JS Developments Limited

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	26468
Company name	JS Developments Limited
Country	Pakistan
Sector	Accommodation & Tourism Services
Environmental category	B
Department	Global Manufacturing & Services
Status	Hold

Date SPI disclosed	April 18, 2008
Projected board date	May 19, 2008

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Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

JS Developments Limited (JSDL, the company) is a new holding company intended to develop and operate a diversified portfolio of property assets in Pakistan, which will be grouped under different subsidiaries. JSDL is expected to take advantage of the existing infrastructure deficits in Pakistan by developing and operating budget hotels in partnership with international operators as well as mix-use developments including office and retail space. In addition, JSDL may consider investments in residential developments. Currently, JSDL has an investment pipeline that includes seven green-field retail-office, mixed-use developments, out of which two include a hotel project, with the support and management of Accor, the French global hotel company, and under its Ibis brand.

Anticipated development impact of the project

The project will help address the lack of sufficient business-enabling infrastructure in the country, including hotels, office and retail facilities; as foreign investment climbs and economic growth spurs an expanding middle class, the supply/demand gap may further increase. The project will help meet the growing demand for quality mid-market hotels in the major business cities of Pakistan, as such hotels are currently not available. It will also improve the country’s hotel service standards by bringing a well known international hotel operator into the country, thereby contributing to further development of the hospitality industry in Pakistan.

On the retail side, the project has the potential to improve the efficiency of retail and distribution activities and to contribute towards bringing formalization and modernization to the sector, leading to increased transparency. In addition, the developments will provide numerous quality jobs during both the implementation and the operations phases. Extensive hotel training will be provided prior to and during operations. The hotels and other facilities will generate foreign exchange for the country and provide revenue to the government by way of taxes, lease payments and other miscellaneous charges. Linkages with the rest of the economy initially involve building materials and will strengthen over time as volumes of operating supplies and services increase. The expected international floating of JSDL will offer a sustainable investment alternative for local and international financial investors.

IFC's expected development contribution

IFC’s participation will help JSDL reach a critical capital base in a time of high political uncertainty in the country, providing added credibility to the sponsors and increasing the chances of raising capital from international sources. In addition, IFC is working closely with the sponsors to enhance JSDL’s structure to ensure adequate alignment of incentives and investor protection. Finally, IFC is helping the sponsors to build internal capabilities to manage environmental and social risks, ensuring compliance with World Bank environmental and social guidelines, including international standards for life and fire safety.

Environmental and social issues - Category B

This is a Category B project according to IFC’s Policy and Performance Standards on Social and Environmental Sustainability. While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with specific Performance Standards on:

- Social and Environmental Assessment and Management System: the company developed its ‘Sustainability Management System’ (SMS) under an existing project with IFC (JSPE). The SMS provides an adequate framework and set of procedures for screening, assessing, managing and monitoring investments. JS will utilize the same SMS to guide JSDL and has agreed to hire a full time Sustainability Manager, with qualifications and experience in ESHS issues to implement the SMS;

- Labor and Working Conditions: the company has reviewed the Performance Standard and confirms that its own operations comply with its key principles. In accordance with the Action Plan, JSDL will revise its Human Resources policy to incorporate explicitly the four key ILO conventions. JS typically designs its buildings in accordance with standards set by the US-based National Fire Protection Association (NFPA). The company has reviewed IFC’s Life and Fire Safety Guidelines and agreed to incorporate these in projects developed under JSDL. JSDL will include standard provisions in its construction contracts requiring the implementation of fair, safe and healthy working conditions at all project sites;

- Pollution Prevention and Abatement: JSDL designs and constructs its developments in accordance with all national requirements;

- Community Health, Safety and Security: major community health, safety and security issues are not expected during operation of the typical assets to be developed by JSDL;

- Land Acquisition and Involuntary Resettlement: sponsors have never had a land situation that has involved displacement either of occupants or users of land acquired for the construction of developments.

Where an early review of a project indicates that there may be impacts on biodiversity or natural resources requiring management, JSDL will engage a qualified third party to conduct an assessment to identify impacts that must be mitigated, managed and monitored in a manner consistent with Performance Standard on Biodiversity Conservation and Sustainable Natural Resource Management. JSDL will include a procedure for assessing cultural heritage ‘chance finds’ that may be identified during either construction or operation to ensure that any such finds are not disturbed until they have been assessed and documented by a competent specialist. With respect to the Performance Standard on Indigenous Peoples, no indigenous peoples are expected to be impacted by the project.

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