The International Finance Corporation, the private sector arm of the World Bank Group, yesterday agreed to invest US$6.5 million in Wumart Stores Inc, one of the leading retail chain store operators in Beijing.

IFC's investment supports Wumart's international offering on the Growth Enterprise Market, the second board of the Hong Kong Stock Exchange.

It will help Wumart expand in the face of increased international competition.

Wumart raised US$70 million in its international offering and intends to use the proceeds to partially fund the establishment of 10 hypermarket franchises, 32 supermarkets and 152 convenience stores over the next two years.

Wumart represents the first investment by IFC in a Chinese retail company. IFC's retail sector portfolio includes US$275 million in investments in 15 countries.

"This investment shows IFC's determination in developing strong local retailers that can compete with international players in the fast-growing Chinese retail market,'' said Javed Hamid, IFC director for East Asia and the Pacific.

Wumart is the first Chinese non-State owned retailer to issue shares on Hong Kong's Growth Enterprise Market.

Zhang Wenzhong, Wumart's Chairman and CEO, said IFC's investment will strengthen its ability to grow rapidly while remaining highly competitive in the Chinese marketplace.

China's retail sector is undergoing rapid changes resulting from China's accession into the World Trade Organization (WTO).

China will end restrictions on foreign ownership in the retail sector by 2005. Heightened competition is leading local retailers such as Wumart to adopt improved management.

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