The Cost-Efficient Way to Acquire Equipment for HS2

As HS2 suppliers acquire bespoke machinery and high-tech equipment for specific project phases, they will need to spend wisely in order to preserve liquidity and reduce long-term risk. In part 3 of our HS2 series, specialists at DLL, one of the top five Asset Finance companies in the UK,¹ share advice on how HS2 suppliers can finance equipment efficiently to address their short- and long-term needs.

“Getting the right equipment to meet contract deadlines is the first challenge for HS2 vendors,” says Martin Joli, Global Head Fleet Solutions and New Business Development at DLL. “By partnering with a financing company that has expertise in multi-asset and multi-branded fleets for the Construction and Special Vehicles sectors, HS2 vendors can increase their flexibility and reduce the Total Cost of Operation (TCO) for the equipment they finance.”

Make the most of your HS2 opportunities
HS2 is moving full steam ahead. HS2 Ltd has already awarded around £18bn worth of contracts, with a significant proportion of this value expected to flow out to the wider supply chain. By the end of 2022, it’s estimated this figure will reach around £25bn. Over 2,000 businesses have already won work on the project, with UK-based businesses making up 98% of contracts. Many HS2 suppliers will need to effectively manage their capital equipment and simplify acquisition and disposal of their assets.

One of the issues with the HS2 is the volume of assets required for this project that may be linked to fixed term contracts. Potentially, there may be no mid-term need for them once HS2 has been completed. That’s where DLL can help.

“Specialists at DLL Fleet Solutions have deep asset knowledge which allows them to accurately predict the value of an asset at the end of the project. Based on that, we advise customers how to leverage flexible and cost-effective structured financing options to match payments with usage. Part of our ability to offer competitive financing is the fact that we own a leased asset when it comes off hire and can provide remarketing services that create a more powerful revenue model.” says Mark Hield.

Structured financing for long-term contracts
Larger equipment investments also involve a greater risk for HS2 suppliers. “With over 25 years’ experience in Construction, Transportation, Industrial, Materials Handling and Specialist Vehicles we can accurately forecast the future value of these sorts of equipment. We can offer structured financing where we share the future risk for this equipment with our customer. If they want to keep the asset, they can purchase the equipment at the end of the contract. If they can’t redeploy the equipment, they can extend the contract or return the equipment.”

Structured financing for bespoke equipment and short-term contracts
DLL is already supporting a number of key HS2 suppliers to help them meet their financing needs for bespoke equipment and short-term contracts. The company draws upon its diverse experience with assets in Construction, Specialist Vehicles and other equipment to provide the best value to them.

For HS2 suppliers who require smaller ticket equipment with short-term contracts, DLL has experience providing structured financing for 2-3 years. “We manage a fleet of yellow plant equipment for a leading UK firm, for example. They need to turn this equipment every 2-3 years so that equipment stays up to date and offers premium quality to end users. Our customer manages the end of lease sales process with DLL, based on a profit-sharing structure that allows for shared risk and reward.”

Global resources and underwriting capacity
“DLL is a global asset finance company for equipment and technology across industries, that serves over 30 countries,” says Martin Joli. “HS2 suppliers can draw upon our global resources and underwriting capabilities to obtain the financing solutions they need to profit from the opportunities that this exciting project offers.”

Let’s make history together
“This is a defining moment for the people in the UK, and we look forward to playing our part in writing this new chapter of history,” says Mark Hield. “We believe that by working together with a clear focus on our end goal, we have the potential to make this not only the biggest – but also the most successful infrastructure project of this century.”

For more information please contact us.

¹ Annual Asset Finance UK 50 – 2020 rankings survey, published by Asset Finance Policy and Asset Finance International.