The Entrepreneur

Household goods

Plasma televisions, watches, power
drills, bicycles and jewellery – not the sort of assets you would
expect to find on the book of any respectable lessor, surely?

Not in the opinion of Dr Axel Sauerland,
director of consultancy at IBM Global Business Services’ leasing
competency centre in Germany, who told Leasing Life last month that
such goods, formerly consigned to the consumer credit market, have
become “absolutely leasable”.

Dr Sauerland wonders why lessors have not
targeted private households for business as more traditional asset
finance has run into rocky ground, noting an “obvious backlog of
demand” in Europe’s private client sector.

He uses the example of mobile phone contracts
including equipment and maintenance to prove that private customer
possessions can be sold through leasing: “Like so often, the wish
has been father to the thought here: clients want to be able to
utilize valuable mobile phone equipment promptly, without having to
pay immediately.”

If private clients are prepared to think of
their valuables and household electronics in the same way as their
mobile phones in terms of payment, says Dr Sauerland, then why
should not lessors be in a position to take advantage of this
fact?

Cow leasing

Cattle leasing has been common in
the ranching industries of Australia and the US for some time, but,
with the exception of some apocryphal Swiss lessors (who at the
time of writing could not be located or contacted by Leasing Life),
has received little interest in Europe.

Things may now be changing, with news that
Somerset-based dairy company Sixty Seven Cow has set up the UK’s
first cattle leasing service, in order to help dairies build up
herds quickly, despite high cattle prices.

But it seems that European cow leasing has
been pioneered first in one of the continent’s newest leasing
markets. The leasing arm of Procredit Bank in Serbia has been
leasing cows for three years and, according to staff there, has
recorded no late payments on any of the 600 cattle lease contracts
concluded so far.

Flooring panels

Meanwhile, one broker/funder in the
UK has seen promising results through actively seeking out the
deals that other financiers avoid.

The Quirky Kit™ (QK) scheme, launched this
quarter by equipment finance introducer Johnson Reed, is building
vendor finance business by targeting – in its own words –
“non-standard assets that traditional lenders, such as banks, do
not like. In other words, quirky kit that has little value on day
two.”

The QK scheme has helped Johnson Reed secure
at least two vendor relationships so far, with deals brokered
including finance for rubber flooring panels in an outside football
pitch, for an adventure play complex, and for boiler systems,
furniture and window shutters at a day care centre.

For lessees, says director Mark Johnson, this
means funding for assets that are “mission critical” – but not
necessarily resalable or valuable outside the business. For
manufacturers new to vendor finance, he says, the trademarked
programme has provided an eye-catching and approachable way of
attracting sales through leasing.

Johnson Reed, which is funded by UK private
and European banks, also writes a lot of QK business in its own
small but growing lease book, which is now around £700,000 in
value.

Discussing the market, Johnson noted the words
of Charles Darwin – “It is not the strongest species that survive,
nor the most intelligent, but the ones most responsive to
change.”