Beijing/Washington, DC, May 19, 2005
— The International Finance Corporation, the private sector arm of the World Bank Group, today made an equity investment of $17.6 million in Yantai Changyu Group Company Limited, or Changyu Group, to take a 10 percent stake. IFC’s investment in Changyu Group will support Chinese policy to attract private strategic investors into state-owned enterprises to prepare them for stronger market competition and support the development of a sustainable private sector in rural China.
Changyu Group is a holding company whose main asset consists of a 53.85 percent stake in Yantai Changyu Pioneer Wine Company Limited, a company listed on the Shenzhen Stock Exchange. Established in 1892, Changyu is the oldest and largest wine producer in China, with production capacity of 76,000 metric tons per annum. IFC acquired the 10 percent stake in Changyu Group from the Yantai City People’s Government State Assets Supervision and Administration Commission, or Yantai SASAC. Concurrently Illva Saronno, an Italian food ingredients and beverages company, acquired a 33 percent stake. The investment will complete the transfer of Changyu Group to private control. Existing management and employees had previously acquired a 45 percent stake.
Changyu is a flagship company in China's growing branded consumer goods industry. It provides sustainable livelihood to over 10,000 grape farmers. “Given the post-WTO competitive environment, Changyu Group’s transfer to private control will give the company the flexibility, incentive and resources to strengthen its competitiveness. This will better support farmers’ livelihood and further stimulate the local rural economy.” said Jean-Paul Pinard, director of IFC’s Agribusiness Department.
“IFC’s investment in Changyu Group will support Changyu’s continued development while promoting private sector development and enterprise reform in China. Transferring shares to international investors will free local government’s resources to improve public welfare facilities and infrastructure.” said Javed Hamid, IFC Director for East Asia and Pacific.
Yantai SASAC was previously the sole owner of Changyu Group and will retain a 12 percent shareholding after the transfers to foreign investors, employees and management. Mr. Zhang Runsheng, Director of Yantai SASAC said “Changyu is a major contributor to Yantai city and Shandong province’s economy through its employment of skilled labor, tax contribution and linkages with the rural sector. IFC’s participation in Changyu Group will promote Changyu’s sustainable development.”
IFC’s committed portfolio in China, including syndications, reached $1.8 billion at the end of the 2004 fiscal year. IFC’s focuses on model, high impact investments that expand the presence of and set standards for private sector investments and address the needs of poorer people and regions.
The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
