EFG Hermes Leasing’s capital is estimated at EGP 1bn
We control 11 per cent of the market, and allocate 20 per cent to small companies
EFG Hermes targets increasing capital of its new subsidiary to EGP 125m
Operations- estimated at EGP 650m- with a number of companies that are engaged in domestic market are still being examined
By Mahmoud Hammad
Ahmed El-Kholy, CEO and Managing Director of EFG Hermes Leasing, said this new subsidiary’s capital has currently exceeded EGP 1bn, with its market share reaching 11 per cent by the end of February. EFG Hermes targets increasing its subsidiary market share during this year.
Moreover, the company holds contracts with nearly 5 banks, in this regard, from which we received EGP 800m funds. Moreover, we are now negotiating with 7 new banks to get nearly EGP 900m.
In this regard, Middle East Observer interviewed El-Kholy to discuss the finance leasing sector in Egypt and to particularly shed light on EFG Hermes Leasing.
What about the finance leasing in Egypt and its structure?
This activity has revitalized in Egypt during the past period, but its nature is still unclear. The structure of leasing in related companies is represented in capital, and loans are regulated based on a leverage rate ranging from 8 to 1. Therefore, if a company starts with an EGP 100m capital, it can borrow up to EGP 800m, consequently its portfolio can mount to EGP 900m in the first year.
Most finance leasing corporates in Egypt kicked off with EGP 50m capital, which was increased later to EGP 80m then to 100m…etc.
What do you think of the new companies that entered the corporate leasing market?
These companies demonstrated great competitive skills, which was clear in the size of portfolios, during the first 2 months of this year, which was announced by the Egyptian Financial Supervisory Authority. Moreover, a heated competition is healthy, for the more there are companies, the more popular corporate leasing and the bigger portfolios become.
What about EFG Hermes Leasing?
It was founded in March 2015 and started operating in June of the same year. From the beginning of its foundation till the end of 2015, the company’s portfolio reached EGP 750m. This means that EFG Hermes Leasing does have all success factors; i.e., powerful shareholders, efficient systems and calibers that managed that amount of money in 6 months.
We have started to generate profits from the 4th year of operation. Moreover, we target diversifying our clients to apportion risks and maintain a good credit portfolio. Our customer base has now reached 150.
How much is EFG Hermes Leasing’s capital, market share and portfolio?
The company first started with a capital of EGP 100m which proves its huge ability to expand. This year, we target increasing capital to EGP 125m.
As for the market share, it reached 5 per cent by the end of 2015 and mounted to 11 per cent by last February. We aim at increasing it even more this year.
EFG Hermes Leasing’s portfolio exceeded EGP 1bn within 9 months, from June 2015 to February 2016.
Do you allocate part of this portfolio to small and medium-sized companies?
Yes, we do. In fact, the share of this type of companies in our portfolio reached 20 per cent by the end 2016 first quarter. We aimed through this to broaden our customer base, engage in new sectors and spread risks.
What about the banks you deal with to get facilities?
The company holds contracts with nearly 5 banks, in this regard, from which we received EGP 800m funds. Moreover, we are now negotiating with 7 new banks to get nearly EGP 900m.
Can you tell us about the company’s syndicated loans?
This year, we have implemented 2 contracts on syndicated loans. We are still examining other operations- estimated at EGP 650m- with a number of companies that are engaged in domestic market. This clearly shows the influential position the company managed to gain since it started operating.
When it comes to operational advantages, what advantages does EFG Hermes Leasing enjoy?
Well, the company’s services are not limited to offering financial solutions only, but they also include providing clients with advice. Moreover, we do not just target short-term contracts only, but these extend to forming long-term partnerships, achieving progress and mutual interests to all those involved, whether clients, suppliers or parent company.
We also avoid complicated credit terms, by resorting to long-term financing to purchase capital assets. We proceed with our financing process at a fast pace and based on each company’s features and advantages. That’s why we inform the clients of our decisions within half the same period needed by other companies in the market. Moreover, we are keen on diversifying funding resources to benefit from different tax and accounting privileges.
What are the most significant sectors that take over finance lease operations in Egypt?
The real-estate sector controlled 80 per cent of the market, during the first 2 months of 2016. The same thing could be said as well about last year. This was enhanced by the dwindling dollars, difficulty of opening letters of credit and shortage in inventory which all lead companies to invest in available opportunities. On top of those was the real-estate sector.
Which sectors do you think are promising in the field?
I believe these would be health care, education and logistic services.
