US Greenlights SPD Silicon Valley Bank's Investment-Linked Lending Business
Xia Xinyu
DATE:  Sep 06 2017
/ SOURCE:  Yicai
US Greenlights SPD Silicon Valley Bank's Investment-Linked Lending Business US Greenlights SPD Silicon Valley Bank's Investment-Linked Lending Business

(Yicai Global) Sept. 6 -- US regulators have approved an investment-linked lending business proposed by SPD Silicon Valley Bank, a joint venture between China's Shanghai Pudong Development Bank [SHA:600000] and Silicon Valley Bank [NASDAQ:SVB], Dave Jones, president of the joint venture, told Yicai Global in an interview.

"We got approval from American regulators for the investment-linked loan business three months ago, and we've drawn up plans and will submit the regulatory filing to the China Banking Regulatory Commission," he said.

The joint venture, set up in August 2012, is governed by both Chinese and American regulations.

The business is a financing model combining equity and debt financing, whereby a commercial bank sets up an investment subsidiary to invest in the equity of a technology startup. It can then provide it with traditional credit support and compensate risks with investment income via institutional arrangements.

"Piloting the investment-linked loan service will not change our existing business model, and we'll set up a dedicated investment subsidiary as required by regulations," Jones said.

SPD Silicon Valley Bank will transfer all its equity warrants to the subsidiary after it receives Chinese approval, he said.

The bank will set up its second branch in the southern city of Shenzhen in Guangdong province, he said. It opened its first branch seven months ago in Beijing.

Both Jones and Tim Hardin, an SPD Silicon Valley Bank vice president and corporate finance general manager, are bullish about the Chinese tech startup market.

The bank's lending has doubled annually in the first eight months of the year. Total assets stood at CNY4.44 billion (USD678 million) at the end of last year. Total liabilities are currently CNY3.39 billion and net loan balance is CNY1.31 billion, while the firm's capital adequacy ratio was 49.63 percent for last year.

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Keywords:   MSCI,New Products,Startups Financial Service