The International Finance Corporation (IFC) is providing a US$75mn loan to Hong Kong-based supply chain solutions giant Li & Fung, in a bid to expand SME access to supply chain finance and boost sustainable practices. 

The senior credit facility will be used to support Li & Fung’s working capital needs. Proceeds will also be used by Air8 – a supply chain fintech company launched in 2021 by Li & Fung’s digital platform LFX – to finance apparel and merchandise suppliers across Asia. 

The apparel sector employs around 60 million workers across Asia, yet remains vulnerable to economic shocks and faces barriers to growth due to a lack of SME financing opportunities, the two institutions say in a June 19 announcement. 

The facility will add “many new suppliers” to Li & Fung’s network, enabling companies to optimise working capital by taking early payment on invoices. Target markets include Bangladesh, Cambodia, China, Indonesia, Sri Lanka and Vietnam. 

The facility also has an environmental and social focus, with IFC providing guidance to improve sustainable practices and performance across supply chains. 

“IFC’s support will help Li & Fung accelerate its target vendors’ access to supply-chain funding and capital, which is not readily available for many smaller businesses in Asia,” says Victor Fung, honorary chairman of Li & Fung. 

“Strengthening these businesses will help fuel growth and create jobs in the apparel and merchandising sectors, as well as create a more sustainable supply chain that benefits all parties involved.” 

Riccardo Puliti, IFC’s vice president for Asia Pacific, adds: “By expanding supply chain financing, we are helping to create a more resilient and inclusive supply chain ecosystem that benefits suppliers and employees, and contributes to broader economic development in the region.” 

IFC has a long history of partnering with Fung Group companies, starting with a US$60mn investment in IDC Medical Systems Group in 2017, which allowed the company to expand its medical supply chain business in Asia. 

The loan also marks another landmark supply chain finance deal for IFC, which acts as the financing arm of the World Bank. 

In September last year, the institution launched a pilot project with Citi to inaugurate a supply chain finance programme aimed at emerging markets.  

It later joined Taulia’s platform as a funder, also with the aim of developing sustainable programmes for emerging market SMEs, and in June this year agreed a risk participation deal with HSBC on a US$200mn supply chain finance portfolio in Mexico.