Arab Finance: The non-banking financial sector is a fast-growing and promising market in Egypt. However, the sector has been dealing with great pressure recently after the multiple increases in interest rates. Overall, while the non-banking financial sector in Egypt faces challenges, it is also growing and showing promise.

That is why Arab Finance interviewed Ahmed El Kholy, Managing Director at Easy Lease, one of the growing successes in the non-banking financial sector. He discussed the company’s tailored services, future plans, and financial achievements.

1-What inspired El Sewedy Group to start Easy Lease?

El Sewedy Group started Easy Lease with the aim of providing easy and innovative financial solutions that could reinforce clients’ operational and financial performance. The company’s main path and commitment towards the Egyptian economy and the lending industry is “innovation,” matching global trends, which should facilitate the business needs of all Easy Lease clients. Easy Lease was inaugurated in June 2021 under Law 176/2018 with an authorized capital of EGP 500 million and a paid-in capital of EGP 200 million, knowing that shareholders, across the past short period since inception, have been highly committed to supporting the business through several paid-in capital increases.

2-Can you tell us more about the types of services that Easy Lease offers?

Easy Lease offers financial leasing services in two types: direct and sale-leaseback. The company’s strategy is to target the Egyptian market from different angles. Accordingly, Easy Lease is keen to diversify its portfolio to include an acceptable chunk of small and medium-sized enterprises (SMEs), along with assorted corporate clients. Easy Lease offers its clients complementary services that should ease and expedite the transaction process according to their needs. It is imperative to mention that the company has tailored business programs toward different types of clients according to their requirements, expectations, budget needs, and constraints, all in line with the company’s risk appetite. We are happy to announce that we have already obtained the factoring license and are currently preparing the setup to launch the service within less than a month, accompanied by its customized programs. We are pretty sure that adding the factoring services will not only empower Easy Lease’s position but also complement our clients’ needs and expectations.

Direct lease is a simple form of a lease agreement that involves the purchase of the asset in favor of the client from the supplier, landlord, or property owner, while the sale and leaseback services enable clients to unlock the capital held in their assets to finance a business that is aiming for expansion and immediate liquidity. The lessor purchases the asset at an agreed value and finances it back to the client over a fixed repayment period.

Easy Lease also has a strong positioning in the market through its syndications and club deals with other lending institutions, including banks and leasing companies, in which the company can transact a security agent deal and/or risk share.

3-How does Easy Lease determine the lease repayment period for its clients?

Easy Lease follows scientific methodologies in determining the lease repayment period for all its clients, in which it considers the ability of the cash flows to cover the lease installments to ensure smoothness, in addition to the lives of the assets over the lease tenor. Moreover, the company considers the seasonality and the constraints of the cash flow in a way that does not affect the ability of the lessee to cover the installments and the maintenance of Easy Lease criteria.

4-What are the minimum and maximum funds Easy Lease can provide its customers with?

Easy Lease offers its clients different ticket sizes according to their needs, capacities, and cash flows that can absorb this; however, the company may offer from EGP 1 million up to EGP 1 billion, whether directly or through club deals or security agent transactions.

5-What are the benefits of choosing Easy Lease over traditional bank loans?

Easy Lease, through its expert team members, offers benefits over traditional bank loans, including tailored financial leasing services that meet the specific needs of the companies, such as seasonal and budget constraints. Nevertheless, Easy Lease is keen to expedite the process to fit the clients’ needs within acceptable timeframes that do not affect the smoothness of the business. Banks are essential in the entire process and will remain vital for clients; however, banks usually use several fees to boost their rates of return and sometimes prolong the process for different reasons. On the other side, Easy Lease offers a high quality of service and involves innovative solutions for its clients to compete with banks’ rates as much as possible, parallel to tailored lease repayment structures that match the clients’ budget constraints through affordable tenors.

In a nutshell, Easy Lease provides more flexibility and convenience for businesses.

6-What are the financial achievements of Easy Lease in its first year of operation?

The company has been able to achieve impressive results in 2022 due to the ambitious vision of its management. In fact, the company provided lease transactions worth nearly EGP 1.7 billion within only 18 months since the start of operations. The funds were distributed to nearly 100 clients based on almost 230 contracts and over 2,200 leased assets. Despite the tremendous achievements during 2022, we are aggressively looking forward to 2023 to expand the portfolio to reach approximately EGP 3.2 billion, if not more. It is worth mentioning that, at the moment, Easy Lease is already in line with its target and is still planning to make some strategic moves during this year that could further assert the company’s market position. It is still important to highlight the shareholders’ commitment towards the business, as the Board of Directors approved 5 times a capital increase during this short period.

7- What industries receive the most portfolio financing? And how do you ensure that your financial solutions are accessible to small businesses and entrepreneurs?

As a matter of fact, the portfolio is composed of corporates and SMEs, knowing that corporate clients make up almost 71% of the portfolio. In addition, the portfolio is well diversified between different sectors, with the largest contributor being the real estate development sector, which represents nearly 20%. On a positive note, Easy Lease also has a plateau picture for its leased asset diversification, as real estate assets contribute to 46% of the portfolio, a ratio that is very moderate in the market, while vehicles represent 21%, empowering the liquidity of the assets. Other asset contributions are less than 20%. Easy Lease is keen to maintain a diversified portfolio that controls risks.

Furthermore, SMEs will remain a vital target for Easy Lease to mix the portfolio and optimize the outcomes. Hence, several tailored programs have already been implemented since inception for the SMEs, in addition to another contractual agreement with one of the specialized platforms for SMEs, through which Easy Lease collaborates to enhance its presence in the governorates and reach new segments that match the risk criteria.

8-The Egyptian market has witnessed a substantial increase in the number of non-banking financing companies. How do you plan to stay competitive? And how do you leverage technology for that aim?

Easy Lease is not only leveraging its existing team members, who are all professionals in their fields and have vast experience that enabled the company to accelerate its growth, but it is also intending to introduce a digital experience by offering an easy-to-use mobile application while providing a range of services to customers at their fingertips. The application includes follow-up for customers to trace their balances and everything related to operations and requests, easing and expediting the process. Nevertheless, the mobile application will assist the company in facilitating and securing the collection and marketing processes. We are looking forward to launching the app by the end of June. We are the first leasing company to run a digital transformation process, which surely will keep Easy Lease in line with market changes and the current investment climate.

9-How does Easy Lease manage the risks associated with financial leasing? And how do you evaluate the creditworthiness of your clients?

Easy Lease is already implanting a unique strategy to diversify its portfolio not only in terms of clients but also in terms of industries and assets, as already illustrated. Furthermore, the company is applying a precautionary policy to ensure the quality of the collection process, knowing that collection rates have been impressive to date.

Regarding creditworthiness, the company conducts a thorough analysis of the client’s financial statements and credit history to assess their ability to properly repay the lease installments on time. Moreover, Easy Lease still has strong connections that may enable it to share risks with other financial institutions to decrease the risk and optimize the returns.

10– Can you elaborate on the deals with other lending institutions?

The company has already secured lines of credit with 14 banks for an amount of EGP 2.1 billion, knowing that the company, in the meantime, is in the latest stages of negotiations with other banks to open new credit limits, which would further increase the number of dealing banks to 19. In fact, these strong relations with banks have enabled the company to further expand its operations and secure security agent deals. In addition, Easy Lease also has strong relations with other market players, through which club deals usually take place.

11-What are Easy Lease’s future plans for growth and expansion in Egypt and beyond?

Easy Lease aims to expand its presence in foreign markets, particularly in the African and Gulf markets, while maintaining a regular presence in the Egyptian market through a well-revised expansion plan. The company is already investigating several opportunities, whether on the Gulf side or in the African markets, knowing that we are currently in negotiations with reputable entities in the Saudi Arabia market, while we also have plans for Africa that may take place throughout the coming period according to updated business plans and market conditions.