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IFC’s First Loan under New Renminbi Swap Facility Expands Financing for Small Businesses in China


In Beijing:
Yu Jing

Phone: (86-10) 5860 3098
E-mail:
jyu1@ifc.org

In Hong Kong:

Hannfried von Hindenburg
Phone: (852) 2509-8115
E-mail:
hvonhindenburg@ifc.org


Beijing, June 25, 2012 —IFC, a member of the World Bank Group, has agreed to provide a 315 million Chinese yuan loan (or $50 million) to Jiangsu Financial Leasing Company to increase access to finance for thousands of small and medium enterprises across China, especially in the education and health care sectors and in less-developed regions.

The loan is the first to be funded through IFC’s landmark Renminbi Swap Facility, after IFC became the first multilateral institution authorized to conduct transactions with Chinese banks in the domestic currency swap market.

“This transaction is a major milestone for our local-currency program in China and globally,” said Monish Mahurkar, IFC’s Director of Treasury Client Solutions Department, “Under the partnership with Chinese banks and the Chinese government, we are looking forward to rolling out our local-currency financing capabilities to Chinese clients in various sectors and participate actively in the further development of the local currency derivatives and capital markets.”

IFC’s senior loan will help Jiangsu Leasing expand its business in China’s poorer or frontier regions and strengthen its financial capability. The company provides financing to enable clients to obtain equipment needed to run their businesses. Unlike commercial banks, Jiangsu Leasing offers flexible packages with longer maturities and less collateral requirements, better addressing the needs of small and medium enterprises.

IFC has invested a total of $38.9 million in the company between 2010 and 2011, owning a 10 percent stake.

“As a strategic investor, IFC offers a unique package of equity investment, long-term debt financing, and international best practices know-how,” said Xiong Xiangen, Chairman of Jiangsu Financial Leasing. “Now we are able to grow our business and provide competitive products to more clients, especially those in China’s western regions.”

As of end-2011, small and medium enterprises accounted for 82 percent of the company’s leasing portfolio and businesses in frontier regions made up 44 percent. With IFC’s loan, Jiangsu Leasing is expected to double its total financing to small and medium enterprises, especially to those in frontier regions, by 2016.

”Supporting small and medium enterprises and developing frontier regions are IFC’s focus areas in China, in line with the country’s developmental priorities,” said Hyun-Chan Cho, IFC’s Country Manager for China and Mongolia, who signed the loan agreement today in Nanjing. “In the future, IFC will support more businesses like Jiangsu Leasing to bring knowledge and capital to small and medium enterprises, the backbone of the economies of China’s western regions.”

By providing loans in Chinese currency, IFC is able to meet the particular financing needs of its private sector clients and help them avoid foreign exchange risks. In 2005 and 2006, IFC issued two domestic renminbi bonds (called panda bonds) to fund priority projects in the health care and manufacturing sectors.  

About IFC

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets. In fiscal 2011, amid economic uncertainty across the globe, we helped our clients create jobs, strengthen environmental performance, and contribute to their local communities—all while driving our investments to an all-time high of nearly $19 billion. For more information, visit
www.ifc.org.

About Jiangsu Leasing

Since its founding in1985, Jiangsu Leasing has pursued a well-defined strategy oriented towards small and medium enterprises, focusing in particular on sectors such as health and education. As of end-2011, the company’s leasing portfolio stood at 9.9 billion yuan, financing more than 1,000 businesses.  For more information, visit
www.jflc.cc.

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