CITY OF INDUSTRY, Calif. – Hikvision has secured a new credit facility from the state-owned Export-Import Bank of China for more than $3 billion. The term is for five years.
The new credit facility will enable the company to earmark additional funds for global research and development, as well as infrastructure, equipment and technology procurement, according to the announcement. Hikvision said on average it commits approximately 7% to 8% of its annual revenues to R&D. The company staffs more than 7,000 engineers.
“This transaction is a testament to the fact that the financial markets recognize Hikvision as a successful enterprise, with a sound financial record, credit, and a promising growth strategy,” the company stated.
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In November 2015, Hikvision secured approximately a $3 billion line of credit with the state-owned China Development Bank. Hikvision also maintains lines of credit with other international financial institutions including Citibank, HSBC and Deutsche Bank, among others. Earlier this year, the company said it diversified its financing channels by issuing more than $450 million in European bonds.
The Export-Import Bank of China, also known as China Eximbank, provides financing mainly for development projects intended to boost the export of China’s industrial and electronic goods, according to its website.
Jeffrey He, president of Hikvision USA and Hikvision Canada, tells SSI the company has had several loan agreements with Exim in the past. The latest funding, he said, will help Hikvision support a major new focus on the North American enterprise market.
“This credit facility is great news for Hikvision and for the security industry as a whole. As we are moving more into the enterprise market, we are actively engaging with top North American systems integrators. These companies are involved in large scale projects and need their video surveillance vendors to provide the product quickly, with high level of service and tech support,” He said.
When asked how much of the new credit line will be slated for investment outside of China, He said he does not have a specific breakdown of numbers on China-based projects versus overseas. “It really depends on the specific projects – cost considerations, delivery timelines and other project requirements – that come online in the near future. The credit facility is really there to be used as the needs arise globally.”
He said some people confuse a credit facility with a subsidy and offered a clarification:
“The Export-Import Bank of China has agreed to provide up to 20 billion RMB [$3 billion] in credit to Hikvision. This is not a ‘subsidy’ or ‘free gift.’ Hikvision will need to pay interest to Exim if we tap into the line of credit. It works exactly the same way taking a loan from a commercial bank works, and is entirely different from a subsidy.”
Hikvision posted global revenues of $3.88 billion in 2015, representing a year-over-year growth rate of 47%, up from $2.78 billion in 2014. The company said it currently has $1.78 billion cash on hand.
IHS Markit has ranked Hikvision as the world’s largest provider of video surveillance products and solutions for five consecutive years.
