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The Special Financing Department is a professional operating institution of Industrial and Commercial Bank of China (“ICBC”) in the global investment & financing field, and also an important platform of ICBC to implement the “Going Global” strategy. Centering on overseas investment & financing and cross-border capital operation, the Special Financing Department meets all sorts of financial demand of the “Going Global” enterprises in the global electricity, global transportation and infrastructure, global manufacturing and leasing, global resources, international syndication and asset transaction fields, through one-stop services. It has taken the lead in completing a batch of significant projects that are influential in the international capital market, and extended services to more than 50 countries and regions in six continents of the globe, becoming an important partner of the “Going Global” Chinese enterprises. Along with implementation of the “Belt and Silk Road” initiative, Chinese enterprises are entering a new stage of “Going Global”, which offers strategic and historical opportunities for development of the global investment financing business. The Special Financing Department will leverage the “ONE ICBC” advantage to support and guide “Going Global” of enterprises, and contribute to the international capacity cooperation and equipment export.
I. Main financing businesses
i. Export credit
1. Export buyer's credit
Description
The financing means of granting medium to long-term loans to the foreign buyer, the buyer’s bank or government to finance their purchase of goods and services from China on the premise that China Export & Credit Insurance Corporation provides insurance for the political and commercial risks with a compensation ratio of no less than 95%.
Scope of Application
The goods exported shall be capital goods that the government encourages to export and value more than USD5 million;
No less than 70% of the goods exported shall be sourced from China;
The loan amount shall not exceed 85% of the commercial contract’s value.
Business Procedures
The borrower (or the exporter that the borrower entrusts) brings forth financing application to the Bank;
The borrower or the exporter submits insurance application to China Export & Credit Insurance Corporation either directly or through the Bank, and obtains the intent of support from the latter;
The Bank reviews credit standing and materials submitted by the borrower, issues intent of financing or interest of financing to the borrower if the borrower meets requirement of the Bank, and signs the power of attorney for financing;
The borrower discusses the text of contracts such as the loan agreement, the guarantee contract etc. with the Bank, and sign the business contract with the exporter according to requirement of China Export & Credit Insurance Corporation and the Bank;
The Bank completes the due diligence survey and approval procedures of the Bank, and signs the financing agreement with the borrower;
China Export & Credit Insurance Corporation issues the insurance policy, and announces effectiveness of the policy in writing;
The borrower submits the loan withdrawal documents after fulfilling the withdrawal preconditions specified the loan agreements, and withdraw loan funds.
Typical Cases
The Jumbo project of Sinopec in the United States;
The SOYO combined power station project of CMEC in Angola;
The power transmission/transformation project of TEBA in Zambia;
The iron mine construction project of China National Electric Engineering Corporation in Russia;
The MTN telecommunication project of Huawei in Nigeria;
The KAZAN soda ash and power station project of Tian Chen in Turkey.
2. Re-financing on deferred export contracts
The Bank buys out the medium to long-term receivables under the export business contract without recourse right on the premise that China Export & Credit Insurance Corporation provides insurance for the political and commercial risks with a compensation ratio of no less than 95%. In practice, the Bank may buy the creditor right covered by China Export & Credit Insurance Corporation to mitigate the exporter’s fund pressure as long as the exporter has fulfilled all of the responsibilities under the commercial contract, regardless whether the exporter has bought any seller’s credit insurance in advance.
3. Overseas accounts receivable financing
Overseas accounts receivable financing refers to the condition that Chinese exporters or contractors sell out their overseas account receivables that are directly accepted by the Bank or those insured by China Export & Credit Insurance Corporation to the Bank. It helps reduce the exporters’ liability ratio and exchange rate risk. By exporter’s responsibility, the overseas accounts receivable financing can be divided as business with recourse right, business without recourse right and business with partial recourse right.
4. International commercial loans
The Bank directly takes risk from the overseas large companies, banks and governments with sound credit standing, and provides medium to long-term financing by taking the abovementioned parties as the borrower or guarantor, in order for them to pay for the electromechanical goods or construction costs to Chinese enterprises;
In general, international commercial loans are combined with export buyer’s credit to pay the business contract advances, interest during the construction period, and insurance premium;
Countries of the overseas enterprises are generally emerging and developing countries with a relatively high sovereign rating and a relatively stable political and economic environment; and relevant countries generally enjoy a credit rating equivalent to or above the BB- foreign currency long-term credit rating issued by S&P/Moody’s.
ii. Global electricity financing
Description
Provide financial services to facilitate the global electricity investment, construction contracting, equipment export etc. of Chinese customers.
Scope of Application
1. The enterprise has high reputation and comprehensive strength in the industry;
2. The enterprise has solid financial position, and relatively strong liquidity and profitability.
Features and advantages
The Bank has successful case experience across all continents around the globe, and offers a diverse spectrum of various financial services through a team of experienced talents;
The global electricity financing team provides financing solutions to cross-border electricity investment and financing of customers;
"Individualized” financial service plans to meet various demand of the customers;
and exclusive project financial advisor services, including transaction matchmaking, interactive financial models, optimization of key project routes, risk matrix analysis, and assistance to business talks etc.
Business Procedures
Select a project;
Design exclusive financial service plan;
Review and sign the agreement.
Typical Cases
Gas-Steam Combined Cycling Thermal Power Plant in Teninskaya, Russia (financing for Chinese investment project)
Heavy oil power plant in Kenya (financing for Chinese engineering + operation maintenance project)
Hydropower station project in Patuca, Honduras (financing for Chinese construction contracting project)
iii. Global resources financing
Description
The Bank offers structured financing to the overseas borrowers that have signed a long-term resources supply contract with domestic enterprises, and use resources sales income under the sales contract as the main source of repayment.
Scope of Application
The borrower or its parent company is an international resource/energy producer with abundant resources reserve and huge sales volume;
The major domestic resource purchasers are overseas counterparties of their sales contract;
It’s ideal that the borrower or its subordinate enterprise grants the construction contracting project to Chinese enterprises.
Features and Advantages
Able to meet the borrower’s medium to short-term demand for huge funds;
Guaranteed by interest in the long-term resource sales agreement signed with Chinese enterprise;
Residual part of the goods payment, after deduction of the loan principal and interest, will be returned to the exporters, so that it doesn’t affect routine fund operation of the enterprise;
Help domestic enterprises to acquire resources or win construction contracts;
Loan purpose is flexible, and loan fund can be used for general purposes or to fund construction of projects undertaken by the Chinese enterprises;
Utilize global outlet network of ICBC to reasonably arrange the tax, legal, commercial business and other matters relating to the loan;
Can be combined with overseas investment project finance, overseas investment capital loans;
Widely applicable to fields such as oil, gas, coal, various metals and resources.
Business Procedures
The borrower (or the construction contractor or counterparty of the supply contract that it entrusts) brings forth financing demand to the Bank;
Review corporate credit standing and materials submitted by the borrower, and discuss the main financing terms. Issue intent of financing or interest of financing to the borrower if the borrower meets credit policy of the Bank; and sign the power of attorney;
Discuss text of contracts such as loan agreement (guarantee agreement), account agreement etc. with the borrower;
Complete due diligence survey and approval procedures of the Bank, and sign relevant financing agreements;
The borrower signs business contract (oil trade contract and/or construction contracting contract) with domestic counterparties before withdrawing the loan fund;
Fulfill withdrawal preconditions specified in the loan agreement, and withdraw loan funds.
Documents Required:
Corporate registration certificate;
Audited financial statements over the past three years;
Resource reserve and appraisal report;
Long-term resource supply contract with China;
Business contracting contract (if any);
Other materials that ICBC needs to assess the loan risk.
iv. Cross-border M&A financing
Description
Financing that aims to meet payment demand of the asset acquirer during cross-border M&A transactions and is repaid with corporate cash flow following the M&A, comprehensive gains or other legitimate income of the asset acquirer etc.
Scope of Application
Industry-relevant strategic M&A launched by Chinese enterprises in overseas market, including corporate consolidation and resources consolidation;
The enterprise shall have prominent strength in core business, stable operation, clear competitiveness in the industry or region, and favorable development prospects;
Businesses of the asset acquirer and target enterprise are closely or strategically correlated, and the asset acquirer is able to get access to strategic resources of the target enterprise, such as R&D strength, key technologies and know-how, trademark, franchising right, supply or distribution network etc., through M&A to sharpen its core competitiveness;
The M&A transaction shall be legal, and have obtained or will soon obtain approval from competent authorities in accordance with the applicable laws and policies if it involves the industrial policy, industrial access, anti-monopoly, transfer of state-owned assets etc.
Business Procedures
The borrower (asset acquirer) brings forth financing demand to the Bank;
The Bank reviews credit standing and materials submitted by the borrower, issues intent of financing or interest of financing after the borrower meets the Bank’s requirements, and signs the power of attorney;
Parties to the M&A deal sign the M&A agreement;
The borrower discusses pertinent agreements including the loan agreement, guarantee agreement etc. with the Bank;
The Bank completes due diligence survey and approval procedures of the Bank in accordance with the workflow;
The borrower signs the contract, fulfill the preconditions for loan withdrawal, and withdraw loan.
Typical Cases
M&A financing for China Cinda Asset Management’s acquisition of Nanyang Commercial Bank
M&A financing for China General Nuclear Power Group’s acquisition of Tenaga Nasional Bhd
M&A financing for State Power Investment Corporation’s acquisition of Pacific Hydro of Australia
M&A financing for Beijing Tourism Group’s acquisition of Home Inns Group
M&A financing for China Wanda Group’s acquisition of Infront Sports & Media
v. International syndicated loans
Description
Financing that a banking group led by one or several banks that are approved to operate loan business and participated by many other banks and non-banking financial institutions to the same borrower based on agreed-upon maturities and conditions under the same loan agreement.
Scope of Application
M&A financing, resource project financing, infrastructure construction project financing, corporate financing etc.;
Companies with relatively high reputation and comprehensive strength in the industry;
Companies with solid financial condition, and relatively strong liquidity and profitability;
Companies with long-term demand for a large amount of loan fund.
Features
Large amount of loan fund, and long maturity. Generally applicable to industries such as transportation, petrochemical, telecommunication, electricity etc.;
The financing costs less time and energies, as the lead bank and correspondent bank are responsible for completing tasks at different stages;
The syndicated loans have diverse forms;
It helps the borrower to build a good market image.
Typical Cases
Syndicated loan for ChemChina’s acquisition of Pirelli
Syndicated loan for China Three Georges Corporation’s acquisition of the operating concessions of Brazilian Hydropower Plants
Syndicated loan for China Minmetals Corporation’s acquisition of a copper mine in Peru
Syndicated loan for HNA Group’s acquisition of Swissport International Ltd
Syndicated loan for Wu Yuefeng-led capital group’s acquisition of the US ISSI
vi. Infrastructure project financing (including overseas construction contracting)
Description
Credit support provided to overseas projects with limited or without resource right, based primarily on project returns, in combination with credit enhancement measures such as insurance, third-party guarantee etc.
Scope of Application
Applicable to large infrastructure construction projects that have huge investment size and generate stable returns over the long term in the electricity, water conservancy, urban water supply, sewage treatment, road & bridge, tunnel, railway, airport industries.
Business Procedures
The borrower (the project company) brings forth project financing demand to the Bank;
The borrower discusses and reaches a consensus with the Bank regarding (without limitation to) the shareholder agreement, construction contracting contract, operation maintenance contract, long-term sales contract, long-term supply contract and various financing-related matters such as transfer of insurance interest, mortgage of project assets, pledge of project usufruct, pledge of project shareholders’ stake etc.;
The Bank carries out survey and evaluation of the project in accordance with approval procedures;
The borrower discusses with the Bank regarding text of all financing agreements after the project loan is approved;
The borrower signs agreement, and withdraws loans according to the construction progress after fulfilling the precondition for loan withdrawal.
Typical Case
Sea water desalination PPP project in Victoria, Australia (PPP project financing)
vii. Global manufacturing and leasing financing
Description
Structured financing product that is designed based on comprehensive credit standing of the global large manufacturer or leasing companies, cash flow arising through managementof equipment leasing, and in combination with credit enhancmeent measures such as insurance, mortgage, pledge, guarantee etc.
Scope of Application
Global large manufacturers;
Global large leasing companies and their SPVs;
Equipment in fields such as energy, transportation, telecommunication, healthcare, engineering machinery etc.
Features
Bolster sale of advanced equipments in global market;
Resolve the fund source issue for leasing companies;
Support equipment upgrading of the lessee;
Make use of the flexible tax and accounting policies for lease business to optimize enterprise’s liabilities, tax etc.
Business Procedures
The borrower submits financing demand and relevant documents to the Bank;
The Bank comprehensively reviews credit standing of the borrower and relevant parties, issues intent of financing or interest of fnancing according to the applicant’s request if the borrower meets the Bank’s requirement, and signs the power of attorney;
The borrower discusses agreements such as the loan agreement, the guarantee agreement etc. with the Bank;
The Bank handles due diligence survey and approval in accordance with the approval procedures;
After the loan is approved, the borrower signs the financing agreement with the Bank;
The bororwer fulfills precondition for loan withdrawal, and withdraw loans.
Documents Required
Business license, organization code certificate, tax registration certificate, loan card, identity material of the legal representative of the borrower and relevant parties;
The leasehold procurement contract and invoice etc.;
The leasing contract and leasehold acceptance certification etc.;
Audited financial statements over the past three years;
Other necessary materials.
Typical Cases
Support a large leasing company to lease its equipment worldwide
Support a manufacturer to expand equipment export through leasing and structured finance.
viii. Aircraft financing
Description
ICBC offers long-term stable financial support to global airline companies, aircraft manufacturers and leasing companies to meet the customers’ fund demand during construction, purchase, leasing and repair of aircrafts.
Scope of Application
Applicable to domestic and foreign airline companies, aircraft manufacturers, leasing companies etc.
Advantages
International standards: The aviation industry is an important service field of ICBC. ICBC relies on abundant resources and global institutional network of the ICBC Group to establish close cooperation with global airline companies, aircraft manufacturers and aircraft leasing companies in the aircraft financing field.
Professional service: As the earliest commercial bank that undertakes aircraft financing business in China, ICBC has a professional aircraft financing team to design customized financing product structure that is consistent with characteristics of the enterprise and industry to meet various financing demand of aviation enterprises.
Major products
1. Advance payment financing: Meet the fund demand of airline companies during payment of a certain proportion of the aircraft cost to aircraft manufacturers as advances. ICBC provides loans or issues payment guarantee to airline companies.
2. Aircraft mortgage financing: ICBC offers medium to long-term loans to airline companies on the condition that the airline companies mortgage aircraft with the Bank and buy insurance that takes the Bank as the first beneficiary.
3. Financial leasing financing: ICBC provides financing to help domestic or overseas financing leasing companies buy aircraft or adopt structured measures to help airline companies raise fund for their aircraft purchase.
4. Operating leasing financing: ICBC provides financing or re-financing to help domestic or overseas aircraft operating leasing companies buy aircraft for leasing business. This business also moves financing business with airline companies off the balance sheet.
5. Sale-leaseback financing: ICBC arranges sales-leaseback for airline companies or aircraft leasing companies, and provides necessary financing services.
6. Aircraft financing under export credit: ICBC provides financing services such as foreign exchange on-lending, commercial loan, export credit, guarantee or counter guarantee etc. to airline companies which has obtained support of export credit institutions from the aircraft manufacture country when purchasing the aircraft, based on concrete conditions.
7. Leasing guarantee and leaseback: ICBC issues letter of guarantee, standby letter of credit, revolving letter of credit etc. with the airline companies as the guaranteed, to guarantee that the airline companies will pay rent on time, or provides counter guarantee to the airline companies’ creditors that have provided similar guarantee to the airline companies.
8. Financial advisory service: ICBC provides individualized structured financing plan to airline companies to meet their demand for aircraft transaction, financial statement optimization, business restructuring etc.
ix. Shipping and maritime financing
Description
ICBC closely grasps market opportunities to meet diverse financing demand, and offer professional and comprehensive financial services to high quality enterprises in the watercraft manufacture, shipping, and maritime equipment fields.
Scope of Application
Applicable to enterprises that have financing demand in the global shipping and maritime field and meet the following conditions: (1) High reputation and solid comprehensive strength in the industry; (2) solid financial position, and relatively strong liquidity and profitability.
Features and Advantages:
As the largest vessel financing service bank in China, ICBC has cumulatively issued USD6 billion worth of ship financing to its domestic and foreign customers, and has an extensive base of customers and great market influence in the shipping financing field;
ICBC leverages its solid strength to offer fund support and meet the huge fund demand of ship financing;
ICBC realizes “full coverage” of the global shipping and maritime undertaking through its strategic layout across the international market;
ICBC has a large team of project financing experts to develop “customized” financing plans aiming different demand of customers.
Business Procedures
The customer brings forth financing demand in the shipping and maritime fields to the Bank;
ICBC holds pre-lending project assessment, reviews credit standing and materials submitted by the borrower, issues interest of financing or intent of financing if the customer meets requirements of the Bank, and signs the power of attorney;
ICBC discusses the loan agreement, guarantee agreement etc. with the borrower; perform the due diligence survey and approval procedures of the Bank according to business procedures;
The borrower signs contract with the bank, fulfills the preconditions for loan withdrawal, and withdraws loans.
II. Contact information
Special Financing Department (Banking Department), Head Office of Industrial and Commercial Bank of China
Global Electricity Financing Division: 010-66108282/1259/7712
Global Resources Financing Division: 010-66107254/6726/1272
Global Infrastructure Financing Division: 010-66107185/7186
Global Manufacturing and Leasing Division: 010-66108276/8385
International Syndication and Asset Transaction Division: 010-66108420/8273
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