C&I Leasing upbeat on digital business to grow revenue
Completes second tranche of N20bn bond programme
With the increasing adoption of digital technology in meeting consumer demands and consumption patterns following the pandemic, C&I Leasing Plc has said it is banking on investments in its digital business to grow future revenues.
The firm expressed optimism that a new business model, which it adopted, would help in driving revenue growth and improve the profitability of its business from 2021 and beyond.
The leasing firm, which has its core business operations in Nigeria and Ghana is investing significantly in its digital business, after the pandemic affected fleet business operations across the globe, causing a decline in revenue.
According to Managing Director/Chief Executive Officer, C&I Leasing, Andrew Otike-Odibi, the firm has introduced into the market three digital products, two of which are in its fleet management business, and the other in personnel outsourcing.
The investments may not have a strong impact on our revenues this year, he said.
“What we are looking out for is from 2022 and beyond, such that our non-asset related income will go up to as much as 20-30 percent. Hence our objective is that in the year 2022/23, we will see more of the digital side of the business generating more revenue than it has done in the past,” he added.
He said C&I Leasing has completed the issuance of the second tranche of its N20 billion bond programme which it started in 2017.
At a 100 percent subscription rate, the long-dated instrument was a N10 billion bond, issued at a coupon rate of 15.5 percent. The firm had earlier in 2018, issued the first tranche of N7 billion.
Otike-Odibi, who at the side-line of the bond signing ceremony in Lagos, briefed journalists on the development, explained that proceeds from the bond sales would be used to refinance short-term debt in its books, and not really to be invested into new business.
“The bond is supposed to take out some short-term debt that we have in our books, to give us a stabilized cash flow and have the business grow further,” he said.
According to him, the process started last year when rates were a lot cheaper, and at the time, the company was projected to have a coupon rate of 10-11 percent. “However, the remote working slowed the process down, and by the time we finally got approval from the regulators and came to the market, rates had already started inching up and we got caught,” he said.
C-Ride, which is one of the new products of the firm in its fleet management business, is a hailing business/car-sharing software, which it deploys to corporate bodies. This enables the businesses secure reliable mobility for its staff without having to invest in fixed assets. C&I Leasing gives them a pool of vehicles that they can call on anytime they need. This software can also be deployed to optimize the fleet of a company as it ensures efficient allocation of resources.
“In providing this service we are putting on the table our skills and pedigree as having managed a logistics company in the past 30 years by providing relatively new vehicles, trained drivers with good safety records,” he said.
FMS 360, which is another product developed to disrupt its fleet management business, is a software that helps companies better manage the data of their fleet in terms of fuel monitoring and driver management.
In the outsourcing space, the firm has developed Skills Central, a virtual training software, Otike-Odibi said, noting that the firm has more in the pipeline as it is putting a lot of resources in the digital space to grow the business.
According to him, the funds for the development of the new products for digital business is coming from the operating cash flow of the organisation.
Late last year, transportation firm, Peace Mass Transit (PMT) acquired additional 313.3 million units of shares of C&I leasing in an unsecured variable coupon redeemable convertible loan stock in registered units of Neoma Africa Fund L.L.C. (formerly Aureos Africa Fund, L.L.C.).
Upon conversion, PMT will be the largest shareholder of the business, taking its stake in the business from 20 percent before the deal, to 63 percent.
Otike-Odibi said then, that the coming in of PMT will serve as an inroad for more equity for the growth of the business. He explained that although the conversion process is still in the works, he doesn’t see any form of changes in the business model.
“The business model is a big attraction to them. They have seen a lot of value in the business and the fact that one of the things that the business has suffered from is undercapitalization. On the board level, we are looking at various ways of improving the capitalization of the business to be able to attract much more value from the business.
“Going into 2021 and beyond, with the entry of PMT, I think the shareholders will see a new C&I leasing, in terms of board structure, composition, capital structure, service offering, profitability and dividend payout. There is more focus on rewarding staff, investors and customers, which will translate to a better investment profile to investors,” he said.