Nature Elements Capital (“NECAP” or the “Manager”) is a private equity firm in Hong Kong founded, solely owned, and led by Dr. KK Chan. NECAP’s management team come with strong technical expertise in the climate change area, and members have worked together at a major cleantech investment firm prior to coming together for the proposed Fund. NECAP has raised a separate RMB fund in the amount of RMB 250 million, primarily from the Chinese local authorities. The RMB fund invests in earlier stage, smaller scale venture capital projects in western China, primarily in the Chongqing region.

The Fund is targeting to raise $200 million commitment. IFC proposes an equity investment of the lesser of $25 million or 20% of the total commitments.

25.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	25.0

* These investment figures are indicative

The Fund is to be formed as a Cayman Islands exempted limited partnership. The Fund Manager is also domiciled in the Cayman Islands. Its operations will be conducted from its Beijing, Chongqing, Hong Kong, and Singapore offices.

The Fund will have a high development impact, which includes but is not limited to: (i) Reduction of GHGs; (ii) Adoption of more environmentally sustainable practices; (iii) Improvement in clean energy technology in China; (iv) Job creation including in the frontier regions; (v) Demonstration effect by strengthening investee companies and making them targets for acquisition and investments; (vi) Privatization of renewable energy assets developed by SOEs; and (vii) Developing and financing renewable energy projects in the frontier regions of China.

IFC will contribute with the following additionality: (i) Catalytic role. IFC is expected to play a significant role in catalyzing funding from both DFIs/IFIs and the private sector when fundraising is still difficult; (ii) Best practices. IFC will help the Manager structure the Fund with best practice fund structure, terms, governance and E&S standards; (iii) Co-investment. IFC can provide both debt and equity financing to the Fund's investee companies and on an as needed basis, Advisory Services; and (iv) Expertise. IFC can provide critical market knowledge, contacts, and support to the Fund from its experience in renewable and clean energy projects.

This is a category FI project under IFC’s environmental and social review procedure. As a start up Fund, the appraisal will focus on: management team selection and experience; investment eligibility criteria; approach to due diligence process, specifically on the identification, assessment and management of environmental and social risks to ensure compliance with applicable countries laws and regulations, IFC’s Exclusion List, and the Performance Standards and approaches to portfolio management in both majority and minority stakeholder positions.

A Social & Environmental Management System (SEMS), appropriately scaled and resourced, will be required as a condition of IFC’s investment. This must include assignment of responsibilities and accountabilities for E&S issues, implementing procedures and processes, access to consultants and other technical expertise as needed, training, monitoring and review processes.

Additionally, IFC will review the implementation and performance of the SEMS for the first few sub-projects, prior to the Fund’s investment decision, to ensure that the SEMS is robust and has adequately addressed the environmental and social issues. The purpose of such notification and review is to ensure that sub-projects'' compliance with the applicable requirements can be demonstrated.