Hikvision gets $3.1 billion

HANGZHOU, China—Video surveillance provider Hikvision, based here, has secured a new $3.1 billion line of credit, $1.5 billion of which is earmarked for investment outside of China, while $1.6 billion is for use inside of China, Jeffrey He, president Hikvision USA and Hikvision Canada, told Security Systems News.

Hikvision may use all or part of the funds in a variety of ways—as bonding for large projects, for R&D or for potential acquisitions, but Hikvision definitely has its eye on “diversification,” He said.

While Hikvision will continue to invest in its core video surveillance products, it plans “to get into new market segments that go beyond the conventional, traditional security,” He said.

What new market segments is Hikvision exploring?

“We are doing innovative work in some other categories such as robotics vision, industrial cameras and drones,” He said.

Hikvision closed the financing deal on Nov. 30. The lender is China Development Bank. CDB had $1.59 trillion in assets in 2014, according to its website. The bank provides medium- to long-term lines of credit and has a mission of making loans that promote the “development of national infrastructure, basic industry, key emerging sectors, national priority projects, … cross-border investment and global business cooperation.”

Recently, Hikvision also secured lines of credit from Citibank, HSBC and Deutsche Bank, among others. Hikvision did not disclose the amounts of those recent lines of credit.

Billion dollar credit facilities may not be common in the security industry, but Hikvision is a large company that's enjoyed “sustained growth,” He pointed out.

“Our financial records are pretty good,” He said.

Indeed, Hikvision expects to have revenues of almost $4 billion this year, up from $2.78 billion in 2014. It currently has $1.07 billion cash on hand and its net profit in 2014 was $723 million.

Its CAGR over the past five years is 52 percent. North America is its fastest growing region, and 25 percent of the company's turnover is from outside of China.

Hikvision is the world's largest provider of video surveillance, according to research group IHS, and in an August 2015 report, IHS said Hikvision is now the No. 1 global provider of IP cameras.

Jeff Kessler, managing director of Imperial Capital, said it's not surprising that Hikvision would receive such a large credit facility. "It will provide the working capital for the company to continue to grow inside of China with government programs that have long lead-times,” Kessler said.

“It will also allow them to continue to fund growth into the small- and mid-sized market outside of China,” he added.

Some of Hikvision's 2015-2016 initiatives in North America include: hiring R&D engineers in the U.S. to collaborate with Hikvision engineers in China; a new headquarters in City of Industry, Calif.; a new logistics center in Miami; and, a new office in Montreal. Outside of North America, it will open a new European headquarters in Amsterdam in 2016 and a new facility in Brazil.

Diversification and a strategy of “Glocalization,” are key components of the company's growth strategy, Hikvision executives say.

Hikvision CEO Yanzhong Hu spoke to Security Systems News in October about the company's growth strategy.

What about talk of a merger or major acquisition?

Jeffrey He said that Hikvision is “always open” to the idea of acquiring within the security industry, but that Hikvision does considerable R&D of its own in that area.

For an acquisition, Hikvision is more likely to “look beyond” video, He said. That may mean access control or intrusion, or it may mean a line of business that's adjacent to physical security. “People should not limit their imaginations [on the possibilities],” He said.