June 10, BEIJING, (Xinhua) -- The International Finance Corporation(IFC), a member of the World Bank Group, announced Tuesday it had invested 100 million U.S. dollars with Morgan Stanley in Nature, one of the largest flooring manufacturers in China.

IFC's investment included a 20 million U.S. dollars equity investment and 30 million U.S. dollars long-term loan. Morgan Stanley made the other 50 million U.S. dollars equity investment. Both companies did not disclose its equity share of the investment.

The money would be used to develop plantation forests in east China's Jiangxi Province and establish a steady supply of certified wood to the floor maker.

Nature plans to increase the use of such independently certified wood gradually to 100 percent. The China Forest Trade Network, the national body of the World Wildlife Fund's Global Forest and Trade Network, will regularly assess the company's progress on this target, according to the IFC.

The Chinese government promotes both ecological conservation and forestry development, as the two are interdependent of each other, said Jia Zhibang, administrator of the State Forestry Administration.

By cooperating with international financial institutions such as IFC and Morgan Stanley, China's forestry industry could expand financing channels, he said.

China is by far the largest growing market of forest products, with annual wood consumption estimated at 337 million cubic meters and wood imports rising at an average of 16 percent a year during the past decade, according to data from the China Timber Distribution Association.

According to Jia, China's total industrial forestry output exceeded one trillion yuan (142.9 billion U.S. dollars) in 2007 with over 74 million cubic meters of artificial board produced, the largest amount in the world.

China was by far the third largest investment destination of the IFC. Focusing on private sector development, the IFC had invested a total of 3.668 billion U.S dollars in 147 projects in China by the end of 2007.

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China floor maker gets $100 mln in pre-IPO funding

BEIJING, June 10 (Reuters) - China Flooring Holding Co received $100 million in funding on Tuesday from Morgan Stanley (MS.N: Quote, Profile, Research) and the International Finance Corp (IFC) and promptly set its sights on going public.

Red-hot growth in China's real estate sector, driven by rapid urbanisation, has boosted demand for engineered and laminate flooring in recent years, making the sector a magnet for foreign capital.

The IFC, an arm of the World Bank that lends to the private sector, provided half of the funding for China Flooring, comprising $20 million in equity and $30 million in long-term debt.

The money will fund the development of plantation forests in Jiangxi province to provide raw materials for China Flooring, which sells its products under the "Nature" label.

"We wish to implement a global strategy for the brand," Se Hok Pan, the firm's chairman, said at a signing ceremony. "Only global shareholders can help to create a global brand."

The Guangdong-based company hopes the investment will pave the way for an initial public offering.

"The plan for an IPO has not been decided yet. The exact timing depends on market conditions," Guan Qilin, the branding manager of China Flooring, said.

"As a strategic investor, we see a positive overall outlook for China's flooring industry," said Sun Hong, a managing director at Morgan Stanley, the other strategic investor.

Morgan Stanley gave no details of its investment in China Flooring.

Other foreign investors that have tapped China's forest industry in recent years include Goldman Sachs (GS.N: Quote, Profile, Research), Citigroup (C.N: Quote, Profile, Research) and Carlyle Group [CYL.UL], said Zhang Senlin, director of the China National Forest Product Industry Association.

The output of China's forestry industry last year was worth 1 trillion yuan, data from the Ministry of Forestry show.

The investment is IFC's second in China's wood-products sector. As well as providing funding, the IFC will offer guidance on wood sourcing, help China Flooring develop appropriate procurement practices and identify new sourcing options, Richard Caines, an environmental manager with the IFC, said.