increases in business volumes, and funding lines in place, Europlan
is the envy of Russian lessors. Jason T Hesse reports.
With a fleet of more than
26,000 vehicles, it is easy to understand why Europlan is one of
Russia’s top leasing companies.
At the end of the third quarter,
the company posted an increase of 52.8 percent in new business
volumes, bringing the value of total vehicles it has financed in
the first three quarters of 2008 to €648 million, compared with
€424 million in the same period the previous year.
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In the first half of 2008, the
company reported a net income of €20.8 million – a figure totalling
more than the company’s €16.5 million net income for the whole of
2007.
Leaping forward
Owned by Baring Vostok Capital
Partners and Capital International, and established nearly a decade
ago, Europlan has quickly grown its portfolio. Five years ago, the
company had only €59.6 million of assets but, by the end of June
2008, it was managing €467 million.
Europlan expects this growth to
continue this year, despite the economic turmoil.
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By GlobalData“Well-funded leasing companies can
build their market share in these circumstances,” said Alexander
Michailov, Europlan’s head of business development.
“We’re experiencing an increased
demand, since only a few Russian lessors are continuing to finance
in the long-term.”
Processing 2,000 lease transactions
a month, the company has become the number one vehicle lessor in
Russia.
Although accounting for 40 percent
of Europlan’s portfolio, the company does not restrict itself to
leasing cars alone. Trucks and forklifts make up 38 percent, and
the rest is specialised equipment (such as construction equipment,
forestry equipment and tools).
“Our strategy is all about the
automotive sector,” said Michailov. “Cars, trucks and specialised
vehicles have great potential in Russia.”
Europlan currently holds a 20
percent market share in the car leasing segment, and aims for a 10
percent market share in the truck leasing segment by the end of
2009.
Relying on foreign
investment
Europlan is heavily dependent
on foreign banks for funding its business. Since 1999, when it was
founded, the lessor has attracted more than €570 million in debt
financing from international finance institutions and commercial
banks.
For example, KfW Bankengruppe, the
German state bank, lent more than €60 million to the company last
year, as Lars Oermann, a vice-president at KfW IPEX-Bank,
explained.
“Europlan’s portfolio is
financially sound, and the company has a convincing business model
for well-balanced growth,” he said.
“Both of these were strong
supporting factors for us to lend to them.”
The lessor’s delinquency rate
illustrates what draws foreign investors to Europlan – at the end
of August, its 90+ days delinquency rate was only 0.4 percent.
“This very low rate shows the
overall quality of our portfolio, and the security it provides to
our lenders,” commented Pierre De La Baume, Europlan’s director of
capital markets.
Businesses with fewer than 100
employees constitute 78 percent of Europlan’s clientele, and having
a local presence is vital to keeping them satisfied.
Repeat customers form 56 percent of
new business, so the lessor is eager to please Russia’s SMEs.
The company hopes to expand
further, despite having already opened 44 branch offices throughout
Russia.
“So far, we have been very
successful in quickly building our own network around the country;
and we have plans for opening new offices in 2010-11,” said
Michailov.
