The project sponsor is Weigao Holding Company Limited (Weigao Holding), a limited liability company incorporated in the People’s Republic of China (PRC) and the majority shareholder of Weigao. Founded in 1988 to manufacture single-use sterile infusion sets, Weigao Holding has since expanded its product range within the disposable medical device sector. In 2000, it established the company as an operating subsidiary to tap the capital markets. While the manufacturing capability lies mainly with Weigao and its subsidiaries, Weigao Holding itself is also engaged in the production of IV fluids, catheters and some pharmaceutical products. Its annual sales (excluding the contribution from Weigao) are estimated at $15 million.

Currently, Weigao Holding is 100% privately-owned by executives and former executives of Weigao.

Incorporated in PRC, Weigao is listed on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited. The company’s main shareholder is Weigao Holding (approximately 60%). The remaining shareholding is held by the company’s senior management (about 7%) and, since its 2004 IPO, the general public (33%).

The project includes investment in machinery and equipment to expand the company’s production capacity (as described above) and permanent working capital requirements. The proposed IFC investment would consist of a loan of $20 million for IFC’s own account, and would represent IFC’s first transaction with Weigao.

20.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.0
Equity

* These investment figures are indicative

Weigao’s current production facilities are located in Weihai, a coastal city in the Shandong Province. The site is located within the existing High Tech Industrial Development Zone, which has been developed and expanded since 1993. The Company has good access to the main transportation routes, including by sea and road.

As Weigao enters the technologically more sophisticated, branded medical products sectors – where China is still heavily reliant on imports – the project will help to create a greater domestic capability in these areas (e.g., drug-eluting stents, dialysis, etc.). Furthermore, the project will foster greater technology transfer. Through the project, Weigao will continue to demonstrate that Chinese manufacturers with strong medical and technical manufacturing capabilities are able to continue to grow and become world-class. As the company’s production of high-value added products comes on stream, Weigao would become an important tax revenue generator. The additional employment expected to be generated through the project is estimated at over 200 jobs.

Currently the company’s capital structure includes loans with maximum tenor of two years, which is inappropriate for a company with a long-term capital investment program. IFC will provide a long-term loan, and will seek to persuade the company’s existing lenders to follow by providing longer maturity loans.

All Weigao’s current operations are all in full compliance with the relevant Performance Standards, including the relevant sector guidelines, and its past land acquisition practice has been reviewed and found acceptable. The future expansion projects are also expected to comply with all Policies, Performance Standards and relevant sector guidelines. The future expansion projects will require the Company to obtain land or land leases, and to ensure these activities will not violate the Performance Standard 5 a series of documentation criteria has been agreed. With this in mind the project has potentially limited adverse environmental or social impacts that are few in number, site-specific, largely reversible, and readily addressed through mitigation measures. As a result this is a Category B Project according to IFC’s environmental and social review procedures. For further information on the projects environmental and social impacts, please see the Environmental and Social Review Summary (ESRS).