Quartz Finance, Norton Folgate and Oak Leasing are just a few
brokers with expanding interests,
so is diversification the way forward for the UK’s brokers?
Fred Crawley reports
Much of the optimism to emerge from
the broker world this year has come from those companies which,
finding traditional business models under pressure, have identified
what it is they do best, and have then replicated it in a fresh
market.
Go deeper with GlobalData
The traditional practice of holding on to a
dependable business source and then calling round to find the
cheapest funding available has died out, and those brokers that
will survive are those who are prepared to look at new types of
business.
One company, Quartz Finance, has its roots in
financing IT and telecommunications assets, but is now branching
out into providing for the corporate aircraft and leisure marine
markets, where it will introduce deals between €250,000 and €50
million in size.
This news comes in the wake of a similar
announcement by broker Norton Folgate, which revealed in the third
quarter that it would be looking to move into the world of yachts
and jets.
Looking into the recreational
sector
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By GlobalDataOne would think that aviation and
marine business could not be more different from arranging finance
in the low-value, high-volume world of technology assets. However,
Ian Jackson, who has just been brought on board to spearhead the
operation at Quartz Finance, begs to differ.
“Many manufacturers and brokers will only
discuss finance with clients if asked, but I think they are missing
out on a more strategic approach,” he said.
“If we can apply the MO [modus operandi] we
have developed in the IT market – where integrated financing is a
much more common sales strategy – we can do a lot more to support
the marine and aviation industries.”
Jackson uses the example of vendor finance,
which is rare in recreational vessel or private aviation sales.
“Because sales volumes are much lower, a few
cancelled orders can have a disproportional impact,” he said.
“Introduce a provider to vendor finance, however, and you add an
important layer of transaction stability.”
Quartz has also broken the cultural barrier
that seems to prevent UK introducers looking to Europe for clients
and funders. Nearly 40 percent of its business is now placed in
Europe, and Quartz has relationships with around 40 funders
globally – a contact book that will come in handy in the highly
international jet industry.
UK broker Oak Leasing has also reported
growing success in placing business in Europe, while Esher-based
Lease UK is known to have entered the continental market this year.
All three firms have reported that Northern Europe – in particular
the Benelux and Scandinavian regions – are particularly ripe for
exploration from the UK.
But an entrepreneur looking to find
a niche in lease brokering need not launch into exotic locations
and markets to find good returns. There are still opportunities
here in Britain.
Profiled in Leasing Life’s sister publication
Motor Finance this month is Mel Goodliffe, who recently bought his
Flexxilease brand from former owner the Car Crash Line Group (CCL),
and has set it up as a short-term, online-based lease broker for
consumer and fleet business.
Since splitting from its lease book at CCL,
Flexxilease has actually increased its business volume, and has
prompted a sister brand, Flexxivan, to address the CV sector in
much the same way. Goodliffe has taken what his brand did well as a
channel for a funder, and made it the cornerstone of a new
introducer. Business volumes, he says, have actually risen since
making the move.
Commercial finance
Expanding into the wider world of
commercial finance is another possible course for brokers to
follow. Take as illustration Close Commercial Finance, the new
Close Brothers brand that will incorporate both asset finance and
cashflow finance lending, and which is known to be keen for its
lease brokers to introduce ID and factoring business.
But although Close and many other lenders are
bringing leasing closer to their other commercial finance offerings
(see Leasing Life, December 2009), to expand from leasing into this
wider field of “asset-based lending” (ABL) is still quite a leap of
faith.
Evette Orams is the managing director of
Hilton-Baird, a specialist ID and factoring brokerage that includes
asset finance among the broad repertoire of products it sources for
customers. Whereas she agrees that a broker which can arrange both
cashflow and lease finance can offer something greater than the sum
of its parts, she warns that the ABL funding market requires
experience to navigate successfully.
“The market for ABL is forever changing, as
are the appetites of lenders. We have had experience of providing
volume to this market for 13 years, and so we know who will provide
what, and when. In such a time-critical business, a fresh approach
to the funding environment could be quite daunting.”
