Colony China Opportunity Fund

completed

The project entails an equity investment of the lower of - 10% of the total fund capitalization, or - $50 million in the proposed Colony China Opportunity Fund (“the fund”). Included in this investment, IFC would seek a stake of 10% in the General Partner (GP) of the fund. The fund is a 7-year closed-end distressed asset investment fund, to be established as a Cayman Islands limited partnership. An on-shore parallel fund, which will co-invest pari passu with the fund, will be set up as a Chinese limited liability company to facilitate participation by domestic investors, including co-sponsor Shanghai Industrial Investment Co. (SIIC). The fund will invest in: - acquisition of NPL pools from financial institutions, - direct purchase of distressed real estate assets, and, to a lesser extent, - restructuring of distressed operating companies in PRC, Hong Kong, and Macau (Greater China). The joint sponsors, Colony Capital Asia Pacific Pte Ltd. (CCAP) and SIIC, will leverage CCAP’s global and Asian distressed investment experience with SIIC’s domestic business and government relationships to optimize the fund’s ability to source, structure and execute distressed investments, aiming to achieve a gross IRR in excess of 25%. The joint sponsors are seeking to raise total capital, for both the off-shore and on-shore vehicles, of $250-$500 million, and expect to conduct a first closing by the end of first quarter of 2004. The fund will charge a 2% annual management fee, and will pay the GP a 20% carried interest based on committed capital after achieving a 10% p.a. hurdle rate.