Bain buys 80% of China leasing firm

This is Bain Capital's first investment into the financial services space in China

Bain Capital has acquired 80 percent of Lionbridge Financial Leasing in the largest transaction in the financial services sector in 2014, according to a statement.

The firm did not provide financial details, but media has reported the deal was worth about RMB 1 billion ($164 million; €127 million).

Lionbridge is one of China’s fastest growing financial leasing companies, with total leased assets of around RMB 3 billion at the end of H1 2014. The company provides leasing services, lease-back services and leasing asset management in heavy duty vehicles, medical equipment, manufacturing equipment and agriculture equipment, focusing on small- and medium-sized enterprises.

“This investment marks Bain Capital’s entry into China’s financial services sector and our efforts to capture business opportunities in the underserved SME sector, where there is a large unmet financing demand,” managing director of Bain Capital, Jonathan Zhu, said.

China’s financial leasing sector has grown nearly 40-fold in the last few years, from RMB 8 billion in 2006 to RMB 3 trillion in 2014, according to Bain, making the country one of the world’s biggest leasing markets. However, the firm says that the penetration rate in China’s leasing market remains low compared to developed countries, indicating a “huge potential” for future growth.

“Providing tailored retail financing services and connecting financing with business operations are the key characteristics that make Lionbridge’s business model unique. Lionbridge’s management has extensive sector expertise and an impressive track record. The network and reputation they have cultivated over many years of hard work are invaluable assets to the company,” Zhu added.

While this is Bain’s first deal in China’s leasing sector, the firm has been active across Asia Pacific this year.

In May, Bain bought Australia-based Retail Zoo from The Riverside Company for an undisclosed amount. The firm teamed with management for the secondary buyout, its second major investment in Australia after buying accounting software firm MYOB in 2011.

The firm has had some successful exits in Japan this year, too, selling stakes in BellSystem24 and Skylark in July and October respectively. In August last year, the firm also successfully exited its investment in Domino’s Pizza Japan in a $123 million deal, selling a 75 percent stake of the business to Domino’s Australia.