ESCgov generates solid investment opportunities for banks, insurance companies, captive financing companies, and others seeking to finance federally funded base-with-options contracts.
The US Government spends about $90 billion per year on information technology and is on track to increase spending to $140 billion by 2023. A sizable amount of that will be financed over 3-to-5-year terms.
This spending is governed by contracts with companies that provide and manage information technology. These contracts typically require the contractor to invest large sums up front to establish the infrastructure by which services are delivered. ESCgov provides financing to those contractors, in many cases taking direct assignment of the resulting government payments under the prime contract.
Federal government IT contract receivables carry low credit risk, solid returns, and quick turns. The US Government is arguably the lowest credit risk available anywhere and its dependence on IT to perform its various missions is indisputable. That alone makes government IT contract receivables an attractive investment, and an important diversification from commercial debt.
But there are risks — Notwithstanding the lack of credit risk, the US Government has established the rules under which it will allow financing or leasing, and maintains statutory rights to terminate its contracts. This introduces risk to any lender depending on those contract receivables to amortize debt.
The ESCgov Difference
ESCgov actively structures and cultivates asset-centric investment opportunities that meet our own high standards for risk avoidance. By paying close attention to contract terms and conditions, analyzing the strength and duration of the government’s underlying need for the technology, and minimizing performance risk for the parties involved, ESCgov has built a 15-year track record of solid returns for its investment partners.