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  1. Analysis
December 6, 2018

Hitachi capital: time to look towards Europe

By Lorenzo Migliorato

UK-based captive and asset finance business Hitachi Capital is gearing up for life as a vendor finance subsidiary in the Netherlands – where opportunities abound. Lorenzo Migliorato speaks to chief executive Robert Gordon.

The UK may have long been the fulcrum of Hitachi Capital Corporation’s presence in Europe, but the lender – just like its parent conglomerate – is no stranger to markets beyond the Channel.

The lender has expended its vehicle contract hire business, known as Vehicle Solutions in the UK, to the Netherlands – as Hitachi Capital Mobility – and, following the 2014 acquisition of Warsaw-based Corpo Flota, to Poland.

Now, the corporation is looking to grow business in mainland Europe beyond vehicle leasing – and Hitachi Capital UK is taking the lead. The PLC is pushing ahead with plans for an Amsterdam-based vendor finance unit, initially envisioned as a branch and recently upgraded to subsidiary.

The rationale, says chief executive Robert Gordon, is having a business dedicated to financing primarily Hitachi products closer to the customer’s location – with potential for further geographical expansion. “We have done most of our business in the UK, but over the last, I’d say, five or six years, we have also been focused on trying to provide services for our parent company, Hitachi.” says Gordon.

“We have done some cross-border transactions [from the UK to Europe], but when you are providing a service, it really is best to provide that service in the country where the customer is based. That is primarily the driver for setting up branches in Europe.”

The focus with the Amsterdam unit is “a business in the country, for that country,” he says, adding that “potentially it can deal in neighbouring countries quite easily from the Netherlands.

We are building a European branch. “Our principal objective, really, is to serve Hitachi Ltd. companies. But as opportunities arise, we will surely look at those. It would be wrong to say we will be limited to Hitachi Ltd. forever … We will definitely consider those [other vendor opportunities].”

Six months from a Brexit cut-off day, an EU subsidiary is not a bad idea for internationallyminded British firms. But Gordon is keen to specify that while Brexit “focuses the mind” in terms of getting on with strategic decisions, the creation of a Netherlands-based unit was very much driven by an appetite for local opportunities.

Hitachi Capital UK has never engaged in regulated cross-border business, he says, so an eventual loss of cross-Channel financial passporting abilities would not particularly affect operations. With the vendor finance unit, Hitachi Capital does not just plan to lease or finance assets.

It aims to provide all-encompassing services suites – in line with the strategy for its parent conglomerate, which, like many similar companies, is putting an emphasis on digitalisation and “X as a service” offerings, beyond the physical manufacturing of equipment. “We are not just a finance provider,” says Gordon.

“We seek to do more than that – data utilisation, tracking. The more information and services we provide, the more value we are to our customers, [the more] we can clearly demonstrate that we have saved them money by planning the assets [and] looking at the utilisation – that’s far more valuable than just providing finance for that asset.”

It does help when one of your parent company’s core business lines is built around data. “[Hitachi] are a manufacturing company [and] they do analyse a lot of data for improvement. As finance moves from just providing finance to providing other services … it is inevitable that we become [more] closely linked with Hitachi Ltd.”

Gordon repeatedly notes the importance of geographical proximity between the lender and the customer – meaning that, if Hitachi wanted to take on the opportunities it saw in the Netherlands, a base in the country was “a natural evolution” for the company.

Yet, he notes with a tint of disappointment, it also reflects how leasing is more appreciated as a financial product in some countries than others. “We’ve seen, over the last few years, growth and investment declining in the UK, [and] that’s across the board, from smaller companies to the bigger companies,” he says.

“I suppose leasing hasn’t got the [same] profile [as more] traditional forms of finance … I would love to widen the acceptance of leasing across the UK.”

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