> Equipment Leasing in the UAE:
What Do a Bio-diesel Refinery, a Fork Lift Truck and a Laser Hair Removal Device Have In Common? Leasing originated in the Middle East in 2000 BC, when Mesopotamian landowners hired-out farming equipment — with an option for workers to buy the equipment over time.
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n the modern GCC, leasing is still in its infancy — despite the practice’s regional roots. Just three percent of GCC equipment transactions are leases — mainly aircraft and shipping for major carriers. Linklease pioneers the “true” leasing concept in the UAE and differs from companies or banks which provide a loan over a shorter period, using the equipment as collateral. It focuses on operating leases, where businesses can access large, expensive or multiple pieces of equipment over a period linked to the useful life of the equipment. This means a lower monthly cash outflow with the option to buy, hand-back or re-lease at the end of the period. The Equipment Capital gap in the Middle East is estimated to be worth $40bn. Companies need manufacturing plants, logistical vehicles and other equipment to cope with a rapidly expanding market place. GCC-based Linklease has expanded into Saudi Arabia working with companies distributing equipment in the kingdom. It is also advancing into parts of Africa, where infrastructure growth requires significant capital. Manufacturers and distributors of equipment are also seeking solutions for clients with low capital budgets who can afford monthly repayments. Sectors such as solar power and clean energy generation, healthcare, transport and education are high priority in the UAE. Linklease solutions allow businesses to access equipment that had been unaffordable, or absorbed cash that was needed for day-to-day running of the business. The UAE has helped by focusing attention on laws supporting leasing, including the moveable asset registry. The registry helps to prove who owns the equipment, a major component of a sophisticated leasing environment. Linklease has listings on several market exchanges, attracting global investors who recognise the regional potential of equipment 128
Figure 1: Linklease competitive position
leasing. Leasing is entering a growth period — and Linklease is perfectly placed to play its part.
liquidity in the years leading into the late-2000s encouraged this.
Linklease comprises a small group of banking professionals with specialised knowledge of equipment, drawn from Gulf Finance Corporation, Lloyds Bank, Barclays Bank, GE, HSBC and other top finance institutions.
Linklease has positioned itself by being able to understand the lessee (the client) and the asset (the equipment). It has a depth of experience in the market, including legal, structural and recovery procedures.
The company was founded in 2015 and is led by Steve Thomas-Williams. It has worked with Oracle, BLME, Aston Martin and Zoomlion to lease equipment to end users in the Middle East.
New entrants will usually have strong equipment and client experience, while banks offer a loan with the equipment as security or pledged. This means that they understand their client and the market, but (rightly) wouldn’t want to take a longer-term residual value position on the equipment. Distributors understand the
The predominant tendency in the GCC had been to own equipment — and the abundance of CFI.co | Capital Finance International