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Trade Finance – More than leasing…. G. Eric Raby. Finance Opportunity. “Every machinery purchase requires a finance decision – how to pay?”. Finance Opportunity: Defining the Needs. Different Needs Require Different Solutions. End-user customers need point of sale leasing.

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Trade finance more than leasing

Trade Finance – More than leasing…

G. Eric Raby


Finance opportunity

Finance Opportunity

“Every machinery purchase requires a finance decision – how to pay?”


Finance opportunity defining the needs

Finance Opportunity: Defining the Needs

Different Needs Require Different Solutions

  • End-user customers needpoint of sale leasing.

  • Distribution channels needwholesale finance.

  • Large agribusiness needproject finance.

  • Lesser developed areas need grants and financing.

  • The need for political cover, risk share, co-financing and technical assistance is evident as well.


Finance opportunity defining the solution

MDI

Leasing

AID

STF

Wholesale

Finance Opportunity: Defining the Solution

To create optimum solutions in markets one must adopt a holistic approach by utilising all of the identified elements both individually and jointly depending on the requirements of each specific market or even customer.

Multilateral Development Institutions

Regional & international institutions that support economic development.

Broad-based finance for key account customer projects & leasing programs.

(Example: European Bank for Reconstruction & Development for risk sharing)

Leasing

Point of sale asset finance.

Expertly defined criteria used to select best leasing providers.

(Example: UCL in Ukraine)

StructuredTrade Finance

Government-support guarantees & insurance for export credit. Experienced & knowledgeable management of multiple ECA relationships and procedures. (Example: US EXIM Bank insurance for KAM client

Agro LV in CIS)

  • AID

  • Government grants to support developing and post-conflict countries.

  • Accessing technical assistance funds and risk guarantees for credit and leasing.

  • (Example: Millennium Challenge Corporation and USAID cooperation in Africa.)

Wholesale Finance

Dealer credit facilities forstocking product.

Country-specific approach (credit, leasing and insurance)

(Example: Atradius insurance for dealer credit facility in Russia)


Finance opportunity defining the customer

Tier 2

Tier 3

Finance Opportunity: Defining the Customer

  • Tier 1 – Large Scale Agribusiness

  • Needs:

  • STF Project Business - Direct

  • MDI Co-Finance Support

  • Most Competitive Leasing

Tier1

  • Tier 2 – Mature markets, mid-size customers

  • Needs:

  • Point of Sale Leasing

  • STF Project Finance – Bank Guaranteed

  • MDI Risk-Sharing Enhanced Leasing

  • Tier 3 – Emerging & mature markets, smaller customers

  • Needs:

  • Leasing

  • MDI Risk Sharing Enhanced Leasing

Tier 4

  • Tier 4 – Inception markets; manual to mechanized

  • Needs:

  • AID, Grants and Financing

  • MDI Risk Sharing via Enhanced Leasing


Finance opportunity defining the focus

Finance Opportunity: Defining the Focus

Finance Needs –Russia

Matching the customer need to the best solution

  • Leasing – flow financing, POS

  • Structured Trade Finance – projects, credit lines

  • Multilateral Development Institutions - Risk-sharing, political cover

  • Russian banks – Made-in-Russia initiative & ECA facilities

  • Wholesale Finance – providing resource for channels

MDI

AID

Leasing

Wholesale

STF


Summary

Summary

  • Russia is a key market for agricultural equipment due to its size and potential

  • It is somewhat of a mixed bag from a finance perspective – old methods blended with new needs

  • Subsidies (goods or rates) are still part of the equation – Government-led

  • Foreign investment is a driver, but ebbs and flows

  • Liquidity in the market for 2012 is uncertain / WTO could be adverse to the margins of many Russian ag businesses

  • Overall and long-term prospects for Russia are still very strong and will likely mature at a rate faster than the United States did in the mid-20th century and as such, will provide an on-going need for finance solutions


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