In a bid to cushion businesses and individuals against effects of coronavirus pandemic through sale and leaseback program, regional leasing firm, Vehicle and Equipment Leasing Limited (VAELL), has inked a Kes. 100 million deal with Tree Capital East Africa (TCEA). The duo said that the partnership will help institutions and individuals to liquidate and mitigate risks as they monetize their assets and acquire capital to invest in projects of higher priority as they still use the vehicles and equipment. This financing comes at a time that various institutions and individuals are struggling to withstand the waves of the virus as markets and industries worldwide are limping and having difficulties sustaining their operations, a situation that has triggered massive layoffs by across all industries.
Speaking in Naivasha, Ms. Bertha Mvati, lessor’s Managing Director for Kenya said, “due to the current virus crisis, cars and equipment owners may desire to venture in growing their projects, or pay debts and the capital required to accomplish such goals may be tied up in their assets. With this new boost to our sale-leaseback program, we are giving them an opportunity to take equity and grow their ventures whereas still using the assets and hence become a double-edged solution.”
“A further investment in this program has been necessitated by the various requests from individuals and institutions that intend to translate their machineries into liquidity. With the added investment from TCEA, we can now provide such clients with immediate cash and opportune solution. The current pandemic has forced these institutions and individuals to act tactically and be innovative in order to ride out of corona storm. Sale-leaseback is a viable alternative for such entities that has substantial capital stalled in other items whereas it can be reinvested elsewhere,” added Ms. Mvati.
A sale-leaseback gives businesses ‘dry powder’ for purchases besides being in a position to service debts, maintain operational control and support core business activities in line with their strategy. With COVID-19 effects, the influx of working capital generated through a sale-leaseback gives a leg up to tap into transitory opportunities that habitually appeal to numerous contestants. It is a popular option for businesses that want to speed up their overall growth and expansion especially when if their balance sheets contain assets with no current economic value. They sale and leaseback such items to enjoy financial flexibility. In order for institutions and individuals to survive the new normal and position themselves for development and success they will have to make cognizant decisions on tactical capital distribution that meritoriously leverages assets.
Ms. Mvati said, “currently there is limited funding from banks owing to uncertainty and hence the need to decipher new ways of survival as they become more innovative and flexible. Things might be tougher in the coming days and the only way to survive is to innovate and change what is likely not to work in the coming days.”
TCEA management said that with the COVID-19 crisis, many institutions are presently experiencing the unadorned reality of a significantly condensed pool of working capital along with credit lines that will likely not defrost anytime soon. Hitherto such challenges, individuals and institutions can now utilize sale-leaseback to allow them unlock capital and increase cash flow.
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Vehicle and Equipment Leasing Limited (VAELL) is the market leader in asset leasing, maintenance and consulting in Eastern and Central Africa region. It has presence in the auto mobile, healthcare, mining, agricultural, telecommunication, construction, gas and oil sector. It has managed to diversify and expand its portfolio by offering customized solutions to suit every client’s requirement and need. VAELL, the leading provider of integrated leasing services for a broad range of moveable assets and machinery across the region, has geographical coverage with fully fledged subsidiaries in Uganda, Rwanda, Tanzania and Zambia. The leasing firm has a correspondent relationship with other leasing companies in South Africa and India. It facilitates clients with vehicles and machinery throughout the region from any one country office across its network.
In 2014 VAELL won the award for the Best in Transport, in the Top 100 KPMG/Business Daily survey, and 2015 shot into Club 101 in the same survey. It has scooped 14 awards in the last 5 years. The leasing market leader was named in 2018 by East African Business Council Tanzania as the best East African Company in The Service Sector. The lessor has also been named in the South Africa’s Titan Building Nation awards in the outstanding achievement category.
VAELL was recently hosted by Nairobi Securities Exchange (NSE) onto its premium incubation and acceleration programme, Ibuka. VAELL also owns Quipbank Trust Limited, equipment sharing platform and TingA, East Africa’s largest tractor share platform.