Elevator for leasing: how to attract investment in infrastructure?
You can build an elevator not only with the money of the bank, but also with the money of the leasing company. Cheaper and faster, customers say. Safer and more profitable, says the creditor.
Ukraine increases harvests and therefore constantly builds new facilities for grain logistics. After all, in recent years there were no problems with the amount of grain, in contrast to the possibility of taking it out on time for all the reasons known to us. The most recently built terminals are MV Cargo in the port of Pivdenny, the grain terminal project in the port of Berdyansk and the terminal of the Evrovneshtorg company in the port of Mykolaiv.
All players in the grain logistics market agree — this business will always be attractive.
The construction of an elevator is a complex and large-scale project that requires significant investment and, accordingly, careful study and selection of the most favorable financing conditions.Banking institutions may refuse to lend to such projects. The reason for this is the NBU’s requirements for banks to form loan reserves, which is not beneficial for the banks themselves as part of infrastructure projects. And if they even agree to lending, their financial and organizational requirements may be very strict — which is not beneficial for the borrower.
So companies are looking for alternatives, one of which could be construction for leasing. So, for example, the company “Novotech-Terminal” began to build the first port elevator in Ukraine for leasing in the port of Odesa.
The capacity of the elevator is +-3 million tons per year. The total cost of the object is about $10 million, 70% of which are the company’s own funds. The remaining 30% is leased equipment financed by TECOM-Leasing LLC.The company “Novotech-Terminal” selected counterparties for the supply of equipment, which were agreed with TEKOM-Leasing, after which tripartite agreements were concluded between the companies involved. Thus, grain capital-engineering purchased silos, elevators from Elevatorpromservice, electrical equipment from S-Engineering, etc.
“We do not finance the purchase of the plot, entrances, other infrastructure, which is included in the cost of the object, but only the equipment,” explained Pavlo Mukhin, the director of the leasing company. In particular, the plot under the elevator was transferred by the Odesa State Administration under the terms of a long-term lease.
After all, why leasing? “The price of leasing capital was competitive compared to the cost of loans. In addition, leasing has several significant advantages. First, the financing process takes less time and the procedure itself is simpler. Secondly, there is no need to look for additional assets to provide as collateral for the financial resources involved. The object of the pledge is the object of the lease, the ownership of which is retained by the leasing company for the entire period of validity of the financial leasing agreement,” says Novotech.
Such agreements are not simple for the lessor. “This requires a deep analysis, in fact we are financing an object that will itself earn money from leasing payments,” says Pavlo Mukhin. According to him, they are approached by a client who plans to expand production, reconstruct or build anew. They analyze the project – how much money the client invests, what are the payback plans, how the implementation will be conducted, what are the risks – and make a decision to reject or approve the project. “It should not be a startup, not a new business for the client, it should have space, invest at least 30% of the total project cost. Such an analysis takes more time, but in the end, the company earns more from it,” explains Mukhin.
The head of the leasing company does not see any special risks for himself – the elevator is difficult to resell, but it almost does not lose in value, even on the contrary. “Any infrastructure projects in Ukraine — ship loading, elevators, incl. port loading facilities are one of the most profitable industries today. In the event of this, we certainly have certain legally stipulated return mechanisms for debt collection and return of the leased object, but in any case, our goal is the sustainable development of our client,” says the head of TECOM-Leasing. Today, about 30% of the company’s portfolio consists of investments in infrastructure: loading complexes, technological complexes that overload grain. There is also an elevator that TECOM financed for Rostock Holding.
Elevator for leasing – contacts
