IFC proposes to inject up to $194m debt in Baidu’s student micro-loan unit

Photo: Reuters

The International Finance Corporation (IFC), the private lending arm of the World Bank Group, is considering a senior loan investment of up to RMB1300 million ($194 million) through its own account as well as a syndication facility in Baidu Chongqing Baidu Micro-Loan Company Ltd (Baidu CQ MCC), a wholly owned entity of Baidu Inc.

Baidu CQ MCC is mainly involved in financing tuition fees for students enrolled in vocational training and educational institutions and looking to expanding its reach to business with more diversified product offerings using big-data.

IFC hopes to provide a three-year RMB denominated loan of up to RMB650 million ($97 million) from their own account and the same amount through a syndication, according to IFC’s pre-investment disclosure on December 8.

“The IFC Loan will be used for on-lending to women borrowers for vocational training/education purpose across China,” stated the announcement.

The Chinese Internet search provider’s ownership in Baidu CQ MCC is made through Baidu Holdings Ltd Baidu (Hong Kong) Ltd and Baidu.com Times Technology (Beijing) Co Ltd. Baidu Inc was founded by Robin Li in January 2000 and five years later, the company was listed in NASDAQ.

The proposed investment is also expected to promote the usage of big data based lending methodology, which can help improve the efficiency and coverage of financing. For a longer-term partnership, IFC hopes to support the company with multiple investment and financing products.

In China, vocational schooling lasts two to three years, seeing enrollments from high schools and secondary vocational schools. Every year, over 11 million students are seen enrolled into technical and vocational institutions.

Looking into the support provided by World Bank in China’s vocational schools, three technical schools, Guangdong Advanced Technical School of City Construction, Guangdong Advanced Technical School of Light Industry, Yangjiang Advanced Technical School in Guangdong province have got support from the World Bank for the improvement in quality and the needs of the students.

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