Pinsent Masons advises International Finance Corporation on project financing of dry port project in Laos

The firm has advised the IFC for the past two years on the Thanaleng Dry Port project in the Lao capital of Vientiane, which is a key piece of a wider Lao government led initiative to build a major transport and logistics hub linking the Laos-China Railway and the Laos-Thailand Railway.

IFC has provided initial technical assistance and then debt funding of US$67 million for the financing of the dry port through a subsidiary of Sitthi Logistic Lao. Co. Ltd, a well-known diversified Laotian business conglomerate developing the dry port.

The dry port project was originally part of a larger concession agreement granted by the Laos government over both the dry port and an adjacent logistics park. Pinsent Masons assisted IFC and the underlying developer to create an innovative structure and a series of new and amending documents to bifurcate the two projects into separate and bankable concessions without upsetting the pre-existing grant of concession.

The cross-border Pinsent Masons team advising IFC on the matter was led by Singapore-based partner James Harris with support from Beijing-based partner Kanyi Lui and Singapore-based partner Mark Tan, and included several members of the firm’s Asia Pacific finance and projects team from Hong Kong, Melbourne and Sydney.

The team acted as the international lead counsel, English counsel and the Singapore counsel to assist IFC throughout the entire process up to financial close on 27 December 2023.

Commenting on the matter, James Harris said: “We are very pleased to have advised IFC’s upstream team and its transactional lending team on this first-of-its-kind project in Lao PDR. This project is the top-ranked project on the country’s list of development priorities and has been a long time in the making. The project supports earlier rail and transport logistic hub initiatives from government with a focus on establishing stronger ties through land transport links with its major trading partners. As such, the dry port will play a very important role in the economic growth of Laos as a whole.”

James said this transaction required a great deal of innovative thinking around structuring, legal issues and documentation.

“For instance, we needed to design to design and execute fairly unconventional yet sophisticated financing structures to suit the need for subsequent potential funding from many additional sources and we also encountered a significant number of new local laws and regulations that came into effect whilst we documented the transaction.”

“We developed suitable and bankable risk mitigation strategies to address these legal, regulatory, technical and financial issues.”

This matter continues Pinsent Mason’s longstanding relationship as legal adviser to the IFC, which in the past year has seen the firm advise IFC on close to US$1billion in green, social and gender bond investments in Indonesia and Mongolia.