IFC pools $300m for China Gas

The IFC has devised a $300m lending package, including a passive investment-suitable syndications platform, to support the gas distributor’s expansion.

IFC, the private investment arm of the World Bank, has put together a $300 million financing package for Hong Kong-listed operator China Gas Holdings (China Gas) to help expand the supply of cheaper and cleaner energy to Chinese households.

The financing is intended to support the expansion of China Gas city distribution infrastructure and the building of new gas refilling stations, with a view to curb the use of polluting coal and other fuels that are more carbon intensive for industrial, household, and road transportation use.

“IFC’s support provides us with the necessary capital to pursue our expansion plans, including investment in more than 30 new city-gas projects and the construction of 200 natural gas stations every year,” said Liu Ming Hui, executive chairman, managing director, and president of China Gas. “Natural gas holds great potential for supporting China’s continued economic growth,” said Lance Crist, IFC’s global head of oil and gas.

“IFC’s long-term financing will help China Gas make this clean-burning fuel available in more places at a time when Chinese cities are growing quickly.”

IFC will provide an $86 million loan from its own account and $64 million from the IFC Managed Co-Lending Portfolio Program – a new syndications platform that offers institutional investors the ability to passively participate in IFC’s future senior loan portfolio – as well as a $150 million syndicated loan from 19 commercial financial institutions, an offering underwritten by The Royal Bank of Scotland (RBS).

China’s strong economic growth in recent decades has lifted millions of people out of poverty but also created environmental challenges, including air pollution.

The investment is part of IFC’s strategic focus on natural gas as an economical and environmentally friendly fuel that offers an opportunity to improve access to reliable energy while reducing pollution and lowering greenhouse gas emissions.

The syndicated loan, which was jointly arranged by IFC and RBS, elicited a very positive response from the banking community, according to Aditya Agarwal, head of loan markets for the Asia-Pacific region at RBS.

“The syndicated loan received very strong interest from a wide variety of banks, with demand exceeding the deal size three times. It is a testament to the strong quality of the company, RBS’ confidence in underwriting, IFC’s stamp of approval, and the credibility of IFC’s B-loan program.”