26 May, 2016
King & Wood Mallesons has advised the joint lead managers as their international and PRC counsels in relation to the debut offering of green bonds by Zhejiang Geely Holding Group Company Limited (Geely) through its subsidiary, London Taxi Corporation Limited (LTC) of US$400,000,000 2.75 per cent credit enhanced bonds due 2021.
Geely is the largest privately owned automobile company in China. Founded in 1997 and headquartered in Hangzhou, Geely has evolved from a domestic auto maker into one with a global reputation with operations spanning the automotive value chain, from research, development and design to production, sales and servicing. The Group comprises China’s leading non state-owned car manufacturer Geely Automobile Holdings Limited, as well as Volvo Car Group and LTC. Net proceeds from the green bond issue will go towards financing or refinancing the design, development and production of zero-emission vehicles by LTC such as the TX5, a new generation of London taxis which will be launched in the UK at the end of 2017 and in international markets in 2018.
Commenting on the deal, partner Hao Zhou said, “We are delighted to have had the opportunity to advise the joint lead managers on this significant transaction. This offering marks the first green bond offering by an automobile manufacturer in China and the third green bond offering by a PRC enterprise. We believe this deal will be a benchmark for other PRC issuers looking to issue green bonds in the international capital markets.”
KWM has had extensive experience in advising on offshore bond offerings by issuers in the PRC auto industry. In 2015 alone, we advised the Beijing Automotive Industry Group (BAIC) on its debut euro bond issue and Weichai Power on its debut international bond issue.
This transaction takes place amidst China’s expansion of its green bond market under the 13th Five-Year Plan as a way to finance its drive to build clean-power generators and the manufacturing companies that promote them. To date, bank loans have been a primary source for green investments. Green bonds offer an alternative source of financing.
“This landmark transaction is one of many firsts in the green bond market KWM has been involved in, further reinforcing KWM’s global capability, all-round experience and expertise in cutting edge debt capital market transactions,” said head of Hong Kong Banking & Finance Practice, Richard Mazzochi.
The KWM international team was led by Hong Kong-based partner Hao Zhou, supported by senior associate Michael Lu, associates Lu Tan and Anran Zhou. The KWM PRC team was led by Shenzhen-based partner Pan Yujia, supported by associate Yao Tingting.
