Originally Posted by
Snoopy
The point is a combine harvester is worth a heck of a lot, just before harvest, and not much afterwards. If Heartland are using a combine harvester for security, they will need to be able to hold it until the high season to get a good price, should a loan go bad. And that means they will need more shareholder capital than an equivalent bank that has a lien over land. How much more capital? 50% more (that translates to 30% of the outstanding loans being the capital requirement that HNZ would need to hold.) At least that is the figure the underwriting banks were demanding when PGW Finance were still part of PGW.
Going after these niche markets will have a capital cost for HNZ shareholders.
SNOOPY