The Carlyle Group Invests US$25 million in Credit Orienwise, China's Leading Private Credit Guarantor for SMEs

Guangzhou and Hong Kong, China – Global private equity firm The Carlyle Group today announced it has invested US$25 million to acquire new shares in Credit Orienwise Group Limited (COG), China’s leading private credit guarantor for small and medium-sized enterprises. The investment, following the two capital injections by Asian Development Bank (ADB) and Citigroup Venture Capital International (CVCI) last year, will significantly strengthen COG’s capital position for local coverage expansion.

In China’s nascent financial and credit market, COG plays a critical role in supporting banks and financing Chinese SMEs and consumers by performing risk assessment, pricing and portfolio management for lenders. The Chinese SMEs are insufficiently served by the current financial systems and represent a sizeable market with an attractive growth potential for COG’s integrated financing services.

By the end of 2005, SMEs account for 99.3% of the total number of Chinese enterprises, 55.6% of GDP, and 74.7% of industrial output growth. They employ 75% of the working population* and have fueled the country’s impressive economic growth in the last two decades. Their contribution to the economy will continue to increase in tandem with China’s soaring manufacturing and exports volume as well as the burgeoning service sector.

Mr. Zhang Kaiyong, Chairman of COG, said: "COG aspires to become China’s largest provider of integrated SME financing services. The introduction of international strategic investors, including Carlyle, CVCI and ADB, will bring significant value beyond capital commitment. These strategic investors will further strengthen our corporate governance and bring current management practice and risk management to international standards.

"Carlyle will help attract top-notch international talent to a business that requires the combined expertise of financial, accounting, auditing, legal and industry knowledge. Its powerful network and reputation will significantly enhance our credit profile and information systems. These initiatives will allow COG to realize its long-term strategic goals and solidify our foundation for business success."

Mr. Wayne Tsou, Managing Director and Head of Carlyle Asia Growth Capital group, said, "This is yet another expansionary stage investment we made in the twin growth engines in Asia, following our announcement in India yesterday. They are led by proven entrepreneurs who power growth and reform momentum in their economies. These innovative thinkers, sound business managers and professionals, with local insight, are building new paradigms in business solutions. They represent the successful management teams and companies Carlyle seeks to support and commit to.

"COG, in particular, engages in a tremendously large space with unfulfilled demands for financing solutions from Chinese SMEs. COG’s proven risk management expertise with low default rates adds to its credibility among local banking partners." Wayne said: "We look forward to assisting COG’s expansion in new cities and product development in areas such as financial advisory, performance guarantees and account receivables factoring that build on its existing knowledge base and skill sets."