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The local trade finance specialist, FIMBank plc, backed by a Kuwaiti investor, hopes to set up a joint venture in China to replicate its IPO-bound operations in India, Business Today has learnt.
The bank is working with the International Finance Corp., the private investment arm of
the World Bank, to find a suitable Chinese partner, its president, Margrith Lutschg-Emmenegger told Reuters in an interview which appeared last week.
The IFC, which owns 7 percent of FIMBank and is a partner of the Indian joint venture, is keen to help promote trade financing targeted at small- and medium-sized Chinese firms, she said.
But Beijing must first allow joint ventures to engage in FIMBank’s niche trade financing areas of forfeiting and factoring. Domestic banks are allowed to do such business but generally lack expertise.
“We will now make an effort to speak to the regulator and to find a local partner to support the idea,” Lutschg-Emmenegger said in the interview.
She said a China venture could take up to two years to establish: “Together with the IFC, we can maybe accelerate it a little bit, but I am aware we have to be patient.”
FIMBank created a joint venture in India in 2000 that aims to float shares later this year or in early 2008, Lutschg-Emmenegger said.
The Indian venture now handles more than 1,000 invoices a day and covers 70 percent of the factoring market for exports. Its return on equity stood at 30 percent, she said.
FIMBank, founded in 1994, has offices in Britain, Russia, Turkey, Brazil, the United
States and Singapore and has set up joint ventures in Dubai and Egypt.
Next up, for joint ventures, are Brazil, where FIMBank has found a partner, and possibly North Africa, Russia and Turkey, she said.
A few months ago, FIMBank had been in talks to sell a stake of at least 33 percent to Burgan Bank but they ground to a halt in mid-April after shareholders rejected the
Kuwaiti lender’s push to own at least 51 percent.
The search is now under way for big-name institutional investors, preferably from the
world of banking or insurance, to take sizeable minority stakes.
“There is a chance we may get one or two good names with 15 to 20 percent each,”
Lutschg-Emmenegger said.
The biggest shareholder currently is the Kuwaiti family that founded the bank. It owns
some 46 percent of the shares.
FIMBank posted net profits of $7.6 million last year, up from $2.7 million in 2005,
according to its Web site, www.fimbank.com. |
