Why does leasing offer particular advantages for private equity firms?
👉 Leasing and hire purchase can fully leverage their benefits as an additional financing source, especially in combination with structured corporate financing arrangements (syndicated loans, unitranche, (Nordic) bonds, etc.).
👉 For a PE portfolio company, it is – particularly in the current market environment – always advantageous to finance upcoming investments through leasing (or hire purchase) and to utilize sale & leaseback for assets already acquired!
So where are the advantages?
With #Leasing you can finance
🔹 over a longer term (maturity-matched, even beyond the final maturity of the financing or the exit),
🔹 at lower to significantly lower cost (due to greater tax efficiency),
🔹 without requiring the consent of senior lenders (leasing basket),
and at the same time
🔹 improve cash flow, senior leverage, and the equity ratio, and
🔹 optimize an exit!
Sounds too good to be true?
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#CFO #Treasury #PrivateEquity #ValueCreation
Why does leasing offer particular advantages for private equity firms?
