News Release
No. 201/02 29 October 2002

Establishing a China Environment Fund for PRC with US$10 Million Equity

MANILA, PHILIPPINES (29 October 2002) - ADB today approved a US$10 million equity investment to establish the first venture capital fund dedicated to the environment sector in the People's Republic of China (PRC).

The China Environment Fund will invest in enterprises in the PRC's environmental service sector, selecting those with strong growth potential and which involve the private sector.

It will introduce modern management and technical skills, and encourage best corporate governance practices.

The Fund will invest in 10-20 companies that provide services under long-term contracts or have well-developed channels to sell clean technology and sustain business products and/or services.

The Fund will provide equity capital and leading technology and take a controlling stake or acquire strong protective rights in each investee company to enable active management by the Fund.

The targeted enterprises will include those that engage in treating hazardous or medical waste, environmental monitoring and data management, water sector services, air pollution control, solid industrial waste recycling, and water and energy use management.

"The focus will be on the services sector rather than infrastructure projects, because customer-focused domestic companies operating to international standards of quality are in short supply in the PRC," says Jong Hwa Lee, ADB Senior Investment Officer.

"These activities will enable the Fund to protect the environment in the PRC and promote private sector growth. If successful, it can prove a catalyst for similar investments."

The Fund's sponsor is Leading Environmental Services & Solutions Limited (LESS), an investment company with an aggressive international investment program in the environmental sector.

The Fund aims to mobilize up to US$40 million of equity capital. LESS has agreed to invest an initial US$15 million and could increase this to up to US$60 million in this and similar funds over the next several years.

Environmental protection is one of the major medium-term priorities for the PRC Government and ADB.

Due to a lack of financing and technical capacity, PRC's domestic private sector has been hampered in playing a significant role in protecting the environment.

More at adb.org/media

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