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Last updated at: (Beijing Time) Friday, March 01, 2002

WB Private Financial Arm Opens Joint Venture in China

The International Finance Corporation (IFC), the World Bank's private financial arm, struck a deal with two other overseas financial companies to launch a joint venture to develop the infant housing financing business in China.

Working together with the local banks, the new company will mainly concentrate on offering technological know-how and expertise in mortgage lending management, risk controls, and even the designing of security plans for the large pool of mortgage lending.



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The International Finance Corporation (IFC), the World Bank's private financial arm, struck a deal with two other overseas financial companies to launch a joint venture to develop the infant housing financing business in China.

Working together with the local banks, the new company will mainly concentrate on offering technological know-how and expertise in mortgage lending management, risk controls, and even the designing of security plans for the large pool of mortgage lending.

"We are going to provide services to our customers in areas of mortgage origination, contract underwriting and portfolio management," said Augustine Tan, executive director of the Advantage Service Holding Ltd, the parent company of the joint venture.

Three share holders
IFC is to take a 24.5 per cent of the total stakes by investing US$370,000 in the new company-Advantage China Holdings Limited, making it the 48th projects the company has invested in China.

Starting from the mid 1980s, IFC, with a primary focus on private business, has already poured US$1.1 billion into China, which has, in turn, generated millions of returns for the company.

But the controlling 51 per cent stake will be in the hands of Advantage Services Holding Ltd, a Hong Kong-based mortgage service provider established in 1999, while the remaining 24.5 per cent go to the Netherlands Development Finance Company.

To expand business to other major cities
"Our company will help major commercial banks in China strengthen their credit assessment capabilities in residential mortgage lending and expand their lending in a financially prudent way," said Javed Hamid, director of the East Asia and Pacific Department of IFC, while attending the signing ceremony on Thursday.

Despite having great growth potential, housing financing still remains a new business in China as many commercial banks still lack strong expertise in the area of risk control, credit guarantee and lending management.

Catering to business growth in Beijing, the joint venture said it will expand its business to other major cities in China in the coming years, with Shanghai, Shenzhen and Guangzhou first and other cities in line with the growth of the market.

China is due to develop 500 to 600 million square metres of residential housing in the coming 10 years.

"We have already teamed up with the Bank of China to develop the consulting business in Beijing, and we have also been in talks with the China Construction Bank and the Agricultural Bank of China," said Ivan Ko, chief executive officer of Advantage Services Holdings Ltd.



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    About IFC

    The International Finance Corporation (IFC) promotes sustainable private sector investment in developing countries as a way to reduce poverty and improve people's lives.

    IFC is a member of the World Bank Group and is headquartered in Washington, DC. It shares the primary objective of all World Bank Group institutions: to improve the quality of the lives of people in its developing member countries. IFC Mission Statement.

    Visit Website of International Finance Corporation

    About FMO

    Not everybody in this world has equal opportunities and the economic world map looks very different to the geographic one. The FMO (the Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden NV or Netherlands Development Finance Company) finances companies which want to grow but are unable to do so without outside assistance. Business-like, decisive, and professional, the FMO is the Dutch development bank targeting the expansion of private enterprise in emerging markets. FMO's financing portfolio is spread across 71 countries with total assets amounting to 1.3 billion EURO.

    Visit Website of Netherlands Development Finance Company




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