide an US$86 million loan from its own account and US$64 million from the IFC managed co-lending portfolio programme, 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 US$150 million syndicated loan from 19 commercial financial institutions, which was underwritten by the Royal Bank of Scotland (RBS).
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, the IFC says, 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 China Gas executive chairman, managing director and president Liu Ming Hui. “IFC’s global vision and sector expertise made this multi-party financing package possible.”
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 IFC global head of oil and gas Lance Crist. “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 programme,” said RBS head of loan markets for Asia-Pacific Aditya Agarwal.
