While the exact ownership percentages are yet to be finalized, the likely shareholding structure following the privatization and pre-IPO equity investment is expected to be : Morgan Stanley Private Equity Asia (MSPEA)/CDH – 35%; IFC – 7%, and Management and Staff – 58%. MSPEA is the private equity investment arm of the international financial conglomerate based in Hong Kong. CDH was established as an 8 year closed-end Cayman vehicle with a capital of about US$ 100 million with the objective of generating long-term capital appreciation through late-stage equity investments in established companies with substantial operations in China. The management and staff shareholding will include over 1,000 employees, none of whom will own more than 1% of the company.

The total project cost is estimated at $436 million which includes the company’s ongoing capital investment program and debt restructuring. The proposed IFC investment includes a senior loan of $50 million for IFC’s own account and equity/quasi equity investment of up to $8 million.

7.70 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	2.20
Equity	5.50

* These investment figures are indicative

The company is headquartered in Jinan, Province of Shandong, China. The company is expanding its existing activities in the cities of Pinyin, Rizhao, and Anqiu.

The project will have two primary impacts: - Supporting the Privatization of SSG. This privatization has been fairly high-profile, and if it proceeds well, could be used as a model for privatizing other large SOEs. - Supporting Industry Consolidation. The Government is encouraging industry consolidation, particularly through the growth of the larger, efficient producers of high quality cement (such as SSG), and the consolidation of small, inefficient and environmentally polluting producers of low quality cement. SSG’s strategy of acquiring inefficient state owned enterprises and improving efficiencies through better management, improved technology and management complements this objective. IFC’s role in this project is threefold: - IFC can help improve SSG’s corporate governance practices, thereby increasing the market value of SSG and setting an example for the market of the benefits of good corporate governance. Given the high profile nature of SSG’s privatization, introducing good corporate governance would be especially important. - IFC’s long-term financing can help SSG rationalize its capital structure and reduce overall financing costs since SSG is currently highly leveraged with short-term debt. - IFC can assist the company by providing strategic advice on how to integrate environmental and social management more effectively into its business model. This is especially important for SSG, since the cement sector is one of the most polluted and energy consuming businesses in China.

This is a Category B project according to IFC’s procedure for environmental and social review of projects. Specific environmental, health & safety and social impacts associated with this project include: be considered during the appraisal include, but is not limited to evaluation of past and potential future land acquisition procedures, sustainable raw material sourcing, quarry rehabilitation plans, emission control, water and wastewater management, transport and infrastructure tie-in, and local social commitments.
Location of environmental documents in locally affected community
This field will be updated when specific information has been received from the sponsor.