Asset Alliance Group, a UK provider of commercial vehicle leasing, has announced its intention to sell its shares in its parent company Asset Alliance Group Holdings Limited to Arbuthnot Latham and Co.

The acquisition, which is subject to regulatory approval and may take up to three months to complete, will replace existing funding arrangements, the lessor said in a statement.

Asset Alliance Group

Willie Paterson, chief executive of Asset Alliance, said: “In an incredibly challenging year, it feels good to share some positive news and to have received such confident backing for our business and our fantastic team.

“We have been actively looking to attract a new investor and been fortunate to have several expressions of interest from different parties. However, the approach from Arbuthnot Latham and Co stood out to us as an ideal match for our operations and plans for continued growth.

“This backing gives us the potential to develop that offering at a faster pace, helping more customers whilst also ensuring our proposition remains competitive, flexible and innovative.”

Once regulatory approval is given, the day-to-day running of the Group will remain unaffected, with all existing senior team members staying with the business, the company said in a statement.

The current directors of Asset Alliance Group Holdings Ltd are James Stuart Jenkins, Adrian Michael Lannon, Douglas Brown McArthur, Richard James McDougall, William Hamilton Paterson.

Asset Alliance Group provides commercial vehicle financing and related services predominantly in the truck & trailer and bus & coach markets. It operates across five UK sites and is headquartered in Wolverhampton. It was founded in 2010 by Willie Paterson, former director of commercial finance at Alliance & Leicester plc.

Arbuthnot Banking Group

In its own press statement, Arbuthnot Banking Group plc said its subsidiary Arbuthnot Latham has agreed to purchase the entire issued share capital of Asset Alliance Group Holdings Limited, the parent company of Asset Alliance Group.

The statement added, that Asset Alliance Group has over 4,000 vehicles under management and that as of 31 August this year, Asset Alliance had assets for lease with a net book value of approximately £150m.

Arbuthnot said the acquisitions proposal is based on an agreed discount to the tangible net assets of Asset Alliance at completion, after adjusting for the fair value of the assets available for lease. The proposal is expected to be approximately £4.1m, according to the statement.

The shares are being purchased from CS Capital Partners III LP and a small number of other investors which include the senior management of Asset Alliance.

Third-party funding

The third-party funding of Asset Alliance at completion, which is associated with the assets available for lease, and includes a revolving credit facility of approximately £140m, is expected to be refinanced by Arbuthnot soon after the completion date.

Asset Alliance had adjusted net assets of £8.1m as at 31 August 2020. It reported an EBITDA of approximately £7.2m for 2019 and is expecting to record £2.3m for the same measure in 2020. This is anticipated to increase to £5.5m in 2021.

Also, this acquisition should generate a net negative goodwill accounting adjustment of £1.7m. Therefore, the transaction is expected to be earnings accretive to the Group in the year ending 31 December 2021. The Group anticipates Asset Alliance transaction costs of approximately £800,000 will be recognised in its 2020 trading results.

The purchase of Asset Alliance’s share capital and the refinancing of the third-party funding will be satisfied by cash from the Group’s resources.

Sir Henry Angest, chairman and chief executive of Arbuthnot Banking Group, said: “We are delighted to welcome Willie and his team to the Group. This acquisition of Asset Alliance is complementary to our strategy of diversification and developing businesses in the specialist commercial finance sectors.

“Their experienced management team have built the foundations for future growth and now that it will no longer be constrained by third-party funding limits, I look forward to Arbuthnot enabling this business to grow and prosper in the future.”

Arbuthnot Latham and Co, established in 1833, is the private banking, wealth management and commercial banking division of Arbuthnot Banking Group. Arbuthnot Banking Group is listed on the Alternative Investment Market of the London Stock Exchange.