Market Research Reports

State of financing for China SME 2016

According to the National Bureau of Statistics, micro, small and medium enterprises (MSMEs) account for over 97 per cent of registered industrial firms in China. They also employ nearly 75 per cent of the workforce and generate 65 per cent of China’s GDP in 2014. 1 Financing is a critical element of SME development.2 Yet 70 per cent of SMEs in China consider difficulty of financing their No. 1 challenge. This report provides an overview of the most popular types of financing for Chinese SMEs, including traditional bank lending, private bond, private loans from trusts, venture capital, private equity, and IPO. They have distinct advantages and disadvantages for SMEs in different industries and at different stage of development. It is crucial for SMEs to adopt innovative thinking in financing that goes beyond traditional lending, to seize timely financing opportunities for SMEs according to their needs and stages of business growth, and we suggest SMEs with high growth potential consider directly listing Chinese entity on oversea stock exchange to raise capital while maintaining its ability to list and trade in China simultaneously.

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Investing in middle market senior and junior secured loans

While institutional investors are familiar with the markets for broadly syndicated large corporate loans and high-yield bonds, the opportunity to invest in U.S. middle market corporate loans is less well-known. One of the characteristics of the loan market since the credit crisis in 2008 has been a dearth of senior loan capital available to middle market companies. Historically, these companies have not had the access to the broader debt capital markets afforded to larger, more liquid borrowers, and are generally too small to be financed by public loan mutual funds or institutional loan investors. At a moment when interest rates remain low and public equity and credit securities seem fully valued, the investment opportunities in middle market loans look very compelling

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