Aloe Environment Fund 2

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	25549
Company name	Green Investment Asia Sustainability Fund I
Country	India
Sector	Collective Investment Vehicles
Environmental category	FI
Department	Private Equity and Investment Funds
Status	Active

Date SPI disclosed	May 21, 2007
Projected board date	July 2, 2007
Previous Events	Invested: December 14, 2007 Signed: November 28, 2007 Approved: November 7, 2007

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Aloe Environment Fund 2 (Aloe 2 or the Fund) is a closed end private equity fund formed by Aloe Private Equity (Aloe or the Manager) which will make equity and equity-related investments in companies that are working to sustain, restore, or improve the global environment, directly or indirectly. The Fund will principally focus on India, China and other IFC client countries (collectively referred to as the Region), both through direct investments in the Region and through European-based small and medium sized companies whose technology benefit countries in the Region. Sectors of focus include clean and renewable energy, waste recycling and emission controls. The Fund has a target size of between €100million and €150 million.

Anticipated development impact of the project

Project Development Impact:

- Investments in the environment space – environment protection, environment technology and services:

The Fund will invest solely in companies that aim to sustain, restore or improve the global environment through projects in developing countries, mainly in India and opportunistically in China.

- Private sector development:

The Fund will add value to its investee companies, by providing managerial and strategic support to improve their competitiveness and sustainability.

- Adoption of best practice for corporate governance, socially responsible investing and environmental standards:

The Fund will adopt international best practices for environmental and social risk assessment and management, as well as transparency and corporate governance, thus fostering knowledge and skill transfer, and encouraging best practices across the industry.

- Support for Small and Medium Enterprises (SMEs):

The Fund is expected to allocate part of its capital for SMEs.

IFC's expected development contribution

IFC’s role includes:

- Business synergy in the environment space:

Given Aloe 2’s energy and environmental focus, IFC can expect significant synergies with the Fund and its portfolio companies.
- Institution-building:

By supporting Aloe 2, IFC will institutionalize Aloe’s business by improving the structuring of the Fund, its governance and workings with investors according to IFC and international best practice.

- Catalytic role:

IFC will add credibility to Aloe and increase its chances of broadening its investor base by encouraging the mobilization of capital from institutional investors which will position the Fund to capitalize on growth opportunities

- Leverage:

IFC will add credibility and additional leverage to the equity by seeking to provide additional project financing to investments which meet the IFC criteria.

Environmental and social issues - Category FI

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

During appraisal, IFC will analyze the fund’s expected portfolio and sectors of investment and determine the Applicable Performance Requirements if any, that would include a combination of:

- The IFC FI Exclusion List; and/or
- The applicable National Social and Environmental Laws and regulations; and/or
- The IFC Performance Standards.

IFC will also review, if required, the capacity of the fund to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). IFC may suggest Supplemental Actions to address any gaps in the SEMS if required.

The Manager will be required to:

- develop an, or upgrade, if necessary, any existing SEMS, prior to disbursement to the satisfaction of IFC;
- identify responsible, qualified persons to manage and implement the SEMS;
- commit to implement the SEMS to ensure that its investments/activities are in compliance with the Applicable Performance Requirements;
- submit a periodic report to IFC as per a format to be provided by IFC.

IFC PROJECTS