Beijing, China, February 28, 2002
—The International Finance Corporation has signed an agreement with Advantage Services Holding Limited (ASHL) to invest in Advantage China Holdings Limited (ACHL). ACHL will establish joint venture companies in China to provide home mortgage origination, borrower credit analysis, and contract underwriting services to Chinese banks.
Established in late 1999, ASHL has been providing mortgage services to financial institutions in Hong Kong through its wholly-owned subsidiary, Advantage Mortgage Services Company (HK), and plans to expand its services into mainland China through ACHL. Beijing Advantage, the first joint venture company, is expected to begin operations in the first half of 2002.
IFC’s investment represents a 24.5 percent direct ownership in ACHL. Other shareholders include ASHL and Netherlands Nederlanse Finanierings-Maatschappij Voor Ontwikkelingslanden N.V. (FMO).
As one of the first mortgage service companies for China, the project is expected to encourage the establishment of other market players. ACHL will help banks strengthen their credit assessment capabilities in residential mortgage lending and expand their lending in a financially prudent way, thus supporting the growth of residential housing and construction. IFC’s presence will provide the company with the credibility that it needs to establish relationships with Chinese banks and gain access to financing. IFC has also been instrumental in helping to mobilize additional financing support in the form of equity capital from FMO.
Javed Hamid, IFC’s Director for East Asia and the Pacific, said, “IFC is very pleased to support the development of mortgage servicing in China where private home ownership is expanding rapidly and lenders need to manage their exposures as they increase their mortgage lending portfolios. This new institution should help alleviate credit concerns in China where the housing sector is growing steadily, increase homeownership rates, and strengthen families and communities.”
Mr. Hamid added that, as a significant economic driver, the development of a well-functioning housing sector is an integral part of IFC’s support for emerging markets. In FY 2001, IFC committed over US$100 million for projects that reinforce links between the housing market and the financial and capital markets.
ACHL’s Founder and Chief Executive Officer, Mr. Ivan Ko, said, “IFC is well known in the banking industry and adds credibility to this project. We look forward to continued support from IFC and FMO as ACHL implements its rollout plan and accesses the capital markets to develops mortgage services in China’s major cities.”
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through the close of the last fiscal year on June 30, 2001, IFC committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was $14.3 billion.
