CFI were mandated by the Ensis Group

Connaught were recently mandated by the Ensis Group in The  Maldives to arrange expansion finance for their fish processing factory and for the development of a resort island. Paul Errington, CEO of Connaught, visited the factory and met with Ensis management, Abdullah Saeed – Director, Mohamed Waseem – Managing Director and Hamid Ahmed – Product Manager.

Ensis Tuna Filleting Process Ensis Tuna Filleting   Ensis Tuna on Ice Ensis Yellow Fin Tuna arriving from the dock   Ensis Buildings Ensis Management -from left Saeed Director Ensis, Waseem MD Ensis, Paul CEO  of Connaught and Hasim from Ensis

Indonesian Oil and Gas Fields

Connaught is assisting with funds for a local engineering firm just outside of Jakarta.

They have been operating for 15 years and manage many of the oil and gas fields for the state owned Pertamina

Expansion plans have created a requirement for debt and equity to be invested in the company.

Westindo Team Pertamina Oil Field

ClaudiusConnaught Finance are pleased to welcome Claudius Grossmann to their global team.

Claudius has spent most of his life and career in Asia, namely Japan, China and Hong Kong working in commercial as well as investment banking, project financing, but also in real estate, alternative financing and many years in industrial leasing.

In his time in Asia he has built-up business units in China such as Dresdner Bank AG Shanghai Branch back in 1993 and Deutsche Leasing (China) Co., Ltd. in 2006, following the economic cycles in Asia, Claudius also gained extensive experience in the professional restructuring of business units.

While Claudius started out in Risk Management, his role soon expanded into managing whole back office operations as well as increasingly working also on the sales side.

With this objective in mind, he has joined Connaught to contribute to the expansion and success of CFI, building up among others good and extensive relationships with German/European SME and vendors operating in Asia and beyond.

Besides his working experience we also welcome his good understanding of different cultures in Asia, sufficient political as well as economical insights into Asian and European affairs and effectiveness dealing within a dynamic multicultural business environment.

Claudius Grossmann
Associate Director
Connaught Finance Investments
Office: +852 3796 5390
Mobile: +852 62324319
Email: claudius@connaughtfinance.com
Germany, Country mobile +49 177 485 7364
Skype: grossmc21
Web: www.connaughtfinance.com

http://www.connaughtfinance.com/459

USA is Fourth Office for Connaught Finance

“The mature equipment leasing market of North and Central America as well as Canada has always appealed to Connaught Finance for expansion” said the CEO of Connaught.

“But expansion is not just one of opportunity you need the right people with the right skill sets and that’s the challenge. That is why we are very pleased to announce that Sandy Garrett has joined our group as President of Connaught Finance USA.”

Sandy has nearly 30 years experience in structured finance, and vendor finance for equipment in the Americas. His wealth of experience will greatly enhance the company’s presence in the US as well as creating a link into Asia for existing as well as new clients with a focus on the Far East.

The New York office will provide the full suite of financial solutions that are offered from the other Connaught offices in Hong Kong, Frankfurt and Sri Lanka.

The company’s main focus stems from structured finance for equipment through vendor relationships and direct to end users but also project finance and private equity investments.

Sandy Garrett
President
Connaught Finance USA
200 Central Park South, Ste 3M, New York, NY 10019
Office: +1.212.956.3590 (New York) / +1.267.544.0255 (Philadelphia)
Mobile: +1.212.586.0049
Email: sandy@connaughtfinance.com
Skype: sandygarrett
Web: www.connaughtfinance.com

Connaught Finance Expand into Europe

Frankfort_Kentucky_Capitol_Building_2007

The Managing Director of Connaught Finance, Mr. Paul Errington, announced today the opening of their new office in Frankfurt.

 

“We are very pleased to have Michael Vander joining our team and heading up the new office which will also cover EMEA”

Michael has over 20 years in the asset finance market and brings a wealth of international experience to the company.

 

The Frankfurt office will provide the full suite of financial solutions that are offered from the other Connaught offices in New York, Hong Kong and Sri Lanka.

The company’s main focus stems from structured finance for equipment through vendor relationships and direct to end users but also project finance and private equity investments.

 

Michael Vander

Associate Director

Connaught Finance Investments – Frankfurt Office

Spessartstr. 14, 61273 Wehrheim, Germany

Office: +49 6081 966 54 79
Mobile: +49 173 46 56 705
Email: michael@connaughtfinance.com
Skype: michaelvander
Web: www.connaughtfinance.com

Global Asset & Auto Finance Survey 2014

Errington quoted in recent Quarterly Survey on Finance in Asia.

“Basic research into equipment leasing globally shows a clear path where the industry is headed in emerging markets of Asia, why therefore are banks and finance companies such as Macquarie and CIT pulling out of many Asian countries?……

assetautofinancesurvey2014

Troubled Waters for the Big 4 in China

big-4-logos

Conducting business in China has never been a straight forward proposition no matter if you are an SME or a multi-national or one of the world’s largest Audit companies.

At the end of January, the US courts ruled that the Big 4 affiliates in China were banned from operating for 6 months. The judges ruling is quite an eye opener on Private Equity and Capital market transactions in China, most especially the reliability of the big 4 auditing accuracy! Transactions in this market worth billions of Dollars rely on the audits providing data that reflects the companies involved and their trading positions. This is now very much in question.

The Big Four are appealing the decision and whilst under review they are allowed to continue operating in China. The SEC had requested data on some Chinese companies quoted in the US but the Big 4 had refused on a number of occasions over the last 2 years stating that it would breach Chinese state secrecy laws.

The growth of KPMG China and Ernst & Young China have been unprecedented but PWC underwent the largest growth with staff numbers increasing four fold to 8,000 people between 2004 and 2012.

In the Judges lengthy ruling he stated “A good faith effort to obey the law means a good faith effort to obey all law, not just the law that one wishes to follow”

One of the breaches in compliance has been the Sarbanes-Oxley regulations which has in fact helped the auditors bottom line in the US as it has increased the necessity for stricter compliance of clients which has resulted in an increase in the fees of the Big Four.

If the ban is upheld then companies such as P&G, Amazon and Nike may have to look for new auditors in China as they have large revenue bases there. Conducting business has never been straight forward but if the appeal is not successful then a large gap will be left in the market that would need to be filled by Chinese audit companies.

With such potential impact on the market and conducting business in China, it is quite amazing that this has not been reported more aggressively.

Connaught are pleased to announce a recently agreed strategic alliance with the Mongolia Fund.

The Fund seeks long term growth of capital through investing in the mining sector, mining services, processing, logistics and energy.

http://www.mongoliafund.com/Who_We_Are.html

The most recent project is the structuring of funds for Hertz Equipment Rental franchise in Ulaanbaatar (the capital of Mongolia)

As a country, Mongolia, has the world’s lowest population density but last year had the highest global GDP growth rate at 17%.

One of the world’s richest areas for natural resources the economy is heavily reliant on the mining industry and market sectors that support the mines.

Connaught are looking forward to expanding the investments of The Mongolia Fund in this emerging Asian market”

112232_2_352875

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.