DAC Management LLC (DAC), a Delaware limited liability company established in 2002, is 75% owned by its founder Mr. Philip Groves, who represented the first non-Chinese investors to purchase an NPL portfolio in China from AMCs. DAC’s five other principals include Mssrs. David Madden, Edward Zhou, Clement Sun, Xue Jie, and Mrs. Mei Zheng who each own 5% of DAC. Collectively, the six principals have a broad range of expertise in investments in Asia, as well as expertise in the sourcing, valuing, and investment management of NPL portfolios in China. DAC and its affiliates, which have operating bases in Hong Kong and mainland China (including Beijing, Guangzhou and Shenyang) with over 40 employees, have previously managed investments in nine NPL portfolios in China via a variety of structures, included a predecessor fund launched in 2004.

It is proposed that IFC invest up to $30 million in the Fund and up to $300,000 in the DAC Financial Management (China) Ltd, up to a maximum of 20% of the total commitments in each case.

30.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	30.0

* These investment figures are indicative

The Fund will be organized as a Cayman Islands exempted limited partnership and DAC Financial Management Ltd is organized as a Hong Kong limited liability company and will both have local teams in China and Hong Kong.

Help improve balance sheet of banks by providing another avenue to dispose of their NPLs, which adversely impact their capital adequacy and thereby free-up balance sheet resources of banks for productive channeling to more credit-worthy clients. In addition to providing a debt servicing platform during distressed debt resolution, the Manager will also be able to restore financial health of over-leveraged companies in the NPL pools through balance sheet and operational restructuring. Demonstrating that a workout alternative for distressed assets, based on a private equity model, is commercially viable in China, thus encouraging other fund managers and investors to participate in this asset class.

- Catalytic Role: IFC’s participation will help the Fund reach a critical size and increase its chances of raising capital from international sources. - Support of Experienced Fund Manager: The market of distressed debt fund managers with a private equity model in China remains limited. IFC would be supporting one of the few established, independent firms, with a demonstrated hands-on approach in workout resolutions and would encourage other distressed debt fund managers to enter or increase their presence in China. - Governance of the Fund: IFC will seek to play a role on the Fund’s governance structure.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

This project involves IFC support for the business of investing in distressed assets, and considering the nature of activities supported, the project will be required to:

-Develop a Social & Environmental management system/procedure relevant to its business process, prior to disbursement, that is satisfactory to IFC, that ensures that all its investments are screened and processed to avoid supporting activities on the IFC FI Exclusion List.
- Review information available in the public domain and avoid investments in sub-projects that have substantial unresolved social or environmental issues.
- Commit to work with the assets it is restructuring to ensure that the projects are operating in compliance with Applicable National Environmental and Social Laws and regulations, or have an action plan to achieve the same within a reasonable time frame.
- Demonstrate commitment and resources to implementing the Social & Environmental management system/procedure, and take action to remedy any gaps in implementation on an ongoing basis.
- Submit a periodic report to IFC as per a format to be provided by IFC.