China Africa Development Fund has agreed to buy the additional shares and convertible bonds to be issued by HongKong-listed Hua Lien International (Holding) Co. Ltd at an aggregate HK$390 million.

The two parties has signed a memorandum of understanding (MOU) onJanuary 31, 2010. Under the MOU, the firm will sell 90 million additional shares at HK
.6 apiece, representing HK$54 million in total consideration. It will also sell to the fund 5-year convertible notesfor approximately HK$336 million.

The additional shares would represent 7.21% of the existing issuedshare capital and approximately 6.72% of the entire enlarged issuedshared capital. If all the convertible bonds are exercised, ChinaAfrica Development Fund will have a 34.23% stake in Hua Lien.

The proceeds will be used entirely to launch a joint venture in theRepublic of Benin, a country in West Africa, in partnershipwith China Africa Development Fund and COMPLANT InternationalSugar Industry Co. Ltd, which holds a 24.03% stake in Hua Lien. Hua Lien will take a 65% stake in the joint venture, whileChina Africa Development Fund will hold a 25%, and COMPLANT will take 10%.

The Benin joint venture will then be used as a vehicle to establisha Benin PC for engaging in Ethanol Biofuel business, targeting EuropeanUnion and Africa as its major markets.

COMPLANT is a subsidiary of the China National Complete PlantImport & Export Corporation (Group) , a wholly-ownedsubsidiary of the State Development & Investment Corp . COMPLANT is principally engaged in sugar cane planting and production of sugar products and ethanol in Africa.

Currently, Hua Lien International (Holding) Co. Ltd is an investmentholding company principally engaged in the manufacture and sale ofleather.

What China Africa Development Fund Has Done Founded in 2007, ChinaAfrica Development Fund is wholly owned by the China Development BankCorporation , focusing its investments in Africa. WithUS$1 billion in initial capital, the fund has deployed US$540 millionfor 27 projects, including agricultural projects in Ethiopia, Malawiand Mozambique; industrial zones in Egypt, Nigeria and Mauritius; and ashare of a power station in Ghana. The fund has also invested inZimbabwe. In a recent announcement, the Ministry of Commerce said thefund’s size has increased to US$3 billion, and targets at US$5 billion.