41668 - JFLC Green Financing Package

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Summary of Investment Information

Project Number

41668

Company Name

JIANGSU FINANCIAL LEASING CO., LTD.

Date SPI Disclosed

Dec 14, 2018

Country

China

Region

East Asia and the Pacific

Projected Board Date

Jan 25, 2019

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Apr 24, 2019

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Apr 4, 2019
Signed : Apr 9, 2019
Invested : Apr 12, 2019

Sector

Other Non-Banking Financial Institution (NBFI)

Project Description

The proposed investment entails a 3-5 years green financing package to Jiangsu Financial Leasing Co., Ltd. (“JFLC”, the “Company”), an existing partner of IFC, to support it to further develop green leasing services to small and medium enterprises (“SMEs”). Established in 1985, JFLC is a financial leasing company licensed and regulated by China Banking and Insurance Regulatory Commission (“CBIRC”), is listed in Shanghai Stock Exchange, and has strategic focuses on supporting SMEs and developing environment-friendly leasing business.

Associated Advisory Engagement

The potential advisory services which are under discussion include: (i) to help build up the green leasing enabling framework, including strategic planning, process optimization, risk management, credit approval, IT infrastructure, and compensation mechanism to support the growth of its green leasing; (ii) to help set up a holistic approach to identify eligible green leasing projects in line with international standards; (iii) to deliver the tools to the Company to help assess, quantify, measure, and report the green benefits generated through its green leasing portfolios; and (iv) to provide training program to JFLC to systematically develop green finance professionals.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management	6.0
Guarantee
Loan	219.28
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to SME Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

i) Stakeholder impacts: to improve SMEs' access to green financing/leasing, and to increase affordability of green leasing products; ii) Environmental and social impact: to generate sizable green electricity and to reduce green-house gas emission; iii) Market standard setting: to promote broader adoption of internationally acceptable green financing principals/standards; iv) Market demonstration effect: to introduce the first sizable public green financing issued by a SME-focused private sector leasing company in China.

(i) Financial additionality is provided through the provision of longer tenor local currency funding that is relatively limited in the market, and the mobilization of local currency funding through innovative syndication products, such as HALP Loan and local currency parallel loan; (ii) Non-financial additionality is provided via knowledge sharing and capacity building through potential advisory engagement to help the Company develop its capacity to publicly issue mid-to-long term green bonds that meet international standards, and to share IFC's experience and expertise in identifying more green leasing opportunities and supporting more eligible green leasing projects.

E&S Category Rationale / Risks and Mitigation

The Project entails an IFC green bond and loan package financing to JFLC, an existing IFC client involved in financial leasing services. The bond and loan proceeds will be used to finance leasing of equipment needed for development of green assets such as renewable energy, energy efficiency, or green building related assets by small and medium enterprises. Given the nature of the financial leasing business and the eligibility criteria to be applied, the Project is expected to be of moderate E&S risk and has been classified as FI-2 according to IFC Sustainability Policy. The company will be required to screen its clients to avoid supporting activities with any unresolved reputational or E&S concerns such as (a) involuntary resettlement, (b) risk of adverse impacts on Indigenous Peoples, (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or (d) significant occupational health and safety risks. It is also required to ensure the leasing activities supported by the Project will meet the requirements of the IFC Exclusion List and the applicable Chinese E&S laws and regulations and be consistent with the ICMA Green Bond Principles. Leasing of equipment for development and/or operation of coal related assets such as coal mining, coal transportation or coal-fired power plants, as well as infrastructure services exclusively dedicated to support any of these activities will be excluded.

The main E&S risks and impacts of the Project derive from the E&S risks of the company’s leasing activities and its capacity and systems in place to manage such risks. Under the existing IFC investment, the company has implemented an environmental and social management system (ESMS) to screen and monitor its leasing activities following IFC FI Exclusion List and to ascertain that the use of leased equipment complies with applicable national E&S laws and regulations. For the new investment, the company will be required to upgrade the existing ESMS by incorporating relevant elements of Green Bond Principles and the IFC Performance Standards and maintain proper capacity to continue to implement the ESMS. It will also be required to comply with IFC Performance Standard 2: Labor and Working Conditions for its own labor practices.

Contacts

For Inquiries About the Project, Contact

Jiangsu Financial Leasing Co., Ltd.
F8-9, F11-19, F25-33, Building 1, Finance Town, No.99 Jialingjiang East Road, Nanjing, China
http://www.jsleasing.cn/

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Task Title & Description	Anticipated Completion Date
Nominate officers	04/26/2019
Staff Training	04/26/2019
Upgrade ESMS	04/26/2019

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