With over R3 billion worth of assets financed across most industries, RentWorks has become South Africa’s leading independent asset rental company. u|Chief asked CEO Kuben Rayan about their growth… and their recent acquisition by DölbergPremium.
How did the deal with DölbergPremium come about, and what are the benefits to both parties, as well as your stakeholders and their clients?
The shareholders of RentWorks had decided to sell their shares in the business. Potential buyers were identified, and DolbergPremium was one of the parties that participated and were the successful bidder.
The RentWorks team are quite excited as the DolbergPremium team share the same values and vision on the future direction of the business.
We are planning a second announcement once the transaction is complete and will provide an update, including information on what clients and stakeholders can expect.
What is the benefit of diversifying your offering to different asset classes in a broad range of industries?
Diversification provides the benefit of additional suppliers and customers, thereby increasing our business network. It has also afforded us the opportunity to cross sell our offerings across industries and better serve our clients. Clients can now chat to their RentWorks Business Manager to assist with all their asset funding requirements.
Diversification has also afforded us the ability to mitigate risks across industries and asset classes. Diversification has allowed RentWorks to navigate through downswings in certain industries, whilst we remain available to assist our clients in these times, most client’s would push out purchasing decisions in times of uncertainty. Given the diverse portfolio of assets classes we have funded, we could now rely on those industries that were performing and where our clients were making asset procurement decisions to continue assisting those clients with their asset funding requirements.
“Diversification has afforded us the ability to mitigate risks across industries and asset classes and has allowed us to navigate through downswings in certain industries.” – Kuben Rayan
What have been the challenges of this diversification?
Initially many thought we were simply the IT Rental specialist, however, over time as we demonstrated our ability to assist with flexible and innovative solutions that benefited both clients and suppliers, we saw an increase in the portfolio of assets we funded. Suppliers were also sceptical, however, some of them are now our greatest supporters.
An additional challenge was to build the track record and intellectual property we had established in the ICT sector, especially with regard to fair market values on returned assets and the remarketing network.
Any secrets to how you built up the largest ICT resale network in Southern Africa?
There are no major secrets here, as we have simply built a capability to deal with the IT assets that are returned to us at the end of the rental agreement. Our residual investment is tied into the assets that are returned. We have thousands of assets that are returned on a quarterly basis and have to ensure that we achieve the best possible resale value to optimise our return on our initial residual investment.
In addition, we also have a considerable amount of intellectual property on the fair market value of the various asset classes that we have sold and information is constantly monitored and mined to ensure that we optimally invest in residual value when we initiate new transactions. Thus affording our loyal existing and new clients the optimal rental solution for the asset requirements.
“We have thousands of assets that are returned on a quarterly basis and have to ensure that we achieve the best possible resale value to optimise our return on our initial residual investment.” – Kuben Rayan
How do Southern African businesses operate compared to businesses in South Africa and in the rest of the world?
- SA is on par with the rest of the world in terms of the level of sophistication of its financial services sector.
- Southern African countries are more conservative when compared to South Africa, however much of the asset finance decisions are influenced by the availability of credit offered by the local banks and their conditions of approval.
- Additional influences that shape the way business is done both in South Africa – as well our colleagues in Southern Africa – are the political landscape and stability, the financial services sector as well as the legal framework that would serve to protect both businesses and the lenders.
- Finally, each country has its own business culture as well as a standard of ethics and codes of conduct, all of which influence the way business is done.