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.

● Distribution channels need wholesale finance.

● Large agribusiness need project 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

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.

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)

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)

Wholesale FinanceDealer credit facilities for

stocking product.

Country-specific approach (credit, leasing and insurance)

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

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.)

MDI Leasing

STF

Wholesale

AID

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

Tier 3

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 – Inception markets; manual to mechanized

Needs: ● AID, Grants and Financing● MDI Risk Sharing via Enhanced Leasing

Tier 4

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

Leasing

STF

Wholesale

AID

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