Aqualyng Holdings AS was incorporated in 2007 in Norway. The Company specializes in planning, developing, financing and operating seawater desalination plants. Aqualyng has also established its own technology in energy recovery device for SWRO and other technology. Aqualyng has four major Norwegian shareholders, Staur Aqua AS, a Norwegian industrial developer, the Lyng Group AS, Aqua Venture AS, and Pareto Energy Solutions AS. The Company was also joined by Clean Resources Asia Growth Fund, L.P. (CLSA), a leading Asia focused private equity fund under CLSA Asia-Pacific Markets as of 2010. IFC plans to co-invest alongside CLSA and other leading private equity fund(s).

The total project cost defined in this round of financing is estimated at US$65 million. IFC is considering an investment of up to US$17 million, in the form of equity, warrants and/or debt.

12.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	12.0
Equity

* These investment figures are indicative

Aqualyng’s first plant is located in the Caofeidian Industrial Zone, Tangshan, Hebei Province, China, and the Company looks to expand to other coastline cities in China. Desalination plants may include supplying water to Beijing.

1. Address the severe water scarcity in China; out of the 663 cities in China, 400 are short of water and 110 are facing serious shortages. 2. Assist the government in establishing a technology that reduces energy consumption, especially with the growing environmental pressure that is increasingly being stressed by the national government and the international community. 3. Demonstration effect to grow this infant industry through the success of the project, in particular the Caofeidian plant as the model desalination project for China. 4. Adoption of environmentally sustainable practices in a water sector that requires careful planning of the waste (brine). 5. Enable knowledge transfer and technology transfer by supporting a company that is shifting its research and manufacturing to China, and planning to expand into other emerging markets.

1. Access to Capital. IFC can help attract private sector funding in the water sector, including future long-term debt. 2. Best Practice. IFC can help the Company with global best practice and provide a framework and guidance in corporate governance as well as in environmental and social standards for a company at a growth stage. While the Sponsor has already adopted international best practice, IFC can particularly facilitate transfer of such practices for projects in China. 3. Expertise and Knowledge Sharing. IFC can provide global emerging market expertise and share experience in the water sector. 4. Partner for Global Expansion. During the growth phase, IFC can facilitate the Sponsor to enter new markets where finding a partner may be challenging. IFC can contribute with understanding the market and the players.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects. The proposed IFC equity investment in Aqualyng will support the Norwegian Company''s entry into the rapidly growing water desalination market in China. As part of the environmental and social review process, the Company''s corporate environmental and social management system, policies and procedures were reviewed as well as its performance to date on the Caofeidian SWRO project. The scope of review included environmental, safety and health and social risks and impacts of the project and the Company’s management capacity to undertake such projects in the future, including how environmental and social consequences are taken into account, from screening of opportunities to planning, design, construction and operation phases.

Because the proposed equity investment may be used to support future, but as yet, undefined projects in addition to those identified, the principal environmental and social risks identified for the project which will require additional mitigation measures by the Company include implementation of a comprehensive environmental and social management system; and adoption of IFC environmental and social Performance Standards as part of the applicable legal and other requirements in its management system, including formal procedures for environmental and social screening of business opportunities (including any joint ventures) and new projects into its marketing strategy, commercial planning, and project bidding processes.