Mr. Huang Zhengming and his wife, Ms. Xu Luija, hold 54.3% of the Company. The other shareholders are: Sequoia Capital China (17.2%), Cathay Fund (17.1%), Gaohe Venture Capital (7.9%) and Advantage Capital (3.5%).

Mr. Huang is the founder and Chairman of Zhengming. Mr. Huang is an entrepreneur, who has been involved in establishing a number of companies.

Sequoia Capital China is a private equity fund established in 2005 and the fund manager of 10 funds (7 US$ and 3 RMB funds).

Cathay Fund is a private equity fund with 3 funds under management with a total of EUR1bn. Cathay Fund has offices in China and France.

The total Project cost is estimated to be RMB403 million (~US$66 million), of which RMB258 million will be for cold storage construction, related equipment and warehouse machineries, RMB30 million for refrigerated transport facilities, and the remaining for incremental working capital, IT SCM system and acquisitions. IFC is invited to invest up to RMB63 million (~US$10 million) in equity and up to US$20 million of long term loan.

30.31 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.0
Equity	10.31

* These investment figures are indicative

The project locations include Shanghai, Sichuan, Chongqing, Yunnan, Hunan, Hubei, Tianjin, Jiangsu and Beijing.

Food safety: There is a need for investments in China''s TCL industry, as many existing refrigeration facilities are obsolete and old. New cold chain facilities with enhanced technology will contribute to improved product quality and reduce product loss, thereby ensuring a higher standard for food safety, which ultimately will benefit the consumers.

Cold storage supply chain efficiency: The industry is fragmented and characterized by small and medium players, who do not provide integrated services, which leads to inefficiencies in the cold storage supply chain. The investment in Zhengming contributes to the industry consolidation and increased efficiencies, as the Company is already acquiring other smaller competitors and providing integrated cold storage supply chain services.

Rural reach: The investment will contribute to balanced rural-urban development, and reduce the gap between living standards in urban and rural areas, as Zhengming targets to expand to become a nationwide TCL provider with TCL warehouses and transportation network in provinces such as Sichuan, Yunnan, Chongqing, Hubei and Hunan.

Stamp of Approval: Zhengming is planning an IPO, which is expected to happen before or during 2018. The industry is lacking national champions with financial strength which can provide consistent high quality services, as most players are small and medium enterprises. IFC''s investment will signal confidence in a player, which has a strong potential to become a national champion and increase quality and standards for the TCL sector.

Long Term Financing: IFC will provide long term financing in the form of equity and debt. Long term debt is not readily available in the market and is needed by the Company to make long term investments in TCL infrastructure.

Improve E&S standards: IFC will assist the Company to achieve international best practice on E&S standards.

All the storage facilities are located in industrial areas. There are no communities adjacent to the warehouses. Moreover, all the planned new warehouses are either renovated from the old warehouses in the existing industrial areas or constructed in the existing industrial areas. There is no manufacturing process involved within the scope of this project. Utilities, including water and electricity, are supplied by the industry parks or municipal governments. There are no point air emissions. All the sanitary wastewater is discharged to the municipal sewage system for treatment.



The key E&S risks and issues include the following:



- Occupational health/safety for the employees and contractors.

- Energy efficiency for cold storage facilities and transportation.

- Minimization of leakage of refrigerants.

- Fire prevention and emergency response.

- Road transportation and community safety.



Mitigation measures for the potential E&S impacts have been identified and are incorporated into an ESAP. The potential adverse E&S impacts of this project are therefore few in number and limited to project sites, and may be readily mitigated. This is therefore an E&S Category B project in accordance with IFC’s Policy on Environmental and Social Sustainability.



All the new warehouses are within existing industrial parks. No land will be acquired outside of industrial parks. No natural protected areas or protected species are identified at, or near, the project sites and thus Performance Standard (PS) 5: Land Acquisition and Involuntary Resettlement and PS 6: Biodiversity Conservation and Sustainable Management of Living Resources are not applicable. Indigenous Peoples were not identified in the project area and no issues related to cultural heritage were equally identified in the project area; thus PS7: Indigenous Peoples and PS8: Cultural Heritage are not applicable.

Please refer to the related Environmental and Social Review Summary (ESRS) document for this project.

Please refer to the Environmental and Social Action Plan (ESAP) tab in the related Environmental and Social Review Summary (ESRS) document for this project.