October 16, 2014, Beijing – Bain Capital Private Equity and Lionbridge Financial Leasing (China) Co. Ltd (Lionbridge) jointly announced that Bain Capital Private Equity has successfully acquired 80% of Lionbridge and has become the largest shareholder of the company, with the remainder held by the management team. This is the largest transaction in China’s financial leasing sector in 2014.
Lionbridge is one of China’s fastest growing financial leasing companies, with the total leased assets at approximately RMB 3 billion at the end of H1 2014. Focusing on China’s small and medium enterprises (SMEs), the company provides leasing services, lease-back services and leasing asset management in four industry verticals: heavy duty vehicles, medical equipment, manufacturing equipment and agriculture equipment.
As industry players align themselves with government policies to help meet SME financing demand, the leasing industry in China is entering a dynamic period of growth. China’s financial leasing sector has grown nearly 40-fold in the last few years, from RMB 8 billion in 2006 to RMB 3 trillion in 2014, making the country one of the world’s biggest leasing markets. However, the penetration rate in China remains low compared to developed countries, indicating huge potential for future growth. Lionbridge recognized that China’s existing financial system is not set-up to serve SMEs and capitalized on this gap by establishing a unique business model and an extensive service network of 174 offices covering 22 provinces, through which bespoke services are provided to local SMEs.
In order to accommodate the credit profiles of China’s SMEs, Lionbridge created a robust risk management system tailored for small scale finance. In addition to the standard risk control mechanisms such as separating credit assessment from loan approval processes as well as setting up review committees, Lionbridge established a quantitative evaluation model and system that assess credit status and potential clients’ repayment ability. Moreover, Lionbridge minimizes its operational risks by focusing on valuation, ownership control and liquidity levels of all leased assets.
Lionbridge’s unique model connects the traditional leasing business with its SME clients’ operations through identifying their operational needs and providing suitable value-add services. As a result, Lionbridge becomes an essential part of its clients’ business processes. By leveraging this business model, Lionbridge has become one of the top three companies in heavy duty vehicles in less than two years.
A Managing Director of Bain Capital Private Equity, Jonathan Zhu, said “This investment marks Bain Capital’s entry into China’s financial services sector and our efforts to capture business opportunities in the underserved SME sector, where there is a large unmet financing demand. Providing tailored retail financing services and connecting financing with business operations are the key characteristics that make Lionbridge’s business model unique. Lionbridge’s management has extensive sector expertise and an impressive track record. The network and reputation they have cultivated over many years of hard work are invaluable assets to the company.”
The founder and CEO of Lionbridge, Wan Jun, said “Bain Capital is a strong shareholder with large financial resources. Its extensive global connections with international banks can help Lionbridge diversify its funding sources and attract strategic investors. Bain Capital will leverage its knowledge and experience to help Lionbridge take its corporate governance to a new level. In addition, Bain Capital will be able to offer global perspectives and a deep understanding of China to guide Lionbridge on its strategies. Lionbridge will be able to draw on Bain Capital’s expertise in M&A to accelerate its expansion rather than the company solely relying on organic growth.”
Bain Capital Private Equity will give its full support across a number of areas, including strengthening Lionbridge’s leading market position in the existing verticals, entering new verticals by leveraging existing capacities and infrastructure, further developing its unique business model of connecting leasing with operations and establishing online financing platforms in order for Lionbridge to provide better services to more Chinese SMEs going forward.
Bain Capital Private Equity has partnered closely with management teams to provide the strategic resources that build great companies and help them thrive since our founding in 1984. Our team of more than 400 investment professionals creates value for our portfolio companies through our global platform and depth of expertise in key vertical industries including consumer/retail, financial and business services, healthcare, industrials, and technology, media and telecommunications. In addition to private equity, Bain Capital invests across asset classes including credit, public equity and venture capital, and leverages the firm’s shared platform to capture opportunities in strategic areas of focus.
Founded in April 2012, Lionbridge Financing Leasing (China) Co. Ltd (www.sqcapital.cn) is a MOFCOM (Ministry of Commerce of China) approved financial leasing company, with registered capital of US$157.6 million (RMB 1 billion). Focusing on SMEs and individual business people, Lionbridge has developed a retail financial leasing model and an extensive operational network. Lionbridge has 174 offices and nearly 800 employees in 22 province and 696 cities and municipalities across China. The Company’s total leased assets reached approximately RMB 3 billion at the end of H1 2014.
Through Lionbridge’s unique business model that connects assets with operations, we provide leasing services, lease-back services and leasing asset management in four industry verticals: heavy duty vehicles, medical equipment, manufacturing equipment and agriculture equipment.
Lionbridge’s mission is to help honest, diligent and outstanding businesses and individuals to achieve their goals by providing financial tools and services, to create value for its shareholders, customers and business partners in a sustainable fashion, and to become an innovative and influential financial leasing company in China.
This press release has been updated to reflect the new business unit name, "Bain Capital Private Equity," which was changed from "Bain Capital" or "Bain Capital, LP."