Xiang Nian II

active

    The proposed investment is a US$30 million equivalent A-loan to Xiang Nian Foods Co. Ltd. (“XN”, or the “Company”), an existing portfolio client of IFC. XN and its subsidiaries currently produce ~140,000 tons of dried noodles per annum for the Chinese market. XN has four entities fully controlled and owned by the group. These being (i) Henan Kang Yuan and Oil Products Co Ltd (HKY), Nangyang based milling operations; (ii) Zhenping Xiang Nian Foods Co., Ltd (ZXN), a milling and noodle manufacturing facility which has been recently commissioned in Henan; (iii) The Khorgos Xiang Nian Voyage Foods Co., Ltd (KXV) a noodle manufacturing company established within the special economic zone of the China-Kazakhstan Khorgos International Border Cooperation Center, Khorgos, Xinjiang, and; (iv) Henan Xiang Nian E-Commerce Co., Ltd, established for promotion and marketing of XN products through e-sales platforms. The process of dried noodle manufacturing involves mixing of flour, blending with water, rolling, forming, drying and packing for dispatch. XN produces three levels of products, from premium brands to mass market with additional product mixes including products fortified with vitamins. XN and HKY source wheat domestically from small holders, farmers cooperatives and government managed grain stores with an annual consumption of ~150,000 tons. Consumption of wheat is anticipated to increase to ~600,000 tons per annum once ZXN will be operating at full capacity in Q4 2020. The wheat sourcing will come from ~75,000 farmers in Henan. KXV was established to take advantage of access to imported flour products from Kazakhstan. The entity currently operates two production lines producing ~32,000 tons of noodle per annum. Procurement of wheat and flour for HKY, XN, and ZXN is centralized under the holding company with wheat purchased directly from small holders and cooperatives by XN and resold to HKY for milling, and subsequently sold back to both XN and ZXN for noodle processing. The balance of flour used in production is sourced from aggregators and traders such as COFCO. Wheat flour for KXV is sourced by that entity and from Kazakhstan based traders. XN is an existing IFC equity investment under project #38881, and to date has demonstrated satisfactory Environment and Social (E&S) performance.