48071 - JC Leasing Syndicated Sustainability Loan

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Summary of Investment Information

Project Number

48071

Company Name

JC International Finance & Leasing Co., Ltd

Date SPI Disclosed

Jan 24, 2024

Country

China

Region

East Asia and the Pacific

Projected Board Date

Feb 29, 2024

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Aug 10, 2024

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Apr 5, 2024
Signed : Apr 18, 2024
Invested : Aug 8, 2024

Sector

Leasing Services

Project Description

The proposed investment entails up to 5-year senior syndicated sustainability loan to JC International Finance & Leasing Co., Ltd. (“JC Leasing” or “the Company”), a commercial leasing company sponsored by Legend Holdings Corporation (3396.HK) in China. The loan is to support JC Leasing in growing its climate finance portfolio (energy efficiency, waste management, sustainable water, clean transportation, renewable energy, etc.) and social finance portfolio (women-led SMEs, healthcare, education and vocational training, etc.). The investment comprises (i) IFC A loan of up to US$100 million equivalent in RMB, and (ii) IFC syndicated loan of up to US$125 million equivalent in RMB. The loan will be aligned with the Green Loan Principles (GLP) and Social Loan Principles (“SLP”) of the Loan Market Association (“LMA”) to ensure transparency in use of proceeds, monitoring, and reporting. The investment is expected to be IFC’s first sustainability loan to a financial institution in China.

Associated Advisory Engagement

Sustainability loan that adheres to internationally recognized standards is new to Chinese financial institutions and investors. IFC, via an integrated investment and advisory solution, will support JC Leasing in upgrading its Sustainability Financing Framework and establishing an Environmental and Social Management System (“ESMS”) per international standards to enhance its capacity in climate finance and social finance underwriting and ensure transparency in the use of proceeds, project monitoring, 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
Syndications	Long Term Loans to Corporates
Syndications	Loans to SME Borrowers
Syndications	Loans to Woman-Owned SMEs
Straight Senior Loan	Long Term Loans to Corporates
Straight Senior Loan	Loans to SME Borrowers
Straight Senior Loan	Loans to Woman-Owned SMEs

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

Development Impact

Stakeholders Effect - Increased access to climate finance and social finance: IFC expects this project to provide long-term financing for climate finance projects (such as energy efficiency, waste management, sustainable water, clean transportation, renewable energy, etc.) and a wide range of social projects (such as women-led SMEs, healthcare, education and vocational training, etc.). Market Creation – Sustainability: IFC anticipates by helping JC Leasing improve/build a benchmark Sustainability Financing Framework/ESMS, it can set market standards to promote sustainability finance in China and to nurture interest and participation from commercial investors and development financial institutions that will facilitate the buildup of an adequate investor base for the project. The project would be IFC’s first sustainability loan to a financial institution in China and one of the first of its kind in China to be LMA compliant among leasing companies. It would establish a benchmark for financial institutions in China and also for other leasing companies in China to emulate.

Resource Mobilization: As the syndication arranger and lead investor, IFC is expected to help mobilize up to US$125 million equivalent financing from international investors. IFC’s investment and IFC’s guidance on JC Leasing’s Sustainability Finance Framework and ESMS will be critical endorsement on JC Leasing’s credibility and capacity of deploying the loan proceeds. Financing Structure: The proposed investment will be JC Leasing’s first loan with a 5-year tenor. This will enable JC Leasing to better match the tenor of its funding with the tenor of its climate finance assets, and to potentially access more longer tenor funding in future. Knowledge, Innovation, and Capacity Building: IFC, via an integrated investment and advisory solution, will support JC Leasing upgrade its Sustainability Financing Framework and establish ESMS per international standard to enhance its capacity in climate finance and social finance underwriting and ensure transparency in use of proceeds, project monitoring, and impact reporting.

E&S Category Rationale / Risks and Mitigation

The proposed project is a syndicated senior loan facility for supporting JC Leasing’s growth of green and social loans portfolio. JC Leasing is a commercial leasing company and provides leasing finance mainly to SMEs, corporates and development projects in China. The project 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 or d) risk of significate retrenchment, or e) significant Occupational Health and Safety risks. The project will not support 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. The project has been categorized as a Category FI-2 project according to IFC Sustainability Policy. The applicable E&S performance requirements for the project will be IFC Exclusion List, extended by additional restricted activities, and relevant host country E&S laws and regulations. The activities to be supported by the project 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.

JC Leasing does not have an environmental and social management system (ESMS) nor designated E&S roles and responsibilities. As part of the project, JC Leasing will be required, among others, to 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, designate an ESMS officer and provide E&S training for relevant staff. JC Leasing’s own labor practices are broadly in line with the IFC’s Performance Standard 2 on labor and working conditions.

Title	Anticipated Completion Date
ESMS Officer nomination	03/22/2024
Staff E&S training	09/30/2024
ESMS implementation	12/30/2024
ESMS development	09/30/2024

Contacts

For Inquiries About the Project, Contact

JC International Finance & Leasing Co., Ltd
Ms. Xinyi Wu
Senior Finance Director
00862123291112
xinyi.wu@jclegend.com
28th Floor, Infinitus Tower, No. 168, Hubin Road, Huangpu District, Shanghai, P.R.China
http://www.jclegend.com/

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