Assetinsure has today announced the acquisition of a 25% stake in eGuarantee, the distributor of the specialist insurer’s lease bond product.

Lease bonds are a digitised, non-collateralised alternative to bank guarantees traditionally used to secure commercial leases.

While the product is popular in North America and Europe, Assetinsure and eGuarantee say their solution, launched early last year, was the first to become widely available in Australia and New Zealand.

Assetinsure is the underwriting agent for the lease bond product on behalf of an international insurance and reinsurance structure.

eGuarantee co-founder and Executive Chairman Cedric Fuchs, a property industry veteran and cofounder of property group Charter Hall, says the strategic investment by Assetinsure is a “powerful endorsement”.

“Assetinsure shares our vision for the potential to disrupt what is currently an antiquated, inefficient and costly lease guarantee system in Australia,” Mr Fuchs said.

Assetinsure CEO Martin McConnell, says lease bonds are rapidly gaining acceptance as they became better understood.

“We see enormous potential for lease bonds in Australia and New Zealand – the market is eager for something that replaces and unlocks the capital tied up in bank guarantees,” he said.

“Locking away more than $7 billion of working capital just to secure commercial leases makes no sense when there is an alternative available that does not require collateral.”