CITICC

completed

IFC is considering an investment in partnership with CITIC Construction (“CITICC” or the “company”) to establish a Platform holding company (“Platform”) to facilitate the development of affordable housing projects in Sub-Saharan Africa. A further investee organization may be identified in the future, though CITICC will maintain a majority shareholding percentage of the Platform. The Platform may invest directly in projects or indirectly by setting up operating companies (“OpCos”) that will deliver and manage multiple projects in a particular country depending on the opportunities available. The Platform will invite value-adding local investors to invest in OpCos and establish partnerships with governments, private land owners and local developers to source projects. Local developers will work with the OpCos to deliver projects given their valuable market knowledge. The Platform will build homes to sell and does not seek to hold land or properties as investments. IFC will provide $2 million in equity and $58 million in shareholder loans, whilst CITICC provides $8 million of equity and $232 million in shareholder loans for a total investment of $300 million in the Platform. The amount the additional investee organization will provide will be determined at the time of their investment. Projects will be developed either directly via the Platform, or via the Opco at the individual country level. CITICC is a subsidiary of the CITIC Group which was established in 1979 and is a large scale transnational conglomerate comprising a broad range of industries in both the financial and non-financial sectors. The CITIC Group is a wholly owned state enterprise of the Government of China. CITICC’s operational strategy is to obtain construction contracts through a clearly defined one-stop service by providing project definition, project development, investment, financing and a pre-construction service. The company focuses on large-scale projects that can take advantage of this integrated approach. CITICC, as part of its EPC activities, integrates and utilizes best-in-class specialized companies or sub-contractors both domestically and internationally and forms key partnerships with these. CITICC acts as the flagship project manager, providing oversight and contract administration by: (i) controlling the key elements of production and resources, such as supplies, equipment, logistics; and (ii) managing the key processes, such as contracts, core resources, legal affairs, finance, public relations; the companies with whom CITICC partners are responsible for project implementation by taking advantage of their respective expertise, though all sub-contracting is arms-length and on a project by project contracting basis. CITICC has in-house professional staff including project managers, engineers, architects and the like that are involved in the construction projects they are associated with. Projects may be undertaken on an EPC basis, though in some instances initial design may be undertaken by other companies in China or in the countries in which the development is occurring. A core function of the professional staff is to provide project management and quality control for construction projects. However, the company has no personnel directly involved in construction activities with all construction work is undertaken by business partners that subcontract to CITICC. Such work is allocated via a formal tender process, though the company may also engage subcontractors directly depending on the nature of the project and the required task.For the purpose of projects initiated via the Platform, the approach to project development may vary depending on the project, and or country where it is occurring. CITTIC will be the preferred EPC contractor and there will be an independent consultant / engineer to review and provide oversight on CITICC’s cost proposals on behalf of the Platform. Currently IFC and CITICC are jointly assessing various potential projects to be developed via the Platform, however none have been formalized to date.