NH Capital, an affiliate of NH Financial Group, is about to enter the capital and lease market in China through a tie-up with China Co-op Group, a state-run business group in China.
The financial group said on Aug. 5 that its affiliate will buy the new shares of the China Co-op Finance and Lease Co. to increases its capital by investing 14.3 billion won, or 85 million Yuan, to take a 29.82 percent stake in the Chinese financial firm next month to become the second largest shareholder. It also has the right to participate in the management of the financial firm. This would be the first time a Korean financial firm has invested in a Chinese financial firm in China and participated in its management.
The leasing firm’s parent, China Co-op Group, signed a memorandum of understanding with NongHyup Financial Group for a range of joint ventures in financial services, including internet banking and insurance in China in January.
“The purchase of shares is a milestone for the joint business to be run by NongHyup Financial and China Co-Op Group and it is the first collaboration between Asia’s leading cooperative financial institutions,” NongHyup Financial Chairman & CEO Kim Yong-hwan said.
The deal came as China’s financial leasing market is flourishing, bolstered by the government’s bold policy support to boost the real economy.
China’s financial leasing market is expected to hit 5 trillion yuan during the first half of 2016 to become the world’s largest, surpassing that of the U.S.
NH Capital will occupy one of the three director positions on the board of the directors of the financial firm, and plans to steer the company to engage in the lease business in the agricultural sector in China. The Chinese lease market has been growing on average of 40 percent annually in the past five years, on contract balance basis.
As of May 31, the lease contract balance amounted to 3.60 trillion Yuan, or 609.659 trillion won, the largest in the world, overtaking the U.S. lease market.
Officials of NH Financial said the agricultural market in China has a chance for a great expansion with the Chinese government considering a plan for a massive investment in its agricultural machinery and infrastructural sectors to mechanize and modernize its farming sector, which will spur the growth of the financial leasing market in China.
China Co-op Group is 100 percent owned by the China Co-op Group International Leasing Co. directly under the Chinese State Council and has some 2,000 affiliates with some 54,000 employees. The affiliates are engaged in a variety of businesses, including the retailing of farm equipment, real estate development, tourism and hotel operations. The group entered the real estate business last year.
In 2014, the China Co-op Finance and Lease posted consolidated revenue of 25 trillion won with net profit of 200 billion won.
Through the JV, NH Financial plans to enter engage in diverse areas including Internet small loan provision and non-life insurance businesses.
China Co-op, established in 2010 by government entity All China Federation of Supply and Marketing Cooperatives, is a distribution giant in the Chinese agriculture market and also provides financial services. With total assets amounting to 16.5 trillion won ($13.8 billion), China Co-op Group is ranked the 83rd amongst China’s top 500 companies.
_농협캐피탈 중국리스.JPG)
