40334 - Xiaomi MCC Loan

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Summary of Investment Information

Project Number

40334

Company Name

CHONGQING XIAOMI MICROFINANCE CO., LTD.

Date SPI Disclosed

Sep 20, 2018

Country

China

Region

East Asia and the Pacific

Projected Board Date

Dec 7, 2018

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Nov 17, 2021

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Feb 8, 2019
Signed : May 31, 2019
Invested : Sep 27, 2019

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

The proposed investment entails a senior loan to Chongqing Xiaomi Microfinance Co., Ltd. (“Xiaomi MCC”, or the “Company”). Xiaomi MCC, ultimately wholly owned by Xiaomi Corporation, was established in June 2015. Xiaomi MCC provides consumer loans and instalment loans using its big data-based credit assessment methodology. Along with its new retail strategy, Xiaomi MCC is expanding its product offering to micro, small, and medium enterprises (“MSMEs”). The proposed senior loan will be on-lent to MSMEs in low tier cities and counties to support their business operation.

Associated Advisory Engagement

The advisory services proposed to be provided to Xiaomi MCC include: (i) promoting digital MSMEs lending in domestic market; and iii) entering oversea emerging markets and sharing digital financial inclusion business cases.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	119.31
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to Microfinance Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

(i) Increase Access to Finance in Low Tier Regions: The proposed investment is expected to support big-data based micro lending to efficiently tap underserved MSMEs in lower tier segments; (ii) Promote market integration by supporting the development of new product for MSMEs: who are small business owners of mom-and-pop shops/kiosk or tech fans, to help distribute Xiaomi's product in low tier cities to promote market integration between urban and rural area; and (iii) Cross-Border Expansion: With the demonstration in China, the knowledge will be replicated to the countries where Xiaomi smartphone already has footprint.

(i) Long-term Financing: MCCs in China face funding constraints. The Project will be the first long-term financing to the Company, which will help the Company access to diversified funding sources and to better manage maturity mismatch along with the ramp up of MSMEs portfolio; (ii) Long-term Partnership: The proposed Project could help strengthen the partnership with Xiaomi and Xiaomi MCC, through which the cooperation could be followed by other business opportunities; and (iii) Global Knowledge: IFC AS will support the Company develops its financial strategy in new emerging markets.

E&S Category Rationale / Risks and Mitigation

The proposed Project is to support Xiaomi MCC in expansion of its MSME lending program. It has been categorized as FI-3 in accordance with IFC Sustainability Policy. Xiaomi MCC provides digital finance services to consumers for acquiring Xiaomi branded products and to MSMEs of Xiaomi authorized retail shops or agencies mainly for selling Xiaomi products including smart phones and accessories and small home appliances across China. Environment & social (E&S) risks associated with these activities are considered as low. Xiaomi MCC will be required to comply with IFC Exclusion List and applicable Chinese E&S laws and regulations. Xiaomi MCC will implement a simple E&S procedure to manage its E&S risks. Company's labor and working condition practices were found broadly in line with IFC Performance Standard 2 Labor and Working Conditions. To further enhance them the company will be required to improve existing emergency response plan for its own employees.

Contacts

For Inquiries About the Project, Contact

Chongqing Xiaomi Microfinance Co., Ltd.
Ms. Yuru Yang
Business Manager
+86-10-60606666
yangyuru@xiaomi.com

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