trade finance – more than leasing…
DESCRIPTION
Trade Finance – More than leasing…. G. Eric Raby. Finance Opportunity. “Every machinery purchase requires a finance decision – how to pay?”. Finance Opportunity: Defining the Needs. Different Needs Require Different Solutions. End-user customers need point of sale leasing. - PowerPoint PPT PresentationTRANSCRIPT
Trade Finance – More than leasing…
G. Eric Raby
Finance Opportunity
“Every machinery purchase requires a
finance decision – how to pay?”
Finance Opportunity: Defining the Needs
Different Needs Require Different Solutions● End-user customers need point of sale leasing.
● Distribution channels need wholesale finance.
● Large agribusiness need project finance.
● Lesser developed areas need grants and financing.
● The need for political cover, risk share, co-financing and technical assistance is evident as well.
Finance Opportunity: Defining the Solution
To create optimum solutions in markets one must adopt a holistic approach by utilising all of the identified elements both individually and jointly depending on the requirements of each specific market or even customer.
StructuredTrade Finance
Government-support guarantees & insurance for export credit. Experienced & knowledgeable management of multiple
ECA relationships and procedures. (Example: US EXIM Bank insurance for KAM client
Agro LV in CIS)
Multilateral Development Institutions
Regional & international institutions that support economic development.
Broad-based finance for key account customer projects & leasing programs.
(Example: European Bank for Reconstruction & Development
for risk sharing)
Leasing
Point of sale asset finance.
Expertly defined criteria used to select best leasing providers.
(Example: UCL in Ukraine)
Wholesale FinanceDealer credit facilities for
stocking product.
Country-specific approach (credit, leasing and insurance)
(Example: Atradius insurance for dealer credit facility in Russia)
AID Government grants to support developing
and post-conflict countries.
Accessing technical assistance funds and risk guarantees for credit and leasing.
(Example: Millennium Challenge Corporation and USAID cooperation in Africa.)
MDI Leasing
STF
Wholesale
AID
Finance Opportunity: Defining the Customer
Tier 1 – Large Scale Agribusiness
Needs: ● STF Project Business - Direct● MDI Co-Finance Support● Most Competitive Leasing
Tier1
Tier 2
Tier 3
Tier 2 – Mature markets, mid-size customers
Needs: ● Point of Sale Leasing● STF Project Finance – Bank Guaranteed ● MDI Risk-Sharing Enhanced Leasing
Tier 3 – Emerging & mature markets, smaller customers
Needs: ● Leasing● MDI Risk Sharing Enhanced Leasing
Tier 4 – Inception markets; manual to mechanized
Needs: ● AID, Grants and Financing● MDI Risk Sharing via Enhanced Leasing
Tier 4
Finance Opportunity: Defining the Focus
Finance Needs – Russia
Matching the customer need to the best solution
●Leasing – flow financing, POS
●Structured Trade Finance – projects, credit lines
●Multilateral Development Institutions - Risk-sharing, political cover
●Russian banks – Made-in-Russia initiative & ECA facilities
●Wholesale Finance – providing resource for channels
MDI
Leasing
STF
Wholesale
AID
Summary
● Russia is a key market for agricultural equipment due to its size and potential
● It is somewhat of a mixed bag from a finance perspective – old methods blended with new needs
● Subsidies (goods or rates) are still part of the equation – Government-led
● Foreign investment is a driver, but ebbs and flows
● Liquidity in the market for 2012 is uncertain / WTO could be adverse to the margins of many Russian ag businesses
● Overall and long-term prospects for Russia are still very strong and will likely mature at a rate faster than the United States did in the mid-20th century and as such, will provide an on-going need for finance solutions