Background

Brutes Air Solutions is an importer and distributor of high-end oil-free and oil-injected air compressors. The company, which was established in 2007 by Christo Bruwer, provides equipment to the industrial, manufacturing, food processing and healthcare sectors in South and sub-Saharan Africa.

Its key suppliers are two of the most recognised brands in the international compressed air industry today: the global Swedish giant, Atlas Copco, and Kaeser Kompressoren of Germany.

The compressed air industry is a highly specialised, niche market. Compressed air is required by virtually every facility in which valves have to be opened and closed to produce, clean or operate some kind of equipment. Compressors are found in environments as diverse as blow-moulding factories that produce motor vehicle bumpers, to food processing plants that stamp out hamburger patties. Even dentists have need of compressed air in their surgeries.

The compressors supplied and maintained by Brutes range in size from a relatively small piece of equipment that can be fitted onto a standard trailer, to massive machines that require abnormal low-bed transportation and weigh in at around 11 tons. The cost of this equipment can range from R100 000 to over R6-million.

The Challenge

While providing short-term – three-to six-month – rental solutions for smaller compressors is well established in South Africa, users of the type of equipment provided by Brutes generally require their equipment for far longer periods.

However, Brutes was only able to offer “cash” deals, with customers having to fund the equipment themselves. In today’s tough economic climate, companies are becoming more wary about having an expensive piece of equipment on their books, or tying up significant capital for the acquisition of equipment that will have to be replaced or upgraded in the medium-term in order to maintain productivity levels. A medium- to long-term rental option is therefore becoming an increasingly attractive option.

Brutes’ major competitors – the air compressor manufacturers themselves – have the financial wherewithal to offer basic rental agreements to customers. However, these agreements seldom include maintenance of the equipment.

Recognising that there was a clear need for a compressed air supplier that could offer a one-stop solution – one that would include the equipment, a rental agreement, and ongoing maintenance. Brutes was therefore seeking a solution to expand its customer base and revenue lines by offering existing and prospective clients a rental option. Brutes Air customers welcomed the opportunity to have a one-stop solution for their air compression needs. Brutes and its partner I-ME, a niche advisory and services firm, were still faced with the challenge of having to raise the capital for a rental business. The initial idea was to approach commercial financial institutions to assist. However, a lack of understanding on the part of the commercial financial institutions about the nature of the equipment, delayed – and sometimes scuppered – the finalisation of deals.

“Asking a commercial bank to set up a rental agreement for a R6-million air compressor is not the same as asking the bank to finance a car. In addition, obtaining bank financing often meant tying up the customer’s current credit lines, something we – and they – were loath to do,” said I-ME founder, Freddie Fourie.

Clearly, an alternative source of capital was required.

The Solution

Enter Westbrooke Aria.

“Brutes has an excellent track record and reputation in the industry and it deals with highly reputable brands of equipment. We were therefore happy to look at developing a solution that would work for everyone: Brutes Air, I-ME, Westbrooke – and most importantly, Brutes’ target market,” said Ryan Rittoff, Head of Origination at Westbrooke Aria.

This resulted in the creation of a specialist air compressor rental company, Brutes Air Rental Solutions (BARS), with Brutes Air, I-ME and Westbrooke Aria as shareholders.

Now, with Westbrooke Aria equity providing the majority of the capital to purchase assets for 12- to 60-month rental agreements, Brutes is able not only to compete on equal terms with the large compressor manufacturers in terms of its ability to provide tailored rental solutions, it has a competitive edge in that it can also maintain and service the equipment provided.

“Brutes Air is now the only one-stop supplier, financier rental provider and maintenance provider of high-end air compression equipment in the region – and it is making a significant difference to Brutes’ growth potential,” Fourie said.

The Result

BARS was set up in late 2015; its first rental transaction was signed in early 2016 – and the company has not looked back since.

“In the two years since Westbrooke came on board, Brutes Air has concluded more than twice the number of transactions it had entered into during the previous four years,” Fourie said. “We achieved this despite the fragile state of the economy in 2017; and despite our conservative approach.”

This growth has enabled BARS to employ an additional five sales people. BARS is also scheduled to open a new office in Middleburg in July 2018, resulting in the creation of an additional four jobs.

In addition, BARS is now the preferred South African supplier of rental solutions to Atlas CopCo, which previously provided rental agreements for its products from its own resources.

Fourie attributes BARS’ success to the “incredibly good” working relationship between all the company’s shareholders – Brutes Air, I-ME and Westbrooke Aria.

“I have been in the rental asset industry for 20 years and this is undoubtedly the best working partnership I have ever had. Our roles were clearly defined at the outset – and we all just get on with what we are supposed to do without any interference from the other parties.”

“With no other long-term rental companies in this space supplying equipment valued at R20 000 upwards, and the fact that South Africa appears to be on the cusp of an economic revival, the outlook for BARS looks extremely promising,” Fourie concluded.