DJ Kumbula, CEO InnoVent: "Better rates than the bank or own cash"

(On the right picture starting from the left Melle Eijckelhoff, Director CFO South Africa and DJ Kumbula, CEO InnoVent) “We can prove to any bank or corporation that InnoVent can give them a better rate than they can fund themselves at.” At the end of the remarkable story of InnoVent, DJ Kumbula does not hold back. He is convinced that his asset leasing and management company provides a service that beats purchasing equipment by borrowing money at the bank or any other form of funding including internal funding. Looking at InnoVent’s portfolio of blue chip and JSE listed clients, it appears there is something here. “Our philosophy is: deliver what you promise and you have got customers for life.” CFO South Africa recently met with InnoVent Group CEO DJ Kumbula and Business Development Manager Willem Venter to discuss InnoVent’s unique approach to asset finance and management which is celebrating its 10th anniversary this year. The company employs about 50 people in the Johannesburg office and the Qrent division, and has recently opened offices in London and Scotland. “Our Qrent division is doing well in Zimbabwe and Zambia has opened its doors,” Venter announces. The story of InnoVent began when the Zimbabwean-born Kumbula and his South African friend Zakhe Khuzwayo, both Chartered Accountants started their small office with two telephones and a shared desk. “We worked in the industry prior to us going on our own” The duo was not impressed with the approach of lease providers towards customers and the negative connotations associated with the leasing industry due to the small print and onerous terms on clients especially at the end of the lease period.. “Leasing can be a nightmare for a client if it is provided by an unscrupulous lessor.. There are things lessors can do which may be legal, but totally unethical and immoral which costs the client more money in the long run than they had budgeted for. We saw that lessors were making massive short term profits at the expense of their clients, ultimately resulting in a short relationship with the clients. So we decided to start our own company focused on the long term – low profits throughout, but long term sustainable client relationships”. What InnoVent basically does is “subsidised asset finance, because we want your asset back when you no longer want to use it. We have created a massive and active secondary market for your otherwise redundant assets – we give you back some of the value we realise in the secondary market by subsidising your finance costs right at the beginning when you source the assets”, Kumbula explains. If those assets are laptops, for example, InnoVent takes them back after the lease period which the client determines and remarkets them through Qrent in a different secondary market. “Our mission is to keep finding secondary markets that yield good value for used assets so we can pass on higher subsidies to our primary clients when they finance through us . We never want to look at our primary clients for profits, but rather as a reliable source of high volumes of used assets.” “For our primary customers we look at all blue chip companies and organisations with sophisticated and astute CFOs that understand our product and are willing to engage with an open mind.” The move to London and Scotland also fits in that model: “In the UK there is no real second hand market for used assets. Now we offer companies in the UK the subsidised financing as well as help them with their CSI initiatives and Green disposal as we recondition their assets at end of lease and redeploy them on the African continent in small businesses, schools, government institutions and with teachers at highly affordable prices.” The list of raving testimonials about InnoVent is impressive and includes a recommendation by Discovery, South Africa’s largest health insurer. InnoVent Rental and Asset Management Solutions (Pty) Ltd, the full name of the company, does not only lease out ICT hardware, but also motor vehicles, yellow metal equipment, telecoms equipment, medical equipment and other moveable assets. “Leasing through us helps you manage your cash flow. We do asset management, you don’t have to worry about green disposal of redundant stuff, you keep up to date with the latest technologies and we offer you the best rate.! Our biggest challenge is not our business model, it’s traditional mind sets of decision makers and the negative connotations associated with the leasing industry especially with people that had a bad leasing experience in the past.” According to Kumbula some leasing companies have “traumatised” some South African finance professionals that have vowed to never lease equipment again. The main difference at InnoVent, Kumbula says, is the end of contract service and transparency. “We help you understand the contract up front, educate you during the process, assist with asset managements and give you notice about the end of the contract – instead of leaving you to manage on your own. We have a moral obligation beyond the contract to assist our clients in achieving the results they set out to achieve when leasing through us. In an effort to enhance this value for our clients and support a positive long term client relationship, we are the only leasing company in our segment who have a dedicated in-house remarketing division, Qrent. We are also the only ones with an in-house logistics team that helps clients return assets at the end of the lease period hassle free and avoiding any nasty so called damages bills ” About 30-40 percent of our clients have come to us from competitorsdue to our reputation as an ethical lease provider”. According to Kumbula, CFOs have a natural tendency to be conservative and he calls on them to keep an open mind for solutions like InnoVent which can improve their business. “As an individual I also like to own my assets. If I have an old phone, I keep it as a backup or give it to a family member,” Kumbula said. “But for a business that uses laptops or desktops it makes good financial sense to get a good leasing deal that enhances your financial and asset management. We now lease equipment to maybe 40 of the top 150 organisations in South Africa. We generally have a good success rate if we get in front of a CFO.”