41378 - Lionbridge Green

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Summary of Investment Information

Project Number

41378

Company Name

LIONBRIDGE FINANCING LEASING (CHINA) CO LTD

Date SPI Disclosed

Feb 25, 2019

Country

China

Region

East Asia and the Pacific

Projected Board Date

Apr 15, 2019

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Aug 13, 2023

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Mar 13, 2020
Signed : Mar 25, 2020
Invested : Jun 29, 2020

Sector

Leasing Services

Project Description

Established in 2012, Lionbridge is led by a group of leasing experts with extensive industry experience and provides financial leasing and extended operational services to micro/small-enterprises and individuals primarily in the sector of commercial vehicle leasing. By the end of September 2018, the outstanding leasing receivables of Lionbridge reached RMB 12.72 billion (US$1.9 billion equivalent) which was primarily relating to truck leasing.

According to the management account of the financial statement as of end September 2018, the total asset of Lionbridge was RMB 16.9 billion, and the total equity was RMB 2.7 Billion. For the 9 months ended 30 September 2018, the Company generated RMB 130 million net profit, translating to ROAA and ROAE of 1.07% and 7.90% respectively.

Associated Advisory Engagement

The proposed investment may be complemented by IFC advisory service in development of electric truck leasing products.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.0
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 SME Borrowers

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

Development Impact

Access to financial services by micro entrepreneurs and SMEs at a time when mainstream commercial lending is being curtailed to this segment in China: With the proposed financing, Lionbridge would be able to expand leasing finance services for electric vehicles to truck drivers, thus rapidly building its electric truck leasing portfolio while increasing the share of climate-smart finance in the overall portfolio. A side benefit is to build truck drivers' capacity and knowledge about the advantages of EV's, thus contributing to accelerated adoption of EVs in the market. Environmental and Social: IFC anticipates the Project will result in a reduction of GHG emissions through the promotion of leasing finance for environmentally-friendly electric trucks. The actual GHG impact numbers will be determined further during appraisal/pre-IRM Market Creation Sustainability: climate change is a significant issue for China. The Chinese government has a strong commitment to reduce current GHG emission reduction levels. Along with the substantial effort to transform the supply-side, Energy Efficiency and Renewable Energy upgrades, transportation has become a critical component to achieve the climate goals and EV promotion stands out as the most immediate and effective path. As part of the climate finance strategy in China, the proposed project complements IFC's experience with the CHUEE program. The demonstration of commercial viability will catalyze the replication across other financial leasing peers, thereby contributing to the overall sustainable targets of the Chinese economy. Competitiveness: the financial leasing product for electric trucks provides an alternative option and thus exerts competitive pressure for truck lending. The proposed project is expected to demonstrate the viability of such products and encourage replication, which will enhance the competitiveness of the truck/ truck lending sector.

Financing structure: The proposed project adopted a structured approach to allow the Company to match its available collateral level for secured lending, while maintaining some degree of unsecured borrowing available; whereby the proposed IFC facility will start at 6-months unsecured and the remaining 2.5 years secured. Such a structure is not available for most non-deposit lenders in the market. Please refer to "IFC Investment" section for more details. Mobilization: The proposed Project will help the Company to obtain long term funding from commercial lenders at 2x - 3x IFC A loan. The presence of IFC will allow other lenders to invest in a structured product targeted for a unique market segment, which they otherwise may not have considered. Knowledge, innovation and capacity building: IFC has been continuously advising the Company and helping with the capacity building since the first investment, which was committed on May 18, 2016. With the second investment, IFC is well positioned to share IFC's global knowledge and learning in EV and jointly develop proper electric truck leasing products to support the Company's pilot with green assets.

E&S Category Rationale / Risks and Mitigation

The project involves a senior loan package to Lionbridge, an existing IFC client, to support its expansion in the electric truck leasing sector consistent with the ICMA Green Loan Principles. The overall environmental and social risk of portfolio to be supported by this project is considered limited. The project has therefore been categorized as FI-2 in accordance with IFC's Sustainability Policy. While Lionbridge's leasing assets include trucks, medical devices and other equipment and its lease clients include truck drivers, hospitals, farmers and other micro, small and medium enterprises, proceeds of this investment will be earmarked for financing the leasing of electric trucks by their users. The company will be required to ensure its leasing activities supported by this project meet the requirements of the IFC Exclusion List and the applicable Chinese E&S laws and regulations. The company doesn't provide any leasing of equipment for development and/or operation of coal related assets such as coal mining, coal transportation or coal-fired power plants, or infrastructure services exclusively dedicated to support any of these activities.

The main E&S risks and impacts of the project derive from the E&S risks of the company's leasing activities supported by the project and the company's policy and capacity in place to manage such risks, as well as the company's own practice with regard to labor and working conditions. The company has appointed an E&S officer and developed an E&S policy commensurate with its financial leasing activities to achieve compliance with the IFC Exclusion List and applicable national E&S laws and regulations. The company will be required to upgrade its E&S policy by incorporating relevant elements of the Green Loan Principles for its financial leasing activities supported by this project, and to provide ongoing training to its staff on E&S management. The company's labor practice was found to be broadly consistent with the requirements of IFC Performance Standard 2 on Labor and Working conditions.

Contacts

For Inquiries About the Project, Contact

Lionbridge Financing Leasing (China) Co., Ltd
Mr. Jun Wan
CEO
+86-10-56700777
wanjun@lionbridgecapital.cn
Chaoyang District, Beijing.100102
Websitehttp://www.sqcapital.cn/

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Task Title & Description	Anticipated Completion Date
Staff Training	06/30/2019
Upgrade ESMS	06/30/2019

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