45674 - DCM Haier Leasing Social Bond

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Summary of Investment Information

Project Number

45674

Company Name

HAIER FINANCIAL SERVICES CO., LTD.

Date SPI Disclosed

Mar 14, 2022

Country

China

Region

East Asia and the Pacific

Projected Board Date

Apr 15, 2022

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Oct 28, 2022

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : May 12, 2022
Signed : Jun 1, 2022
Invested : Oct 26, 2022

Sector

Other Non-Banking Financial Institution (NBFI)

Project Description

The proposed project entails up to US$100 million (or equivalent in RMB) IFC investment in the Social Bond to be issued Haier Financial Services China Co., Ltd (“Haier Leasing” or “the Company”). IFC will play an anchor investor role in the social bond placement to help catalyze mobilization from other investors.

The bond will follow the Social Bond Principles, as administered by the International Capital Market Association (ICMA) and verified by a second party. As defined under the draft Social Bond Framework prepared by the Company, the bond proceeds will be used to finance healthcare, education, food/agriculture, SMEs in rural China , and women enterprises in order to ease social issues in inequality, food safety, employment, and women enterprises’ access to finance.

Associated Advisory Engagement

IFC advisory services will support the Company: (i) develop an integrated sustainable finance system; (ii) establish Social Bond Framework and prepare for social bond issuance; and (iii) build capacity in social bond framework and sustainable finance. This engagement will support the Company to achieve its medium-to-long term strategic objectives: i) formalizing its lease operations to social impact projects; and ii) adopting good ESG practices, especially in establishing E&S risk management system and impact reporting.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	100.0
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 Corporates
Straight Senior Loan	Loans to SME Borrowers
Straight Senior Loan	Agri Finance (Corp./Farmers/Climate)
Straight Senior Loan	Loans to Woman-Owned SMEs

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

Development Impact

1) Stakeholders Effect - Improve access to finance for social sectors, specifically in rural areas: IFC anticipates that this project will increase access to finance for the provision of essential services in rural areas in such as education, healthcare, food security as well as sustainable agriculture businesses, and the support of SMEs, in particular women enterprises in China. IFC expects this project to provide innovative long-term financing for end borrowers and improve Haier Leasing’s capacity related to social financing. 2) Market Creation - Sustainability: IFC anticipates that the issuance of the ICMA compliant social bond by Haier Leasing will enable other players in the market to follow suit with internationally recognized instruments to raise funds for social projects including SME, healthcare, education, sustainable agriculture in China. The Project is expected to help create a credible and sustainable market for social bonds in China and is expected to encourage other Chinese institutions to replicate the use of internationally recognized social bond principles to raise funding for social projects.

E&S Category Rationale / Risks and Mitigation

The proposed Project entails IFC investment in the Social Bond to be issued by Haier Leasing to support its financial leasing activities in healthcare, education, and food/agriculture sectors as well as women enterprises in line with the ICMA Social Bond Principles. The activities supported by the Project are expected to be of moderate E&S risks that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures. Higher E&S risk activities including those involving 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, will not be eligible for financing from the proceeds of the IFC investment. Coal-related activities including coal mining, coal transportation or coal-fired power plants, as well as infrastructure services exclusively dedicated to support any of these activities, will not be supported by this Project either. The Project has been categorized as FI-2 according to IFC Sustainability Policy. The Applicable E&S Performance Requirements of the Project include the IFC FI Exclusion List and the national E&S laws and regulations, and where applicable, IFC Performance Standards.

The E&S risks and impacts of the proposed Project, while moderate in nature as described above, may arise from the activities of the clients supported by Haier Leasing using the bond proceeds. They may include risks and impacts related to occupational health & safety, labor and working conditions, pollution management, and others. E&S Management System While Haier Leasing currently assesses its clients' E&S performance against with national laws, it has not developed an environmental and social management system (ESMS) for assessing and managing E&S risks consistent with IFC requirements. Under this Project, the company will be required to develop such an ESMS and implement it at the level of asset class supported by the Project. The ESMS should include the following key aspects: E&S policy, internal organizational capacity and competency development, E&S screening procedures and tools to identify the risks and impacts of client activities, and monitoring and review of the portfolio. Haier Leasing will be also required to appoint an ESMS officer and maintain proper capacity to implement the ESMS, including training relevant staff in conducting E&S screening, assessing and monitoring of activities in accordance with the applicable E&S performance requirements. Haier Leasing's HR practices overall are in line with the requirements of IFC Performance Standard 2: Labor and Working Conditions.

Contacts

For Inquiries About the Project, Contact

Haier Financial Services China Co., Ltd.
Mr. Baoquan CHEN
CFO
+86 (21) 80256000
baoquan.chen@haierfinancial.com
20F, Building B, No. 1168 Century Avenue, Pudong New District, Shanghai, China
www.haierfinancial.com

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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Task Title & Description	Anticipated Completion Date
Nominate officers	05/31/2022
Establish SEMS	07/31/2022
Staff Training	07/31/2022
Retain an E&S consultant	07/31/2022

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