HSBC recently announced that it has formally signed an asset-backed loan facility with Micro Connect, a new financial market platform connecting global capital with China’s micro and small businesses.
Micro Connect has created Daily Revenue Contracts (DRCs) as a new asset class for direct and diversified exposure to the daily cash flows from millions of stores in China’s vibrant consumer economy, while making capital more accessible and affordable to business owners. Investment returns are collected securely via the Automated Repayment Mechanism, a network of digital infrastructure that Micro Connect operates in partnerships with brands / franchises, financial institutions, and SaaS companies across China. To date, Micro Connect has invested in more than 1,800 stores with over 170 brands across China.
Charles Li, Founder and Chairman of Micro Connect, said: “We are pleased to have received this facility from HSBC, which marks a critical milestone as it opens up a new, sustainable funding channel for our long-term growth. As we continue to scale our micro and small business investments in China and beyond, we look forward to closer collaborations with HSBC as a long-term finance partner. We appreciate HSBC’s confidence in Micro Connect and our conviction in developing new solutions to better support the underserved segments of the economy.”
Frank Fang, General Manager, Head of Commercial Banking, Hong Kong and Macau, HSBC, said: “At HSBC, we constantly look into developing tailored solutions to cater to the innovative business models across different sectors, including fintech companies and startups which are reshaping the future of finance. We are delighted to become the first bank to arrange an asset-backed loan facility for Micro Connect, deepening our long-term relationship to support its business expansion strategy in China.This will also enable Micro Connect to step up its support to micro and small businesses, contributing to the domestic economy and driving broader financial inclusion.”
As legal counsel to HSBC, KWM is honored to assist HSBC with Micro Connect’s first cross-border structured finance transaction. KWM advised on every aspect of this landmark transaction, including structuring, due diligence of the underlying assets as well as preparing and negotiating the full suite of onshore and offshore transaction documents.
This transaction involved close collaboration between cross-border teams in KWM’s Shanghai and Hong Kong* offices. The KWM Shanghai team is led by partner Hu Zhe (Eddie) with support from core team members Qian Bei and Huang Linwei. The KWM Hong Kong team (advising HSBC as lender) is led by partners Richard Mazzochi and Minny Siu with support from core team members Andrew Fei, Louise Yun, Marco Sin and Gerneny Chan. A separate KWM Hong Kong team (advising HSBC as facility agent, security agent and account bank) is led by partner Angus Sip with support from core team members Claire Potter and Evangeline Chee.
*Any reference to "Hong Kong" or "Hong Kong SAR" shall be construed as a reference to the "Hong Kong Special Administrative Region of the People's Republic of China".
