In the last few months we have been pleased to welcome on board a new vendor, Kornit Digital Asia.

Kornit Digital (NASDAQ:KRNT) develops, manufactures and markets industrial digital printing technologies for the garment, apparel and textile industries.

Leading the digital textile printing industry through its revolutionary NeoPigment™ process, including an integrated pretreatment solution, they cater directly to the needs of both designers and manufacturers to address the changing needs of the entire textile printing value chain.


Connaught and Kornit have partnered to offer their channel partners and clients, financial solutions to more easily acquire the printing equipment across Asia. With representation in Hong Kong, Australia, Japan, Philippines, Indonesia, China, Vietnam, India and Sri Lanka, Kornit are ideally positioned to expand extensively in the region. Connaught will assist this expansion with their vendor finance program.





We are pleased to announce that we have now completed a corporate rebranding process.

This allows a refreshed image for the company as we move forward with the new business models for Corporate Consultancy.

New services include corporate restructuring of balance sheet, discount of receivables and a more integrated vendor finance programs.

Also read articles published by Paul Errington on Asset Finance International:

Asia Pacific Business Prospects for 2018

Asia Pacific Business Prospects for 2018

By Paul Errington CEO, Connaught Finance, Hong Kong

The multi-cultural diversity of the Asia Pacific region brings many trade opportunities but also many geo-political problems.

One of the major influencers for business prospects could be seen as the US vision for trade in the region. Trump has just concluded an Asian tour visiting Japan, China, South Korea, Vietnam and the Philippines where he attended the ASEAN Summit Conference. Expectations were high (by some) that the Trump vision of “America First” would show some detail on this policy and therefore how it would impact Asia. Unfortunately, little or no details were forthcoming.

The only significant change was that some months ago, Trump pulled the US out of the Trans Pacific Partnership (TPP) a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. But as the American position in Asia is on the descent so is the Chinese position on the ascent.

China already has it’s own trade program in place the Regional Comprehensive Economic Partnership (RCEP). America is playing directly into the hands of China who encourages multi –national trade agreements whereas America is looking for only bi-lateral agreements, unfortunately not many nations are stepping up for such agreements at the moment.

When in China last week, Trump was “managed” by the Chinese who knew exactly how to pander to the billionaire’s ego with flattery and over the top pageantry. But the conflicting interests between Washington and Beijing remain with very little being achieved from the meetings with Xi Jinping, China’s President. Deals have subsequently been announced for US$250 billion but again little information on any details.

Overall, the “unknown” Trump vision in Asia is expected to have little impact on business growth in the region as China’s economy continues to grow as does their influence in the region.

Locally, there are other issues that will or could impact business growth, such as the increasing tensions with North Korea, the South China Sea territorial disputes, the Rohingya ethnic cleansing in Myanmar and the military junta government of Thailand going to elections in 2018.

It is expected that the North Korean situation will impact foreign investments next year into South Korea as confidence on stability is put in question. However, outside of the Korean peninsula there appears to be a “business as usual” approach although concerns do remain high.

Overall, what impact will these matters have on trade and business growth in 2018? Generally we are expecting a positive growth to the economy in Asia Pacific. The automotive industry is ever increasing in China but Singapore will drop off drastically as the government implement a “no new cars” policy from February 2018 (only a small market of 600,000 cars in 2016 and China has 172 million) The mining industry in the Philippines and Indonesia will be set to grow after some clarifications on trade regulations for both countries.

Infrastructure will be one of the largest growth sectors, in our opinion, along with logistics.

Another market indicator are the number of IPO’s waiting to list on the Hong Kong Stock Exchange now reaching some 2,500 companies. This is equal to the entire number of companies listed on the Shenzhen Stock Exchange.

For more information and contributions from other Asian business leaders follow this link to Asset Finance International and the White Clarke “Global Auto and Equipment Finance Report 2018


KPMG’s Special Situation Forum: China 2017

KPMG and China Money recently held a seminar in Hong Kong entitled “Special Situations Forum: China 2017”

Guest speakers were from Bain Capital Credit, UBS and Poseidon Capital to name but a few.


Paul Errington, the CEO of Connaught Finance attended the Forum and had this to say: The groups focus was on the Non-Performing Loans (NPL’s) market in China, how banks were trying to dispose of these to other companies and how to restructure these.

KPMG alone, helped dispose of CNY 342 billion across 567 NPL portfolios.

But one of the major questions is who is buying these portfolios and basically this is other funders / banks within China, so as far as “disposal” is concerned it is not strictly correct as they are being moved within the domestic banking market. This situation will continue as long as foreign investors have government restrictions imposed on them coming into China.


Another point of discussion was the official level reported of NPL’s. Many portfolios have been addressed by wrapping around them financial structures that allow them to be accounted for as “investments” and not NPL’s hence it is difficult to tell the actual percentage of NPL’s in China.


Nearly 90% of all NPL’s are property based and taking control of these can often prove legally difficult but over the last 10 years the government have made massive changes and inroads to assist the legal structure within the courts and without a doubt this has helped the market.


Cali-Mex Bar and Grill




Over the last few years the food and beverage industry has seen a new and exciting entrant into the market of Hong Kong – Cali-Mex.

This new client for Connaught, not only provides excellent Mexican food but a true Mexican experience at their Bar & Grill outlets.

Now with 17 stores across Hong Kong island and Kowloon, Cali-Mex opened their flag ship in Lan Kwai Fong in late September 2017.

Photos are from their Grand Opening Party which hosted some 350 guests who enjoyed all things Mexican in the entertainment and the Tequilas.



Jeff Moss – CEO of Cali-Mex & Paul Errington – CEO of Connaught Finance.


Asset Finance International

Connaught was recently asked by a world renowned Online Finance Magazine, Asset Finance International to contribute to their “Asia Pacific Country Report”.

Paul Errington, the CEO of Connaught based in Hong Kong, writes numerous industry articles on project finance and equipment finance for the Asian region.

For the full article, follow the link:

Asset finance trends in Asia Pacific

Local and global political winds are blowing through the finance markets of the Asia Pacific region. The repercussions of the Brexit vote followed by the election of Donal Trump have the potential to impact the economies in the region, while escalating tensions between the United States and North Korea add troubling uncertainty.

The two biggest economies in the region, China and India, appear to have the size and momentum to withstand whatever happens on the world stage, and both hold enticing prospects for asset finance companies.

“Both economies are showing political support through tax breaks and economic zones that will assist asset finance growth,” said Paul Errington, chief executive officer of Connaught Finance Investments, based in Hong Kong.

While the decision of the US to end its involvement in the Asia Pacific Trade Agreement at the start of 2017 may jeopardise smaller economies, the impact on China appears limited.

“China already has the Regional Economic Partnership, which can easily replace the USA based agreement and attract stronger regional trade,” said Errington.

He sees the political stage as having the greatest impact on growth in the region, with economies adjusting to new elections over the last three years in Hong Kong, Philippines, Sri Lanka, Myanmar, Thailand, Laos and Nepal.

“Political risk is always a factor in any economy and some far more than others,” said Errington. “In the region the Maldives and Myanmar are probably the highest risk of economic implosion through political machinations.”

These, though, are tiny economies compared to some of their neighbours, and investors would be wise to view Asia-Pacific as a hugely diverse region, where a broadbrush approach is in danger of missing significant local differences in critical measures like per capita income and the penetration of connected devices.

Connaught has divided the region into tiers, ranked one to six, grouping countries according to how established each national asset finance market is, as well as factors such as size by GDP, GDP growth, population, industry growth and political risk (see table 1).

With an umbrella view of the region, the Asian Development Bank forecasts GDP growth for Asia Pacific of 5.7% in both 2017 and 2018, as controlled growth in China is balanced by more dynamic growth elsewhere.

“Growth is picking up in 30 of the 45 economies in developing Asia, supported by higher external demand and rebounding global commodity prices,” said the ADB.

The bank anticipates authorities in China maintaining financial and fiscal stability as the country rebalances its economy from industry to services, with domestic consumption driving growth. This in turn will reduce China’s reliance on exports.

But it is the economic development of India that excites so many experts. Measures of GDP per capita, oil demand and even the flourishing new car market remind specialists of China a decade ago, and if India can follow a similar economic trajectory, the Asia Pacific region will have two titans of the global business world.

“Government deregulation and reform of taxes on goods and services, among other areas, should improve confidence and thus business investment and growth prospects [in India],” said the ADB. “Growth is expected to edge up to 7.4% in 2017 and 7.6% in 2018.

Star Prototype


Connaught are pleased to welcome Star Prototype to their ever expanding list of clients.

Star Prototype was founded in 2005 by British engineer Gordon Styles and it continues to be 100% owned by him. Gordon is an expert in rapid prototyping and 5 axis CNC machining.

Star Prototype specialize in rapid prototyping, rapid tooling and low volume production of custom parts. Their international team of engineers and technicians use advanced equipment and techniques like 3D metal printing, multi-axis CNC machining and plastic injection molding, to turn client’s designs into reality quickly and accurately.

At a recent site visit to their manufacturing plant in Zhongshan, China, Paul Errington, CEO of Connaught, stated “ I was impressed with the company on many levels, not just the exceptional cleanliness of the work areas but also the equipment quality and more than anything else the team spirit amongst the international and local engineers”. Paul met with Gordon Styles and Jon Ross the company CEO as well as many of the divisional leaders of Star.

Connaught provided a funding solution to assist with the rapid company growth.

For more information on Star Prototype pleas go to their website:






Mongolia – The New Frontier for Equipment Finance

November 2013

A country that has been described as “the last frontier” and at the same time “the wealthiest country in the world for natural resources” is once again at a cross roads.

Trade with China represents more than half of Mongolia’s total external trade – China receives more than 90% of Mongolia’s exports. Mongolia purchases 95% of its petroleum products and a substantial amount of electric power from Russia, leaving it vulnerable to price increases. Due to severe winter weather in 2009-10, Mongolia lost 22% of its total livestock, and meat prices doubled. Inflation remained higher than 10% for much of 2010-12, due in part to higher food and fuel prices.

New investment legislation is expected to result in mainland firms pouring billions of dollars into key railway and highway projects Mongolia’s new law is expected to encourage billions of dollars of Chinese investments.

Without a doubt this is needed due to the slowing down of the economy in 2013 when a number of elements hit the economy at the same time. Namely the dispute between the Mongolian government and Rio Tinto’s, Oyu Tolgoi US$6.6 billion copper mine and at the same time a new government election. In addition to this the slowing Chinese economy saw trade reduced by 50% between the two counties.

Mongolia 1










Oyu Tolgoi Mine

Around 90% of the Mongolia’s revenues come from mine-product exports. Falling prices for these exports have worsened the balance of payments and slowed the country’s growth even further. Saying that, Mongolia’s economy expanded 12.2% last year and 17% in 2011, when it topped world growth rankings, according to World Bank data. For comparison, other counties GDP growth 2012:


Mongolia 2











Impact on Equipment Demand

Mongolia has planned US$50 billion of mega projects in the next 10 years, said road and transport minister Amarjargal Gansukh. “We are looking for investors in mining, energy and transport infrastructure.” (Speaking at the Mongolia Investment Summit in November in Hong Kong)

Construction had begun on 1,800 kilometres of railway costing US$5.2 billion, which was one-third of the planned national rail network, Gansukh said.

Other infrastructure projects are also underway which will have a substantial increase on the amount of equipment required in the country. These include the improvement of existing roads as well as new ones going to and from mine sites.

Another national requirement is for power as the mines require massive amounts on a day to day basis. Wind and solar power projects as well as new oil fields are helping with local employment.

In the midst of this surging demand for equipment on these projects is a new franchise with Hertz Equipment Rentals in Ulaanbaatar (the counties capital) Connaught Finance, in conjunction with The Mongolia Fund have raised US$50 million in private equity for the launch of this new company that is listed in USA.

Equipment Lessors in Mongolia

As with many emerging economies, there is a lack of legislation when it comes to equipment leasing. There is no registration for moveable assets in the country which obviously makes traditional banks uneasy. At the Mongolian Investment summit, Mr Norihiko Kato the CEO of Khan Bank (one of the largest banks) said that opportunities for leasing were with “non vanilla” type transactions. This on the surface appeared rather promising and pro active but when later asked about leasing of “yellow goods” he said it was all rather difficult if they did not know where they were going to be!

Mongolia 3









(Paul Errington – CEO of Connaught Finance meets Khan Bank representative)

Other local banks such as Xac Bank and Xac Leasing appeared more interested in solutions rather than seeing obstacles which is very encouraging for this emerging market that has great potential for equipment leasing.

Mongolia 4

Sri Lanka – An Emerging Economy and an Emerging Leasing Industry (Part 2 of 3)

In the previous article on Sri Lanka and their leasing industry, we looked at the economy and the historical leasing model of local banks offering finance leases for vehicles but little else.

In this article we look at the leasing  industry today, how the Leasing Association has been structured and how leasing of “non vehicle” equipment is managed.

Every emerging market for equipment leasing faces two main challenges;  which comes down to supply and demand;  these are product development (supply) and market education about the availability of leasing (demand). The growth of the industry depends nearly entirely on these two factors (taking out for the time being the legislation that can either make it hard to transact business or even harder). Too much or unclear  legislation is restrictive such as in China and too little such as in Mongolia can increase the risk of leasing for a lessor.

The “Catch 22” of this situation is that banks and finance companies will not invest resources in product development until demand is registered in the market but demand will not start until the market has been made aware of the benefits of leasing to their companies.

The creation of the Leasing Association of Sri Lanka is an excellent step forward for the industry participants. To become a member you have to be a Commercial Bank, Development Bank, Merchant Bank, Registered Finance Company or Specialized Leasing Company that is registered with the Central Bank of Sri Lanka under the Finance Leasing Act of 2000. As a regulatory body this, on the surface makes good common sense. The many years of experience that is represented by it’s members as well as it’s Committee offers a great deal of knowledge to such an august body.

Their recently refurbished web site reflects the equipment that the industry has experience of when they talk of vehicle valuations in the country.

This begs the question” How does the Association help develop Equipment Leasing away from the traditional focus on vehicles?”

As with any equipment leasing emerging country  nearly all finance companies/banks start with vehicle leasing as it is a known asset with a reasonable residual value or at least a solid second hand market. This was the case in the UK, Europe, America and Australia when the leasing industry started to grow.

The next step would often be the emergence of foreign banks and equipment vendors coming into a country (such as China) with their success records on equipment finance from around the world. But Sri Lanka only has a GDP of US$ 60 billion and is therefore a relatively small market and so far too small to attract many IT vendor finance companies such as IBM, HP, Cisco or Netapp. Even the noted equipment lessor banks such as Macquarie Equipment Finance have shown no interest. The latter is not too surprising as Macquarie appear to have a marketing approach to Asia of “Now we’re in and now we’re out”.

So this traditional next step is not happening in Sri Lanka. In fact the market has created the next step for equipment leasing as import taxes on vehicles have increased over the last year by up to 200%. The vehicle registrations have been down for months and some imported vehicles are being re exported as they cannot be sold in Sri Lanka.

We therefore see the equipment leasing companies wondering what to finance as their markets have effectively vanished.

As I mentioned in the first article, the economy of Sri Lanka is growing at a steady pace of around 7% per annum with hotels and tourism being the fastest growing industry. At the same time, increased tourism places a greater strain on the country’s infrastructure.

The government have changed legislation recently to make it easier for foreign investment. This has seen an influx of funds from China to build the new freeway from Colombo to Galle in the south(opened just a few months ago) , a US$200 million loan to the government for their new international airport in the south at Hambantota called Mattila airport (opened in March 2013) and further similar investments in the ports and power stations.

James Packers group (the Australian entrepreneur) is looking to build a casino in Colombo and a resort facility on the east coast at Trincomalee. The majority of tourists to Sri Lanka still originate in India and as gambling is illegal in India this should create a new market for the country. Not dissimilar to Macau and mainland China relationship for gambling.

How therefore does this impact the equipment leasing market?

The growth of the economy in all the above sectors involves equipment in some shape or form. From construction and technology to power plants and shipping. Sri Lanka is poised to make a spectacular entry into the global leasing arena. Watch out for it  in future White Clark Group annual surveys.

Sri Lanka – An Emerging Economy and an Emerging Leasing Industry (Part 1 of 3)

Sri Lanka (formerly called Ceylon) is a vibrant and booming country which is truly starting to see the growth benefits after the 30 year war ended two years ago with the Tamil Tigers.

A major impact of the war was on the country’s infrastructure as well as it’s economic growth. Without forgetting the impact on the people of Sri Lanka through division, personal tragedies and poverty. (the average per capita income in 2010 was US$5,100)

But now that the war is over the capital city of Colombo and the surrounding countryside is changing rapidly. Gone are the cement roadside barricades being replaced with trees and shrubs and enter construction in the ports, roads, hotels, commercial office blocks and residential buildings.

Such growth also brings it’s own problems such as the recently completed power plant (from China) failing 5 times in the last three months. Colombo, as we speak, are suffering 2 hours enforced electricity blackouts every day until the problem is resolved.

In addition to the operational problems of growth comes the financial problems. Where will all the funds come from to bring Sri Lanka more into the global economy ?

The wealth of the country is without doubt growing with the most recent loan from the International Monetary Fund (IMF) being declined by the Sri Lankan government as it was not required.

Foreign investments in infrastructure projects are increasing (a substantial amount from China) but as yet foreign banks have not seen the market as attractive enough for investment in equipment leasing.

Equipment Leasing – Historically

I first visited Colombo last year and met with 6 banks and finance companies to establish their leasing products, market and future plans. Previous market research had given me a great deal of this information but breaking into a new region demands face to face discussions.

The result was a step back in time to other emerging markets in which I have worked. All of the funders I met with could finance cars for private users. That was the bottom line!

We were surrounded by cranes, ships, power plants (although broken) manufacturing equipment, Technology – it was an equipment junkies paradise but all we finance is cars!

Vehicles, as an asset to finance, provides safe residual risk and a safe second hand market in which to sell the asset in the event of repossession. This is the starting point for most markets that are becoming familiar with equipment leasing.

The Market Today

  • Finance Leases and Hire Purchase
  • 95% of leasing is based on vehicles
  • At the end of 2010 there were 70 registered leasing companies.
  • Growth will come from demand (as in Australia and India)
  • Product development will come from international vendors of equipment and international banks such as Macquarie Bank, ANZ and HSBC to a lesser extent. (neither of the first two banks are yet in Sri Lanka for equipment finance as the market is viewed as too small)
  • Domestic banks and finance companies have an opportunity to be ahead of the international banks

Market Education

This had to take place from a funders point of view as well as the users point of view, which is not dissimilar to other Asian countries in which we work such as Malaysia, China, Korea and Indonesia. (all to different degrees). Further ahead in their legislation than a lot of their neighbors, Sri Lanka has the accounting standards in place to manage operating leases as well as finance leases in the form of LKAS17

Cross border transactions were not possible due to attracting withholding tax and therefore the domestic banks needed to be onside. We provided Rental documents tailored to the Sri Lankan market which had to be passed by their boards and their legal departments before we could look at sourcing business.

From the clients view point, we needed to make them aware of Rentals / Operating leases that could assist in preservation of their capex budgets and spread the costs of ownership over the useful life of the equipment.

Market Changes

The rapid growth in the economy has seen the government step in and try to curb inflation by increasing the cost of funds. Last year the interest rate for equipment leasing in Sri Lanka was around 13%, today it is anywhere between 18% and 23% (effective).

This in itself would have an adverse effect on the leasing industry and it did. But the government then increased the import taxes on vehicles – in some cases 200% !! So the only market that the banks and finance companies lease equipment has suddenly dried up.

Growth of any industry is impacted by numerous forces such as  economic shifts, be they domestic or international, inspired by technology changes or government enforced changes.

Other markets developing for equipment finance such as China (albeit now the second largest leasing country in the world with US$83.3 billion in 2011) are seeing an unprecedented change with foreign banks actually reducing their lending exposures. This is due to pressure from their home markets such as Europe and USA along with balance sheet weakness and political pressure. RBS and ING have pulled back from Asia whilst French and German banks are under pressure to meet Basel III regulations.

At the same time the local banks such as CIMB (based in Malaysia), DBS (from Singapore), United Overseas Bank (UOB from Singapore) and OCBC have all been quick to take the place of the shrinking foreign investments from overseas banks.

This is a unique position that is occurring in China but Sri Lanka finds it’s market development some time behind that of China where the foreign banks have not started to take a dominating foothold, certainly for equipment finance. This is where the opportunity lies for the local Sri Lankan banks to establish their own beachhead before this occurs.

We will present two more articles on Leasing in Sri Lanka over the following months.


By Paul Errington


Connaught Finance Investments

Hong Kong