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 Kshs.100 million deal with Tree
Capital East Africa (TCEA).
The
companies 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 use the vehicles and equipment.
Care limping and having difficulties sustaining their operations, a
situation that has triggered massive layoffs across economic 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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