30 Jan 2013
Masterlease purchase gives Leasedrive scale to grow
The following article was published by Fleet News on 30th January 2013:
The leasing sector has entered a period of calm after a tumultuous five years during which time residual values collapsed, the economy twice went into recession and acquisition/consolidation announcements became commonplace.
One of the companies in the midst of the changing landscape was Leasedrive Group, which took on responsibility for running Masterlease after Investec acquired the business two years ago.
The two leasing operations have now been fully integrated, with the majority of Masterlease’s SME and white label business run off, mostly to brokers.
Leasedrive identified around 70 customers it wanted to retain, which accounted for around half of Masterlease’s risk fleet volume. All have moved across.
“These customers fitted with our business values and were an organisational fit, where we could add value,” said Roddy Graham, Leasedrive commercial director (pictured below).
“Three of our top five orders in 2012 were Masterlease customers and the other two were new customers we acquired.
“The biggest existing Leasedrive customer is in sixth place in terms of orders.”
David Bird, Leasedrive chief executive, added: “We had to demonstrate to them that we could be competitive on price and not only continue the service levels but improve upon them.”
Leasedrive now funds 23,000 vehicles, with a further 11,000 under management – 34,000 in total. Three years ago, the combined figure was just under 18,000.
The growth trajectory has been reflected in the company’s profits, which have risen from £5 million (earnings before interest, tax and amortisation) in 2010 to £14 million in 2012, itself a £4 million year-on-year increase. Masterlease contributed much of the recent growth.
“We are still entrepreneurial but Masterlease gives us scale to further invest in service and technology,” said Bird.
“It’s the best of both worlds.”
He believes Leasedrive has the infrastructure and resource to grow to a 50,000 total fleet size before it will need to reassess its approach. That is likely to happen at the end of 2015.
The strategy to get there focuses on organic growth with a small number of large customers – the target is a new customer every month – but Bird does not rule out making another acquisition if the right business becomes available.
He has his eye on four companies in the FN50 which are a cultural fit and have the right customers.
“I believe we will see the market diverging between funders – banks that want to provide funds but don’t want to be in service provision – and the service providers,” he said. “This is the template we set with Investec.
“The industry has survived some tough times but no-one went down. But there is still consolidation to come at the top end.
“If you look at the FN50 in three years’ time you will see fewer bank-owned leasing companies and more motor manufacturer-owned.”
Pictured above: Roddy Graham, commercial director.