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As the broker community
tallies up business after a surprisingly busy first quarter, Fred
Crawley takes a broad look at the activity going on across a
leaner, more cautious, but refreshingly ambitious
sector.
Last month, Leasing Life
reported on growth plans from WestWon Capital, Associated
Commercial Finance, Capital Solutions Group, and Premier Asset
Finance, an outfit comprising ex-Bank of Scotland (BoS) sales
veterans.
Now, another broker formed in the aftermath of
BoS’s withdrawal from the transport and logistics market has
signalled its ambitions.
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By GlobalDataT&L Leasing, a specialist
broker – possibly the only one of its kind – working in the field
of heavy commercial vehicles, has announced plans to hire
additional staff, in anticipation of what director Phil Snewin says
will be a second year of growth.
“The trailer market, in particular, has not
been hit as hard as the heavy commercial vehicle market has,” says
Snewin, who used to head up transport and logistics at BoS’s asset
finance business.
Snewin adds that the transport market in
general was seeing a lot of pent-up demand as a result of fleet
replacement decisions postponed in late 2008 and 2009.
“Many of the customers we have spoken to this
year have got substantial buying plans for the next 18 months” he
concludes.
Snewin started the business in January 2009
with renowned commercial vehicle expert Paul Lewis and national
accounts manager Darren Hallmark. The first year of trading for the
Chester-based introducer saw more than 1,000 vehicles financed via
150 deals with 10 lenders, most of which are based in Europe and
the Middle East.
So far, T&L has almost entirely worked with
customers and suppliers known from the BoS era, in addition to
clients introduced from that pool.
The fact that almost all of T&L’s deals are
with clients with good borrowing histories with BoS has made its
funders comfortable to discuss greater lending volumes for next
year, with three of them going so far as to set formal targets.
While not wishing to tempt fate, Snewin says
that none of deals introduced so far – almost all over £250,000
(€278,000) in size – have caused any problems for funders.
Cautious optimism
Meanwhile, more generalist
intermediaries are also approaching the year with cautious
optimism.
Henry Howard Finance (HH) is a
relative heavyweight in terms of volume, with around 25 staff, of
which seven are dedicated salespeople. An introducer that has grown
its own book over the last seven years, HH now has a growing
appetite for larger deals.
Director David Cooper, who works alongside Mark
Crook and Howard Ross says 2010 had an excellent start, with
volumes dying off to some extent towards the end of the first
quarter – a situation he feels will be remedied once the decisions
of the UK’s general election in May have been made.
London-based HH sources the majority of its
business via smaller ticket flow-rate deals, but is seeing
increasing interest in more complex deals of more than £150,000 in
value.
According to Cooper, as businesses become more
aware of leasing as a means of investment, HH is being approached
to fund a wider range of asset types not falling within the
“traditional” remit of broker business.
For Cooper, one of the most important questions
in mind when considering the growth of the firm is what business to
pass on to funders, and what to put into the HH lease book.
While snapping up the best quality deals for
in-house funding can grow an own-book introducer’s balance sheet
quickly and safely, it ties up funding lines with business that
would happily be taken on by other lenders.
“Our own book is never the first port of call,”
Cooper says.
On the other hand, however, a lot of thought
must go into any decision to underwrite business turned down by
banks.
“Bank underwriters certainly know what they are
doing,” says Cooper. “Anything they are not willing to write, you
need to think twice about before funding yourself.”
Whereas predictions for own-book growth remain
cautious, Cooper sees post-election 2010 as “potentially a big
opportunity” to grow HH’s sales footprint, and to repair the
relationship between brokers and funders across the industry.
One challenge, however, will be finding the
right sales talent. Cooper is looking to take on new front-end
staff, but is finding that many well-known salespeople are either
reticent to look for new opportunities while the spectre of the
recession lingers, or have left the industry.
“There needs to be more new blood,” he
reflects.
Smaller broker Leasing
Programmes (LP) has kept its own book since 1991, and is
open to expanding it through acquisitions this year, says director
Andrew Wyeth.
Presently, LP has around £2m of outstanding
loans, and since January has been looking to purchase portfolios up
to the £10m mark, “although we would certainly take a long look at
anything beyond that threshold”, Wyeth adds.
The drive behind this appetite comes from one
of LP’s investors, a private equity entity attached to a large
banking group.
In the meantime, Wyeth will concentrate on
building the firm through targeting sales aid business outside the
motor finance and office equipment sectors.
What will go on the books for now will be
generally below £50,000 in size, mostly for exposure reasons. LP is
very cautious on this front, with even exposure to NHS trusts
limited in the run up to likely public sector budget cuts.
Unusually for a sales aid broker, LP insists on
meeting the customers of the suppliers it works with on any deal
worth more than £10,000 – a measure which keeps Wyeth’s team of six
salaried staff extremely busy, but which drastically lessens the
risk of fraud or client failure.
This transactional methodology, applied to a
flow rate business model, has given a lot of weight to LP’s funding
proposals, Wyeth says, calling the strategy “a step backwards in
time” and comparing it to the old NWS/Capital bank model.
Most of LP’s business comes from the ‘coffin’ –
the coffin-shaped corridor connecting Manchester and London, and
taking in Birmingham and Leicester. Nevertheless, it also works
with suppliers as far afield as East Anglia and Scotland.
Meanwhile, another smaller broker of a
different kind, Premier Leasing, is preparing to
enter several new markets after streamlining itself during
2009.
Premier’s last financial results showed
turnover down 30% year-on-year to reach around £7m, but profits up
considerably.
This was partially a result of several
redundancies, reducing staffing to 10 but lowering overheads
considerably and keeping the business alive and well.
Now, Jones says that Premier is in a “very
strong position” to move forward, with several big developments on
the way before the end of its financial year in June.
It has been contacted by several new funders,
with 10 lines already established, and is about to open a new
office in Manchester. In addition to this, it is planning several
key hires this quarter, with a view to breaking into valuable new
sectors.
Hotly pursued market
One of these will be the professions finance
sector, without a doubt one of the most hotly pursued asset finance
markets in 2010. Another target will be larger public sector deals
– an arena in which Premier has had some experience through placing
smaller business for around 30 local authorities nationwide.
Aiding Premier in its expansion will be its new
proposal management system, into which around £100,000 has been
invested over the last two years, and customer relationship
management expert Dave Webber, who continues to develop the
company’s CRM platform.
Asset expertise has also kept many brokers
healthy – take for example UCF Finance and
Ilsley Finance, both of which have maintained
buoyant in the highly troubled print market; or agricultural
introducer group AGF, which has kept a very
high-quality contact book in the farming community.
Other brokers are pushing ahead with new
specialisms. John Barter at Oak Lease seems to be
continuing his Google-powered assault on the world of European
asset finance, while the long-standing directors of Lease
UK are exploring new types of sales-aid programme.
Meanwhile, Quartz Finance and
Norton Folgate remain at large in the highly
international world of yacht and jet leasing, and the commercial
and asset finance arm of advisory firm Vantis is
expanding its role as an intermediary to offer services in the
field of portfolio review and client restructuring aid.
Others still that have already proven their
sales strength on the open market are now continuing their work
under new ownership – LeaseDirect Finance has
provided the vehicle through which Investec Asset Finance will
build its presence in the professions finance space, while
Wyse Finance has been adopted as the front-end
engine of German-owned IT lessor CHG Meridian.
Back in final quarter of 2008, many brokers
were wondering if the culture of introduced business in asset
finance was coming to an end.
Now, after 18 savagely difficult
months, the inverse has been proved – activity in the broker market
has exploded in the first quarter of 2010, and growth is no longer
a dirty word.
On the day this article was written, two
brokerages reported that the ink was drying on the biggest
contracts they had ever signed, while a surprising number of
introducers spoken to were looking to take on staff.
Elsewhere in the industry, lenders are now
openly inviting more introduced business. Along with ING Lease’s
undiminished support for the broker world, a number of other
portfolios are growing more receptive, with Armada Finance, Black
Arrow Finance and Aldermore all quoted in this issue as seeking
greater panels.
