IFS Capital has entered into a non-binding Memorandum of Understanding with Hong Kong-listed Tat Hong Equipment Service to provide leasing solutions with a focus on tower crane financing in China.
The joint venture will allow IFS Capital to establish a beachhead in China to offer its suite of financing solutions and participate in the growth of the economy, the company said in a statement.
Tat Hong is the first foreign-owned tower crane service provider in the PRC. Its services include consultancy, technical design, commissioning, construction and after-sale services to construction contractors in infrastructure, energy, commercial, and residential sectors.
The company also engages in installing, maintaining as well as leasing of construction machinery and equipment. Tat Hong is the second largest provider of tower crane services in China, with a fleet of over 1,000 tower cranes.
“We are extremely glad to partner with a veteran industry player like Tat Hong which will not only allow us to grow our suite of small and medium enterprise (SME) financing solutions but also extend our geographical footprint into China.
“We aim to support local SMEs with responsible financing as they ride the tremendous long-term growth potential of the Chinese economy. This leasing joint venture marks the starting point for us to explore new growth opportunities throughout China,” said Randy Sim, IFS Capital’s Group CEO.
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Economies around the world have adopted an infrastructure-led economic recovery as they reel from the impacts of Covid-19. China has led this trend and positioned itself to be the world’s largest economy by 2030.
The construction industry in China grew at a compound annual growth rate (CAGR) of 8.2% from 2015 to 2019 and is expected to grow at a CAGR of 8% to RMB35.1 trillion in 2024 according to Frost & Sullivan, driven by extensive infrastructure investments by the government.
Meanwhile, the tower crane service market has grown at a CAGR of 9.7% from 2015 to 2019 and is expected to grow at a CAGR of 7.9% to RMB148.8 billion in 2024.
IFS Capital will hold 60% of the new joint venture company, whereas Tat Hong will be a 40% shareholder.
Shares in IFS Capital traded flat at 17.5 cents on Dec 6.
Photo: Bloomberg
