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August 1, 2009updated 12 Apr 2017 4:34pm

Opportunities abound for lessors in the trade supply channel

Asset management firm Acqsys is behind a leasing scheme aimed at improving working capital

By Fred Crawley

Asset management firm Acqsys is behind a leasing scheme
aimed at improving working capital. Fred Crawley reports.

At present, there are just over four million branded vending
machines in Europe. This figure looks set to rise by at least 5
percent over the next 12 months.

Their combined value represents billions of
euros on the balance sheets of the companies whose branding adorns
their sides; billions of euros, that is, which manufacturers could
instead use to fund their core business activities.

In the same cafes, bars, and entertainment
venues as those vending machines, there are also millions of ice
cream freezers, soft drinks dispensers, coffee machines,
refrigerators, water coolers and beer pumps.

These assets are all on the books of their
respective manufacturers – as opposed to the books of the cafes and
bars – and, as such, are locking up a vast amount of valuable
working capital.

These machines are known as trade supply
assets – and such assets may represent a significant amount of
low-risk business opportunity for lessors which can find a way to
sell into the market.

One company that says it can provide such a
way in is Acqsys, a Reading-based asset management firm.

Acqsys’ core activity involves passing on
ownership of a manufacturer’s assets to a leasing company, and
taking on the responsibility for maintaining and servicing those
assets itself.

Such agreements release working capital for
the manufacturer, and free it from the administrative burden of
asset management and maintenance.

In turn, the manufacturer pays a single
monthly fee to Acqsys, covering both service costs and lease
rentals, the latter portion of which is then passed on to the
lessor.

Acqsys says that it can also offer
manufacturers large enough savings on servicing to mitigate the
costs of lease financing. For example, say that Acqsys takes on the
responsibility of maintaining a portfolio of hot drinks vending
machines owned by one manufacturer in several locations in
Portugal.

If it then makes a similar agreement with
another manufacturer, whose assets are present in the same retail
locations, it can service both sets of assets at a much lower cost
than that which would be incurred if both manufacturers sent out
separate maintenance teams.

The more brands it has agreements with, the
more of a maintenance saving Acqsys says it can offer.

According to Acqsys executive director Darren
Shipard, 30 percent savings have been achieved with some customers.
Founded in 2006, Acqsys currently lists brewers Heineken and
Scottish & Newcastle, plus Danone, Nestle and Unilever among
its clients, and is seeking more multinational customers across
Europe.

For potential finance partners in arrangements
such as those offered by Acqsys, risk is mitigated by the asset
management firm’s technology offerings. Acqsys works closely with
RFID (radio frequency identity) technology company Intellident, and
equips all of its managed assets with radio frequency tracking
equipment. In addition, Acqsys keeps a comprehensive asset register
and maintenance history on all goods serviced, meaning that losses
through fraud are minimised.

Furthermore, in the event of an outlet holding
financed trade supply goods going out of business, recoveries are
handled by Acqsys. Assets are then usually sold back to the
manufacturer, or redistributed to other outlets.

According to Shipard, Acqsys’s offering is
sold to manufacturers on the basis of operational benefits, rather
than through the prospect of releasing operating capital. For the
owners of trade supply assets, he says, the driving factor in
pursuing a partnership is freedom from the financial and operative
burden of providing service to hundreds of SME-level, point of sale
businesses.

This operational benefit provides a selling
point for large-scale operating lease deals beyond what an asset
finance house could offer by itself, and a way into a large and
relatively robust market.

Despite the recession, growth in trade supply
assets seems to be continuing. In Europe the number of branded
water coolers on the market increased by 63 percent between 2002
and 2007. Even over the last two years growth has continued,
especially in Europe’s mature markets. In Spain, for example, there
were 240,000 branded water coolers in operation at the end of 2007.
It is thought that by the end of 2010, this figure will have risen
to 600,000.

“In this economy, where manufacturers are
leaving no stone unturned in looking for value in their
organisations, trade assets are the last frontier,” says
Shipard.

For a risk-averse lessor with some liquidity
behind it, it seems they may represent solid new ground to move
onto.

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