PINPOINTING REAL INVESTMENT VALUE IN EMERGING MARKETS
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OUR RISK MANAGEMENT MODEL

Loinette’s approach to risk is rigorous. We balance this judiciously with our aim of being enablers of development in emerging markets by forging the real human relationships that the institutional finance sector no longer bothers with. In Africa, clients come to us only through referrals from our co-operative dealership networks that are deeply embedded in local systems. In South America, Loinette owns Latin Equipment, a business with its own key dealership networks across the continent. Whether it is a mining operator in the Democratic Republic of Congo, or a forestry contractor in Argentina, we engage directly and comprehensively to properly assess and manage risk.

 

• MACHINE RISK PROFILE
The assets we finance are our primary source of security. To this end:

• We only finance the assets of clients who have concluded full service and maintenance agreements with their supplier
• The supplier must be represented, or have an appointed agent in the country, in which the asset is being used
• The supplier must be willing to provide significant remarketing support with National and International remarketing ability.

We ensure that we have a thorough understanding the value of the machine throughout its life cycle so that the correct loan to value ratios are maintained.

 

• CUSTOMER RISK PROFILE
With many years of experience of operating in emerging markets we are well-attuned to assessing the ‘ideal client’. Clients come to us only through referrals. We prefer to finance established customers with a minimum of a three year track record with supplier. We also are in favour of customers who are repeat buyers of equipment from the supplier. The supplier must endorse and recommend our involvement with the customer.

In consultation with the dealership concerned we undertake a full customer risk analysis for each application, which includes:

• Financial Analysis incorporating historical financial performance; future cash flow; contract lending and machine equity analysis
• Operational Assessment includes an onsite review and supplier endorsement
• Reputation – we only deal with customers who have exemplary track record.

Customers are categorized into:
• Category 1- undoubted
• Category 2- low risk
• Category 3- medium risk

 

• COUNTRY RISK PROFILE
Proper consideration is given to the political and socio-economic volatility in the emerging markets where we operate. Three main country risks considered:

Liquidity Risk - Central Bank Reserves and risk
Political Risk - Stability of the ruling party
Reputational Risk - Impact on future business due to doing business in a certain country

Countries are categorized into:
Category 1 - Stable
Category 2 - Moderate risk
Category 3 - High risk

Loinette has gained vital experience operating in the following countries:
• Funding - Zambia, Zimbabwe, DRC, Mozambique, Madagascar, Chile, Argentina, Panama, Uruguay, Cote I’voire, Cameroon Madagascar, Reunion Island, Mauritius, Tanzania, Ghana and Chile
• Investments - Uruguay, Chile, Argentina and Mauritius

 

• COMMODITY / REVENUE RISK PROFILE
We conduct various assessments including:


• Analysis of the source of revenue which incorporates commodity price fluctuations, gems versus resources. This assessment is closely aligned to country risk
• We determine what government contracts the customer has in place and the impact thereof
• We determine what private Sector contracts the customer has in place and the impact thereof
• We determine the client’s own resources
• We determine if there are any off- take agreements and ensure we understand the flow of funds

 

• CONTRACT GRANTOR RISK PROFILE
We conduct various assessments including:

• Financial analysis
• Reputation assessment to understand the role that grantor plays in economy and determine whether the grantor is a high profile player in the local economy
• We ensure that the grantor is willing, if necessary, to cede proceeds of contract to Loinette

 

• INSURANCE RISK
Loinette maintains that Comprehensive Insurance and Political Risk Insurance are mandatory. As the assets are our primary source of collateral, we pay careful attention to how, and by whom the assets are insured with. It is a standard requirement for all funding that equipment is comprehensively insured with Loinette noted as the first loss payee. Furthermore we enable proper insurance by funding insurance premiums as part of finance deal. Through our Mauritian registered brokerage company African Risk & Management Services, we provide clients with comprehensive insurance solutions.

 

 

Contact Us

Palm Chambers No. 3, P O Box 3152, Tortola, British Virgin Islands

E-mail: admin@loinetteleasing.com

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