42159 - DCM Ping An Leasing Sustainability Bond

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Summary of Investment Information

Project Number

42159

Company Name

PING AN INTERNATIONAL FINANCIAL LEASING CO., LTD.

Date SPI Disclosed

Sep 9, 2024

Country

China

Region

East Asia and the Pacific

Projected Board Date

Aug 7, 2024

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Sep 18, 2024

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Aug 7, 2024
Signed : Sep 3, 2024
Invested : Sep 13, 2024

Sector

Leasing Services

Project Description

The proposed investment entails a subscription of up to 1.8 billion Chinese renminbi (approximately US$250 million equivalent) in an up to 5-year senior bond (the “Bond”) to be issued by Ping An International Financial Leasing Co., Ltd. (“Ping An Leasing” or “the Company”), a commercial leasing company wholly-owned by Ping An Insurance (Group) Company of China, Ltd. (“Ping An Group”) (2318.HK, 601318.CH) in China. IFC will be an anchor investor in the Bond. The Bond will support Ping An Leasing to expand its eligible climate finance and social finance portfolio in line with the Sustainability Bond Guidelines (and in accordance with the Social Bond Principles and Green Bond Principles) of the International Capital Market Association (“ICMA”). All of IFC own account investment is expected to be used for eligible climate finance projects. On a best-effort basis, at least 25 percent of the IFC’s subscription will be used towards eligible electric vehicle leases for women customers.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	253.86
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	Long Term Loans to Corporates
Straight Senior Loan	Loans to Woman-Owned SMEs
Straight Senior Loan	Loans to MSME (mix of Micro and SME)

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

Development Impact

Stakeholders Effect - Increased access to climate finance: The project is expected to help increase the funding for Ping An Leasing to expand its climate finance portfolio, mainly in clean transportation. While IFC’s investment focuses on climate finance, the proceeds of the bond subscribed by other investors will help increase the funding for Ping An Leasing to expand its SME finance portfolio in China, with a focus on frontier regions and WSMEs. Market Creation - Sustainability: The Project aims to further nurture a credible market for sustainable finance in the country, through IFC’s investment in a publicly offered sustainability bond issued by a local financial institution (“FI”) in line with international standards. IFC anticipates the issuance of a sustainability bond aligned with international standards by a leasing company will enable other players in the market to follow suit with the issuance of sustainability bonds that meet internationally recognized standards, raising funds for climate and social projects and helping to deepen the market for sustainable finance in China.

Innovative Financing Structure: IFC seeks to anchor the first sustainability bond issued by an FI following ICMA rules in China (excluding Hong Kong SAR, China, Macau SAR, China, and Taiwan, China). The Project is also IFC’s first sustainability bond investment in China. By endorsing such an ICMA-compliant sustainability bond via public offering, the Project is expected to drive FIs towards a more sustainable business growth path by adhering to international standards through capital markets innovation. Resource Mobilization: As the anchor investor, IFC expects to mobilize up to 1.8 billion Chinese renminbi (approx. US$250 million equivalent) in financing from other investors. IFC’s anchor investment and guidance on Ping An Leasing’s Sustainability Bond Framework and ESMS will be critical to strengthening Ping An Leasing’s credibility and capacity to deploy the bond proceeds, sending a positive signal to the market and supporting a successful issuance of the bond. Knowledge, Innovation, and Capacity Building: IFC will support the Company in expanding its eligible climate and social leasing portfolio in line with ICMA's Sustainability Bond Guidelines via an integrated advisory services solution. As there are currently no ICMA-aligned sustainability bonds that have been publicly issued by an FI in China (excluding Hong Kong SAR, China, Macau SAR, China, and Taiwan, China), the proposed Project will be the first in market. IFC will leverage its global leadership and expertise in sustainable finance and successful track record in supporting Chinese FIs to assist Ping An Leasing establish an internationally recognized Sustainability Bond Framework. IFC’s advisory services include (i) developing a Sustainability Strategy, (ii) reviewing the Sustainability Bond Framework and helping identify eligible projects under the Framework, (iii) guiding the Company in developing an ESMS, and (iv) guiding the Company in implementing an impact management system.

E&S Category Rationale / Risks and Mitigation

The project is a IFC’s investment in a publicly offered sustainability bond issued by Ping An Leasing to support its growth of green and social lease financing. Ping An Leasing is a commercial leasing company providing leasing finance to individuals, micro, small and medium enterprises, corporates and development projects in China. The bond will exclude any higher risk business activities that involve 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, d) risk of significate retrenchment, or e) significant Occupational Health and Safety risks. Any coal-related activities including coal mining, coal transportation or coal-fired power plants, and infrastructure services exclusively dedicated to support any of these activities will not be supported by the bond. The activities to be supported by the bond are expected to be moderate E&S risks, that are generally site-specific and typically include occupational health and safety, pollution, waste and wastewater, labor and working conditions issues. The project has been categorized as a Category FI-2 project according to IFC Sustainability Policy. Applicable E&S performance requirements for the project will be IFC Exclusion List, extended by additional restricted activities, relevant host country E&S laws and regulations, and screening out of higher risk activities. The company will be required to comply with IFC Performance Standard 2 requirements for its own operations.

Ping An Leasing does not have an environmental and social management system (ESMS) nor designated E&S roles and responsibilities. As part of the project, Ping An Leasing will designate an ESMS officer, develop and implement an Environmental and Social Management System (ESMS) to assess and manage the E&S risks consistent with the applicable E&S performance requirements for the project, and provide E&S training for relevant staff. The labor practices of Ping An Leasing are generally in line with the IFC’s Performance Standard 2 on labor and working conditions.

S.no	Title	Anticipated Completion Date
1	ESMS Officer nomination	09/09/2024
2	E&S training	09/12/2024
3	ESMS development	09/12/2024
4	ESMS implementation	12/11/2024

Contacts

For Inquiries About the Project, Contact

Ping An International Financial Leasing Co., Ltd.
Mr. Zhu Liedi
Finance Manager
00862138631217
zhuliedi627@pingan.com.cn
8 Century Avenue, Pudong New District, Shanghai, P.R.China
https://pazl.pingan.cn/

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