The International Financial Corporation (IFC), the investment arm of World Bank, will invest up to $60 million into China's Chongqing Economic and Technological Development Zone Houze Small Loan Co., Ltd (CHG).
A filing from IFC states that the package includes a 5-year RMB denominated senior loan of up to $40 million and a direct equity investment to the holding company of CHG of up to $20 million.
IFC declined to comment beyond the filing.
The IFC investment will be used for lending to affordable housing projects mainly in urban and sub-urban districts of Chongqing and potentially in Chengdu, Sichuan Province if the Chengdu lending license is granted.
According to a 2015 McKinsey report, China's affordable housing gap is estimated to be about $180 billion per year which is about two percent of the country's GDP. About 60 percent of households cannot afford basic housing at market rates, in cities where the population is higher than seven million.
CHG focuses on providing debt financing to privately-owned residential housing developers in frontier regions in China. Clearwater Fund IV holds 76.9 percent equity stake in the company.
Clearwater Fund IV was set up by Clearwater Capital Partners LLC and it had $575 million capital commitment in 2012. It focuses on fixed income, direct lending and restructuring opportunities in China, India, Korea, Australia, Southeast Asia and Pan Asia.
Clearwater Capital Partners is an Asia-dedicated credit and special situations investment firm established in 2001. It has approximately $1.5 billion assets under management and capital commitments across 5 private equity structured funds and a hedge fund.