FIMBank eyes joint venture in China

07.06.2007

Malta-Based FIMBank hopes to set up a joint venture in China to replicate its IPO-bound operations in India, its president, Margrith Lutschg-Emmenegger has said.

The bank is working with the International Finance Corp., the private investment arm of the World Bank, to find a suitable Chinese partner, Ms. Lutschg-Emmenegger told Reuters.

The IFC, which owns 7 per cent 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,” Ms Lutschg-Emmenegger said.

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.  The Indian venture now handled more than 1,000 invoices a day and covered 70 per cent of the factoring market for exports.   Its return on equity stood at 30 per cent, she said.

FIMBank, founded in 1994, has offices in Britain, Russian, Turkey, Brazil, the United States and Singapore and has set up joint ventures in Dubai and Egypt.

Next up, for joint ventures, were Brazil, where FIMBank had found a partner, and possibly North Africa, Russia and Turkey, she said.

FIMBank had been in talks to sell a stake of at least 33 per cent 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 per cent, she said.

The search was 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 per cent each,” Ms Lutschg-Emmenegger said.

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