25049 - Avenue Asia Special Situations Fund IV, LP

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Summary of Proposed Investment

Project Number

25049

Company Name

Avenue Asia Special Situations Fund IV, LP

Date SPI Disclosed

May 8, 2006

Country

East Asia and Pacific Region

Industry

other

Projected Board Date

Jun 8, 2006

Status

Completed

Sector

Private Equity/Venture Cap Fund - Regional

Department

Equity Portfolio Management

Environmental Category

Previous Events

Approved : Jun 22, 2006
Signed : Jun 29, 2006
Invested : Jul 20, 2006

Project Description

Avenue Asia Special Situations Fund IV, L.P. (Avenue IV or the Fund) is a closed-end fund, which will primarily invest in distressed securities and assets in Asia. IFC proposes to invest $50 million in the Fund.

Investments are expected to include the securities and assets of companies that are:

- undergoing restructuring, reorganization or bankruptcy;
- operationally sound, but financially troubled due to bad balance sheets, inadequate capitalization or poor access to capital; or
- otherwise being sold for less than their intrinsic value.

Sponsor / Cost / Location

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

Development Impact

IFC’s developmental objective is to support a workout alternative for single distressed credits and Non-Performing Loans (NPL) pools in Asia.

The project will have the goal of helping to improve the balance sheets of banks by providing an avenue for banks to dispose of their Non-Performing Loans, which are a significant and growing burden on capital adequacy. NPL disposals free-up balance sheet resources which otherwise cannot be productively channeled to credit-worthy clients.

The Fund Manager’s investments are expected to lead to stronger relationships with the management teams of the underlying companies.

The Fund Manager will aim to restore over-leveraged companies in the region to financial health through the implementation of financial restructuring strategies.

IFC’s proposed participation in the Fund reflects its continuing commitment to distressed debt as an asset class in the region.

Through IFC’s investment in the Fund and participation in the Fund’s Advisory Committee, IFC would be able to establish strategic relationships and maintain an active dialogue with the Avenue Asia team as well as other distressed asset investors.

IFC may have the ability to leverage individual transactions as well as exercise its co-investment rights and participate directly in the equity tranche of an underlying distressed investment, IFC would be able to play a much more active role in the workout process, thereby giving impetus to the development of strong credit culture.

This is an environmental review category FI project. To be eligible for inclusion in the underlying asset pool, a corporate issuer’s business may not involve activities on IFC’s exclusion list. The Fund Manager will also use a screening procedure to determine the suitability of corporate issues for inclusion in the asset pool on a reasonable efforts basis. The Fund Manager will seek to exclude corporate issues from companies with known poor environmental and/or social practices.

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This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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