Guorong International Financial Leasing
1. The Company’s Business Positioning and Operation Mode
As an independent third-party financial leasing company, Guorong positions itself as an overall financial services institution.
In the business development process, the company has established a wide range of cooperation channels with domestic and foreign financial institutions, and a wide range of business channels with domestic clients. The company insists on the view of investment banking and performs a comprehensive use of various financing tools to provide customers with high value-added, effective, and comprehensive financial services.
2. Strategy of One Backbone and Two Wings
Guorong adopts the strategy of one backbone and two wings, among which the one backbone refers to financial leasing, and the two wings are separately specialty financing and equity financing. Currently the business mode has achieved remarkable results, through which the company can carry out comprehensive financial services and offer financing solutions for large enterprises and SMEs.
In the future, Guorong will adhere to the overall business system of One Backbone and Two Wings, be deeply rooted in coal, mining, chemicals, electricity, transportation, steel, port logistics, machinery manufacturing, construction, energy conservation, machinery and equipment leasing, commercial property leasing and other industries, fully integrate the marketing resources, constantly grow the backbone of financing leasing, actively expand the two wings of specialty financing and equity financing, build an integrated product service system, and maximize the value for the clients.
3. Specific Forms of Business
A. Financial Leasing
(1) Direct financial leasing: Guorong purchases the equipment specified by the lessee from the equipment provider specified by the lessee by the conditions agreed by the lessee on the request of the lessee, and transfers the possession, use, risk and benefit right of the equipment to the lessee. After the lease expires, Guorong transfers the ownership of the leased assets to the lessee at a symbolic price.
(2) Leaseback: The lessee and the equipment provider is the same company. The leased property is the equipment purchased before the lease contract execution and being used by the lessee. The lessee leases the equipment to Guorong and receives rent as a leased property. This type of leasing business improves the company’s cash flow without affecting the operations.
(3) Operating leasing: Guorong purchases equipment according to the market needs, and rents the equipment to different lessee, thus recovering the leasing investment and obtaining corresponding revenue. In this type of leasing business, the ownership of leased property is always held by Guorong. Guorong depreciates the equipment and is responsible for its maintenance. The rent payable by the lessee is included in the cost as financial costs.
(4) Leveraged leasing: Guorong takes the initiative to conduct financial leasing for a large-scale project. Through establishing a dedicated project company, Guorong invests part of the amount required by the purchasing of the leased property and obtains all the funds for the project by means of financial leverage. The leasing business is generally used for the financial leasing of aircraft, ships, communications equipment and large complete sets of equipment. It can provide enterprises with a combination of more financing products. As a new cooperation model of banks and leasing companies, it can form product portfolios of different risks through stratified income.
(5) Percentage leasing: In the leasing relationship, the lessee pays rent to Guorong based on a certain percentage of operating income. All or part of the rent is directly linked with the operating leasing income of the lessee to motivate the lessee. After the lease expires, the leased equipment can be transferred to the lessee at a discounted price. The leasing business can help SMEs achieve the financing objectives, which are still in the growth period, without banking and capital market financing conditions but with good interest rate return.
(6) Collective leasing of SMEs: Collective leasing is an innovative leasing business independently developed by Guorong. Initiated by Guorong, the leasing business is a collective financial leasing characterized by unified structure design, unified period, unified guarantee and mutual guarantee of lessee. The lessees are 3~10 quality enterprises with long-term mutual guarantee relationship and a business scale of RMB 0.1~0.4 billion yuan.
B. Specialty Financing
(1) Bank credit financing consultation: Guorong uses its own resources and selects financing banks for its clients according to clients’ financing needs, to collect the funds required by clients.
(2) Industrial fund raiser and manager: As an industrial fund manager with specialized knowledge and experience, Guorong is responsible for the specific investment decision-making, operation and daily management as specified by the laws, regulations, fund constitutions and fund contracts, including fund design, raising, distribution, investment and recovery, etc, to seek constant appreciation of the managed fund assets and maximize the revenues of the fund holders.
(3) Trust financing: Trust financing is a form of indirect financing, carried out by the trust company, which develops financing programs according to the customer needs. If trust financing applies, Guorong provides a tailored trust financing program for customers, matches funds, finds the optimal trust company, and commissions the trust financing, thus delivering effective and low-cost trust financing services.
(4) Collective bills of SMEs: Collective bills of SMEs are innovate products based on short-term financing bonds and medium-term notes. Guorong offers all the services of collective bill of SMEs (including seeking business combinations, designing unified financing structures, providing peripheral credit increment, conducting unified rating, and accounting, providing legal services, preparing issuance materials, filing for approval, etc) and hands them over to cooperating underwriters to conduct financing in the interbank market.
(5) Region prime bills of SMEs: Region prime bills refer to the debt financing tools issued by small and medium-sized non-financial enterprises with core technologies and good market prospects within a certain region in the interbank bond market through the government support of dedicated risk mitigation measures. Guorong offers all the services (ditto) and hands them over to cooperating underwriters to conduct financing in the interbank market.
(6) Collective trust of SMEs: Multiple SMEs join together as a whole to release the trust plans and raise funds through trust companies, and allocate the raised funds to each company. Guorong offers all the services of collective trust of SMEs and commissions the trust companies for the issuance.
C. Equity Financing:
According to customers’ capital and financial plans, Guorong introduces eligible investors, and provide financing services in the form of equity by way of equity capital increase. According to the wishes and preferences of investors and customers, the investor return mode can be fixed income, or fixed income plus return on equity.
(1) Private Equity (PE): As the financial investor, Guorong itself (or in conjunction with other investors) conduct equity investment to the unlisted companies, and quit the business through IPO, MBO or M&A.
(2) Industrial investment: Guorong selects outstanding industry enterprises, conducts equity investment, participates in the management and operation, obtains long-term operating income, and quits the business through IPO, MBO or M&A.
E. Derivative Business
In addition to the company's main business of financial leasing, the business scope of Guorong also includes financial advisory, asset securitization, asset management of leased property and attached technology, residual value processing and maintenance, leasing transaction advisory and guarantee, corporate asset reorganization, M&A and project planning, management consulting and information consulting services.