CCAP, with a potential shareholding of 45-50% in the GP, is a wholly owned subsidiary of Colony Capital (“Colony”). Colony is led by its founder and CEO, Thomas J. Barrack, Jr. (56), and ten other principals, who on average have worked at Colony for eight years with an average of 22 years of relevant business and investing experience. Colony is one of a few unaffiliated, privately-held distressed asset fund organizations having the capability to source, execute and realize investment opportunities in the global markets. SIIC, a potential shareholder with 45-50% stake in the GP, is incorporated in Hong Kong with executive headquarters in Shanghai. SIIC has been the “window” company of the Shanghai Municipal Government since 1981, with the core mandate of attracting global capital to Shanghai. Its flagship operating entity, Shanghai Industrial Holdings Ltd., is a Hong Kong-listed Hang Seng Index company, 40% owned by the public. SIIC’s total assets of over $4.1 billion (as of December 31, 2002) are invested in real estate, financial services, health care, consumer retailing, infrastructure and logistics, information technology, and the Chongming Development Area. With a dozen offices across China and nine international offices, SIIC has sought to combine local knowledge with global expertise in various sectors through alliances with international players, including Temasek, Salomon Smith Barney and Goldman Sachs. CCAP and SIIC are also committed to ensuring an optimal alignment of all investor’s interests by investing an aggregate of up to 10% of the fund’s total capitalization. If IFC participates in the GP, 10% of IFC’s total commitment would count toward this GP obligation. CCAP has been in discussion with various Asian and U.S. institutional investors about participating in the fund. Initial feedback indicates that IFC’s involvement in the fund is viewed by those institutions as essential to validate the fund concept and mitigate certain risks.

The project entails an equity investment of the lower of : - 10% of the total fund capitalization, or - $50 million in the proposed $500 million fund.

50.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	50.0

* These investment figures are indicative

The Fund would be registered as a Cayman Islands limited partnership. SI Colony China (Colony China), a Cayman Islands entity, will be the GP of the fund. The GP is currently proposed to be owned 50:50 by CCAP and SIIC. If IFC takes a stake of 10% in the GP, the shares of CCAP and SIIC would each be reduced to 45%. CCAP controls the daily management of the GP. Mr. Tom Barrack will serve as the interim CEO for the Fund until the local operating team is fully in place. Deals would be sourced through both direct negotiations with domestic banks and asset owners, and auctions by asset management companies (AMCs). Based on the current pipeline, the GP estimates a portfolio mix of 40% NPL transactions, 40% distressed real estate asset workouts, and 20% corporate restructuring transactions.

This is a category FI Type 2 project according to IFC’s environmental review procedure. The fund has committed to establishing an environmental management system that will ensure that investments are consistent with applicable host country environmental laws and regulations as well as applicable World Bank Group environmental, health and safety guidelines and policies; designating appropriate individuals who will have responsibility for the environment and who will attend IFC’s environmental management workshops; submitting to IFC an environmental management plan; obtaining clearance by IFC for any category A or infrastructure investment by the fund; and submitting to IFC an annual environmental performance report.
Location of environmental documents in locally affected community

This project is expected to make strong impact by doing the following: - Introducing real estate distressed asset resolution techniques to China; - Building local capacity in managing distressed assets, a highly specialized area, by transferring technical expertise from a first tier international player and helping to establish industry best practices in China; - Advocating with policy makers and regulators for more creditor-friendly policies and regulations; and - Building capacity at the municipal level (through SIIC) which supports World Bank and IFC goals. IFC would play various critical roles in this fund, including: - Being the lead sponsor/anchor investor of the first distressed debt fund in China; - Catalyzing private sector investments in the fund; - Acting as the "neutral party/honest broker” between CCAP and SIIC; and - Ensuring best practice corporate governance and helping to establish industry standards in this asset class.