An unfamiliar name to many in the leasing industry is aiming to grow its business by up to 30% during the next 12 months. And, if that wasn’t ambitious enough, the company expects to secure that additional business in the small and medium enterprise (SME) market.
LDF Vehicle Finance, part of Leasedirect Finance, aims to achieve this in a year in which most economic forecasters are painting the bleakest of pictures.
The UK growth forecast has been downgraded from 1.6% to just 0.6% by the International Monetary Fund (IMF), while the economy shrank by 0.2% in the last quarter. Talk of a double dip recession prevails.
Meanwhile, business leaders regularly report how SMEs are suffering more than most, with access to funding especially difficult to obtain.
However, LDF Vehicle Finance is confident of success and when its growth ambitions are compared to the 460% increase in business it achieved in 2011, it could be considered a realistic target.
The broker’s growth was connected to Masterlease’s demise when it was announced that Leasedrive Velo (now Leasedrive Group) had been handed the running of the Masterlease fleet (Fleet News, December 9, 2010).
Investec Capital Markets, part of Investec Bank, had bought Masterlease from Ally Financial for an undisclosed sum (see below).
However, while Leasedrive took the blue chip business, LDF Vehicle Finance was given the opportunity to pick up the SME fleet, which equated to around 5,000 units.
It was in pole position to take advantage of the Masterlease deal because Investec had bought 75% of LDF’s business in a £9 million deal only a few months earlier, in February 2010.
Graham Lea, head of vehicle finance at LDF, said: “We were awarded all of the SME business, which was originally fleets of 25 or less, but it’s now 100 units or less.”
The move has already doubled LDF’s fleet size from 1,500 to 3,000 ‘live contracts’ (vehicles within an active lease agreement). Lea hopes to convert the remainder of the 5,000 Masterlease customers when their current leasing agreements expire, potentially taking the fleet to 6,500.
The original vehicle finance team of two has grown to seven, which is now also served by a dedicated credit team, and Lea says the department is intending to recruit a further three to four account managers this year.
Lea admits that with Masterlease having spent so long looking for a suitor, some of its customers were not receiving the level of service they should have been. That became its top priority, while it also moved to strengthen its manufacturer relationships.
He said: “We’ve now got direct terms with Vauxhall, Ford, Nissan, Volvo, Hyundai and Kia among others.”
It also has strategic partnerships with the likes of ALD Automotive and LeasePlan, providing a SME sales arm for some of the country’s biggest leasing companies, while most of the manufacturers are now treating LDF as a “fully-blown” contract hire business.
LDF vehicle finance senior account manager Ian Liversage said: “It’s developed since Investec acquired Masterlease. The company had been owned by GMAC and as soon as Vauxhall discovered what was happening to Masterlease they were eager to offer their support.
“They wanted to retain as much of that Vauxhall business as possible, while their competitors have been looking for the conquest business.”
LDF’s strengthening position is also seen in recent contract wins, including a deal for 100 liveried and racked commercial vehicles with home installation and maintenance company Job Worth Doing on a three-year/90,000-mile contract.
Sale changed leasing landscape
Speculation had been rife about the future of Masterlease, with several suitors wanting to strike a deal to buy the contract hire company.
Ally Financial-owned Masterlease had effectively been on the market for more than a year, with GE Capital thought to be one of five or six companies looking at the business.
But in a move which surprised many in the industry it was Investec Bank that stumped up the cash to push the deal through.
The top 20 FN50 leasing company’s risk fleet stood at around 30,000 vehicles and Investec handed over the reins to Leasedrive Velo (now Leasedrive Group).
The Masterlease fleet was integrated into its existing business and pushed it up the FN50 rankings from 19th and a risk fleet of 15,200 vehicles in 2010 to number 11 and 35,659 units last year.