China Development Bank to float leasing unit

The largest state-regulated leasing business in China is seeking to raise about $130m through a public offering in Hong Kong.

CDB Leasing, the financing leasing unit of China Development Bank, has filed an application for an initial public offering on the Hong Kong Stock Exchange. 

The float is expected to help the largest state-regulated leasing business in China raise about HKD1 billion (€118 million; $129 million) in the first half of the year, according to reports. The proceeds will be used to strengthen the lender's capital base and fuel growth. 

CDB Leasing mainly engage in leasing services to industries including aviation, infrastructure, shipping, commercial vehicle and construction machinery manufacturing. 

The company reckons ample opportunities are being brought by market-based reforms in the financial industry, increasing demand for customised leasing products, internationalisation of the Chinese currency and national policy initiatives such as 'One Belt One Road' and the 'Going Out' strategies. 

In terms of infrastructure leasing, the company mainly focuses on transportation, urban and energy infrastructure. This segment of business accounted for 32.8 percent of its revenue and 35.5 percent of total segment assets in the first nine months of 2015. 

It provides leasing services in both sale-and-leaseback and direct finance leasing transactions, as well as collaborates with CDB’s regional branches on project development. 

Some of its clients include large state-owned enterprises such as Fujian Funing Highway, Hubei Intercity Railway and CGN Lufeng Nuclear Power. As of 30 September 2015, leasing projects owned or backed by local governments accounted for 68.2 percent of its infrastructure leasing business. 

The leasing industry in China has grown rapidly since 2009, according to Frost & Sullivan, an independent market researcher and consultant, which estimates that the market grew from CNY664.7 billion (€93.4 billion; $101 billion) in 2009 to CNY2,633.9 billion in 2014. As of 31 December 2014, the country had become the largest leasing market in the world with 32 CBRC-regulated leasing companies.

Apart from CDB Leasing, key players in the sector includes CCB Financial Leasing, Bocom Financial Leasing, ICBC Financial Leasing and Minsheng Financial Leasing. Two Chinese financial lessors including BOC Aviation, the aircraft leasing unit of Bank of China, and Minsheng Financial Leasing, are also preparing IPOs in Hong Kong this year.