Alios Finance Group chief executive officer Jan Valk (left) during the signing of a $9million loan to the firm by IFC in Nairobi on July 20,2012. Looking on is Alios Finance Kenya CEO Edna Kihara (right). Photo/Diana Ngila
French firm Alios Finance is expanding to the Kenyan market.
It is relocating its African headquarters from Tunis to Nairobi, attracted by the multi-billion-shilling asset finance industry as local businesses increasingly warm to alternative forms of lending.
Alios Finance has mainly been operating in Francophone Africa since 1959 but is now expanding to Anglophone sub-Saharan Africa.
“We have been based in Tunis but have now relocated the offices to Nairobi,” said chief executive Jan Valk.
Alios Finance already operates in Zambia and Tanzania and is expected to start operations in Uganda by the end of the year. Democratic Republic of Congo is also in the expansion pipeline.
The firm is already leasing greenhouses and has committed $5 million (Sh419 million) for Kenyan SMEs under a $9 million (Sh754 million) loan from the International Finance Corporation (IFC). The remaining $4 million (Sh335 million) is for the Tanzanian market.
The firm focuses on SMEs and, on average, finances leases and equipment loans in $50,000 (Sh4.19 million) tranches but can go down to a tenth of this.
Businesses seeking financing from Alios Finance will be charged rates close to what competitors such as banks are charging but Mr Valk said that the firm is leveraging on a quicker turnaround time due to fewer procedures, coupled with short approvals.
High interest rates have discouraged borrowers but Mr Valk said that there is a market for asset finance by non-banks since they are able to structure deals that are industry specific.
The agriculture sector, for example, is better suited for lending that takes into account cash flows that come in drips during one part of the season and in gushes in the other.
Toyotsu and RentWorks (East Africa) are the other non-bank players in the local asset finance industry. RentWorks operates in seven countries with $4 billion (Sh335 billion) in assets globally.
Consolidated Bank Head of Credit Charles Kamari says that lending for a wide a variety of assets coupled with growth in the region makes the industry attractive.
“The asset finance industry is very attractive as it offers opportunities for lending that cuts across all sectors, from vehicle to machinery finance. It is not possible to estimate the market size,” said Mr Kamari.
Consolidated Bank generates up to 80 per cent of its revenues from SMEs and asset finance makes up 10 per cent (Sh917 million) of the bank’s loan book.
The attractiveness of asset leasing has also caught the Treasury’s eye. The government asked leasing companies and motor dealers to provide at least 1,500 vehicles and 300 ambulances as well as run transport services on its behalf back in September 2010.
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