The Sponsor is Piaggio, a leading, global manufacturer and distributor of two-wheelers, and three and four-wheeler LCVs. Established in 1887, it is headquartered in Pontadera, Italy. Piaggio sells its products globally and has manufacturing plants in Italy, Spain, China, India and Vietnam, where it has started its operations recently. Piaggio is listed on the Milan stock exchange (30%). Its majority shareholder (about 54%) is IMMSI S.p.A., an Italian listed company, which in turn is controlled by Omniaholding S.p.A., a company controlled by Mr. Roberto Colaninno. The remainder of its shares are spread across private and institutional investors. The Vietnamese subsidiary, PV is directly and indirectly, 87.5% owned by Piaggio and 12.5% by Simest S.p.A., a government entity that promotes investments abroad by Italian companies. The Indian subsidiary, PVPL, is wholly owned by Piaggio.

The estimated total cost for both projects is approximately €88 million. The proposed IFC investment consists of two separate loans; an A loan for IFC's own account of up to €15 million to PV and of up to €30 million to PVPL.

55.32 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	55.32
Equity

* These investment figures are indicative

The green-field plant in Vietnam is located in Vinh Phuc province industrial zone, 45 kms north of Hanoi. The plant in India will be an expansion of PVPL’s existing location in Baramati, 160 kms southeast of Mumbai, in the state of Maharashtra.

The projects will have a number of important development impacts as follows: (i) Improved access to economic life and mobility for individuals as well as micro/small enterprises in two IDA countries: In India, Piaggio's LCVs are sold to self-employed or micro/small business owners active in transportation of cargo and passengers and provide highly cost-effective solutions for distribution systems/logistics. In Vietnam, the project will increase competition and improve the quality of two-wheelers available to the consumers. (ii) Enhancing competitiveness of the manufacturing sector in both countries and technology transfer: Through the projects, Piaggio will transfer technological know-how and help develop technical and management skills in the automotive sector. (iii) Employment generation: The projects will benefit the local population by generating new employment, approximately 500 in Vietnam and 300 in India. In addition, significant number of indirect jobs are expected to be created along the value chain from suppliers to distribution and after sales services. (iv) Demonstration effect: Successful completion of Piaggio's projects will boost confidence in both economies and provide a demonstration effect to other foreign investors. (v) Improved energy consumption in product manufacturing and product usage: Piaggio's technology is expected to be highly efficient in terms of energy consumption in the manufacturing. In addition, the vehicles manufactured will offer better fuel-efficiency and lower green house gas emissions as compared with the competition.

IFC will provide long-term financing in line with the long gestation of the projects, help limit foreign exchange risk by providing local currency financing, and provide political risk mitigation as a partner to the Sponsor. As it expands its operations in emerging markets, the Sponsor derives comfort from IFC’s local presence in the market and relationships with the government, financial institutions and other corporates. In addition, by aligning with a technically innovative Sponsor, IFC will support the introduction of more fuel-efficient products into the market and therefore help set new industry environmental standards in the transport equipment sector.

This is a Category B project according IFC’s Procedure for Environmental and Social Review of Projects.

Key Environmental & Social issues associated with this investment include: the Companies’ capacity to manage their social, environmental, health and safety performance in accordance with local requirements and IFC Performance Standards and EHS Guidelines; implementing environmental and social management systems; assurance of fair, safe and healthy working conditions for its staff as well as contract workers; utilization of equipment and operational practices that maximizes conservation of energy, water and process materials including recycling and reuse initiatives; management of air emissions including the impacts of operations on local ambient air quality, wastewater treatment and discharge, and solid and other waste disposal; handling and management of hazardous materials and hazardous wastes; and ensuring health, safety and security of nearby communities.

Further details on the potential environmental and social impacts of the projects, corresponding mitigation measures and guidance on how and where information about the project are provided in the IFC Environmental & Social Review Summary and Environmental & Social Action Plan.