Hikvision Gets $3 Billion From Chinese Government Bank

Author: John Honovich, Published on Dec 09, 2015

Hikvision has secured the biggest financing ever in the video surveillance industry.

Despite the groundbreaking news, Hikvision has been strangely quiet about it, with no English language announcements nor celebrations.

However, Hikvision and their largest shareholder, a Chinese government owned entity, did announce and explain it in Chinese.

In this note, we examine the financing and how the Chinese government bank is empowering Hikvision's international 2.0 strategy.

Financing Overview

The China Development Bank, one of the 3 government owned policy banks, is providing 20 billion yuan (~$3.1 billion USD) financing to Hikvision from 2015 - 2019. This looks to be credit / debt financing, not equity (though Hikvision is already largely owned by a different Chinese government entity).

Financing of ~$3.1 billion USD is quite tremendous, even for Hikvision's size (with nearly ~$2.8 billion USD revenue last year). The company has grown ~60% so far in 2015 and is clearly focused on continued top line growth.

International Expansion

Hikvision's President explained the strategy in the release on Hikvision's government owner's website:

"The implementation of international Hikvision 2.0 strategies to strengthen Overseas localization services for capacity-building, providing a comprehensive, multi-channel capital protection.... strategy to jointly carry out an important measure of global strategic layout, to further enhance our security products international competitiveness and global brand influence has an important role in promoting." (Google Translate)

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Hikvision would not comment nor clarify to IPVM about the financing.

Abandoned Hong Kong IPO

At the beginning of 2015, Hikvision planned to do a Hong Kong IPO (in addition to their Shenzhen listing) of $1+ billion USD for international expansion. However, that was put 'on hold' after the market turmoil of the first half of the year. This new Chinese government financing makes that not critical.

Impact

For a global market (including China) that is ~$15 billion, ~$3 billion is an immense amount of funds to support global expansion and minimize needs for even mid-term profitability or cash constraints.

This financing is a critical component to power Hikvision to continue the pace of their rapid global expansion.

Hidden

On the other hand, the way Hikvision has handled this has shown their approach in (not) communicating with the rest of the world about critical news. As a Hikvision defender recently declared:

"So is Hikvision hiding something? Not if you can read Chinese."

Given this financing and Hikvision's approach, you may need to learn Chinese.

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