IFC proposes investment in China-listed credit union

The investment would consist of senior debt with a three-year tenor, and would be used to provide microloans to Qiongzhong’s target customers of farmers and small businesses, according to a disclosure. IFC will advise on credit risk management and overall capacity building, and also expects its involvement to help Qiongzhong attract investment from other sources.

Founded in 2007, Qiongzhong is based in Qiongzhong County in Hainan province and is one of 19 members of the Hainan provincial rural credit union. It has 17 branches and more than 300 agent outlets across 10 counties and 100 villages, and claims a market share of 40% in deposits and 63% in loans in the areas it operates.

The bank went public on China’s National Equities Exchange and Quotations (NEEQ), or New Third Board, in 2014. In its most recent annual report it recorded revenue of RMB161 million for the 2015 financial year, up from RMB126 million the year before. Over the same period profit rose from RMB18.7 million to RMB22.9 million.

IFC’s primary goal with its investment is to help advance financial inclusion in rural China. Hainan is considered one of China’s least developed provinces, with its GDP in 2015 ranked 28 of 31. Qiongzhong has provided microloans to about 110,000 borrowers since its founding, 90% of them women, and expects to add another 75,000 over the period of IFC’s loan.

IFC is considering several investments in listed emerging markets financial institutions, having recently proposed commitments to Thailand’s TMB Bank, Bangladesh’s Dhaka Bank and Vietnam’s VPBank. 

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• Topics
• Greater China
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• PIPEs
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