Alios Finance Kenya and Alios Finance Tanzania will receive $5million and $4 million respectively to be repaid over the next five years.
The International Finance Corporation— the World Bank’s private lending arm — will advance a $9 million loan to Alios Finance Group for the firm’s operations in the East Africa region.
Alios Finance Kenya and Alios Finance Tanzania will receive $5million and $4 million respectively to be repaid over the next five years.
The entry of Alios in Nairobi highlights the growing interest by global lenders and private equity funds in the region, with a rise in demand for funding, especially to small and medium businesses.
Alios lends to small and medium sized companies working in transportation, manufacturing and services to acquire equipment either through loans or hire purchase.
“In markets like Kenya and Tanzania, where small businesses lack access to finance; leasing and hire purchase help firms acquire the equipment they need,” said Aida Kimemia, the principal investment officer for IFC.
Alios is a pan-African, specialised asset finance company with African and European investors. The group has been present in Africa since 1956.
Its current operations are in Burkina Faso, Cameroon, Gabon, Ivory Coast, Kenya, Mali, Senegal, Tanzania and Zambia.
The loan, executives said will be partly dollar denominated and in local currencies, a move that is meant to shield Alios from currency fluctuations, helping the company transfer the benefit to borrowers through attractive rates.
“Local currency financing is a priority for IFC because it helps develop local capital markets. The recent financial crises demonstrated that even stable exchange rate regimes may not hold in times of crisis. By providing loans in local currency, IFC protects firms from foreign-exchange risk, enabling them to focus on their core business and growth,” IFC said in a statement.
East African currencies have remained volatile over the last year, with the Kenyan shilling for example weakening from Ksh82 to the dollar at the beginning of last year to a low of Ksh107 in October 2011.
Alios will finance leases and equipment loans in tranches of $50,000 though it says it can also alter the tranche to as low as a tenth of this amount.
Although the rates it will charge will be closer to bank rates, its key advantage to borrowers is that it offers quick access to funds , as the firm takes less time to do due diligence on borrowers.
The major asset financing banks in Kenya are NIC bank with an estimated 30 per cent market share in the segment; and Consolidated Bank, which generates 80 per cent of its revenues from the segment.
