Exclusive: China’s CPFA Microfinance may land $25m equity from existing investor IFC

Visual from IFC website.

CFPA Microfinance Management Co. Ltd., one of China’s largest microfinance players, is raising an equity investment of RMB160 million ($25 million) from the International Finance Corporation, which owns 19.2 per cent stake in the entity.

The private lending arm of the World Bank had earlier provided a $20 million loan to the MFI five years ago. The tenure of that loan is over. CFPA MF has an outstanding portfolio of RMB2.6 billion ($400 million), which represents a consolidated growth rate of over 46 per cent in the last five years.

The firm has about 306,000 customers, in 17 provinces of China. CFPA MF is operated by Beijing-based CFPA Foundation, which has a 62.7 per cent stake. While IFC holds 19.2 per cent, venture capital firm Sequoia Capital has 18.1 per cent interest in the firm.

CFPA Foundation was formed in 1989 as a poverty alleviation project. It is now the largest and most influential public welfare organization for poverty alleviation in China.

The funding will help CFPA MF to expand to more areas and counties of China, and expand its portfolio. About 97 per cent of CFPA MF’s customers are rural households, and over 90 per cent of recipients are women. Majority of them are not covered by traditional financial institutions, such as banks.

People living in remote areas of China have increasing need for loans to buy new machinery and materials to grow crops. Microfinance companies, which usually charge higher interest than banks, help meet that demand. There are more than 8,200 microcredit companies in the country.

CFPA recently entered into a partnership with Visa and China Foundation for Development of Financial Education (CFDFE) to extend micro-lending to Inner Mongolia.

Microfinance started late in China, compared with countries like India, but it grew rapidly. By 2012, the country had 6,000 microcredit providers, with just a quarter having been in operation for more than three years.

Alibaba Group Holdings Ltd, China’s e-commerce giant, is also involved in the sector and has extended loans to more than 230,000 micro-entrepreneurs through its AliFinance arm since 2011. Alibaba also operates Zhejiang Wangshang Bank, China’s first online-only bank with no physical branches, that provides loans to 800 million rural residents.

The sector has attracted investor interest in the region. In January, private equity firm Olympus Capital Asia invested about $30 million in CreditAcess Asia NV, a microfinance operator with a total portfolio of $258 million and operations in India, Indonesia and the Philippines.

Other recent deals include IDFC Bank’s $1.3 million investment in ASA International India Microfinance, and DCB Bank’s $1.5 million investment in Annapurna Microfinance.

Also read:

PE firm Olympus Capital invests $30m in Asian microfinance operator CreditAccess

DCB Bank acquires 5.8% stake in Annapurna Microfinance for $1.5m

India: IDFC Bank picks nearly 10% stake in microfinance company ASAI India

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.