Close up of a map focusing on China

CIT departures pave way for a new number one. UniTrust
Finance expects ‘triple-figure’ growth for the business this year.
Fred Crawley reports.


While CIT’s Chinese leasing business
hit hard times in 2009 as a result of its parent group’s liquidity
issues, its decline may have paved the way for a new, private
equity-backed player to reach the number one spot in Chinese
equipment leasing.

UniTrust Finance and Leasing Corporation has
claimed that it will emerge as the clear leader of the Chinese
leasing market in 2010, in a sign that its chief stakeholder, the
US private equity giant TPG Capital, may be about to start seeing
the returns it had hoped for from Chinese equipment leasing.

UniTrust has CIT, in part, to thank for its
recent turn of fortune, with the company’s CEO, Siming Li, jumping
ship to UniTrust in April last year.

Several senior colleagues of his at CIT also
moved with him to UniTrust, which at the time was suffering severe
liquidity difficulties. Given the fact Li had spent almost a decade
at CIT, having started as general manager of the group’s
market-leading Chinese arm, his move represented a blow for the

While Li said that “only a few” of CIT China’s
circa-100 employees moved over to UniTrust, the appointments were

Arthur Lung, formerly CIT’s chief credit
officer for Asia, started work as UniTrust’s chief risk officer in
January 2009, while CIT’s general manager for Greater China, Jun
Zhao, was appointed president of UniTrust in June.

An interesting non-CIT hire was Kent Li, an
information expert at Standard Chartered Bank who was appointed by
TPG as UniTrust’s CIO in early 2008. It is understood that Li’s
mandate at the company was to deliver an IT system promising
greater operational capability in terms of credit management, risk
management and collections.


Bright forecast for 2010

Today, Li expects “triple-figure”
growth for the business this year, with substantial gains made

“Despite challenges in the leasing sector in
China, UniTrust has grown substantially in the past 12 months,” he

Li explained that low leasing penetration in
the mid- to small-ticket sector presented a better outlook for
margins than larger-ticket business.

“Twelve bank holding leasing companies control
most of the large-ticket deals and the majority of [large ticket] assets, and returns in this segment are low,” he said. “We believe,
however, there are great opportunities in the small- to mid-ticket
equipment leasing segment and vendor financing.”

Currently, UniTrust is the most high-profile
private equity investment in Chinese leasing. It became so in late
2007, when TPG paid $275m for a 60% stake in the Japanese Nissin
leasing group, of which it was a subsidiary business.

It is understood that the growth potential of
the Shanghai unit was the driving force behind TPG’s buy, and it
was already one of China’s top lessors by volume at the time of


Stumbling blocks

However, a running dispute with
Nissin’s Chinese management team put TPG’s investment in jeopardy,
coming to a head when the investment group attempted to install
former GE Asia-Pacific leader Steven Schneider as CEO on 10 July
2008. In the clash that ensued, local police were called to
Nissin’s office, and Schneider left the building with security
detail in tow and no resolution to the crisis.

Nevertheless, January 2009 saw TPG install a
new head of Asian operation, Stephen Peel, the man who had broken
in the group’s new Moscow office in 2007. Before long, Nissin had a
new management team and a new name, UniTrust.

Now, UniTrust appears to remain in full
recruitment mode.

“Leasing is an underdeveloped segment in China
and we are adding a significant number of resources to service SME
customers. We also have a well established internal training
program. UniTrust has doubled its team within the last six months
and will continue to expand,” Li said.

The company’s bullish expansion has not gone
unnoticed by peers, either. Stefan Knuppertz, managing director of
Heidelberg Financial Services, says that UniTrust’s presence and
visibility in China has skyrocketed since mid-2009.

“UniTrust really is a clear example of how
quickly a well-backed leasing business can gain market share in
China,” Knuppertz said.

While TPG would not take an official position
on the outlook for its investment in UniTrust, a source close to
the investor said: “When TPG made the investment in Unitrust, their
evaluation of the leasing sector led to an appreciation of how
underdeveloped it was in China and the opportunities it

“TPG’s strategy has been to expand the
company’s operational capabilities and recruit a strong local
management team that will focus on growing the business by
servicing the expanding SME market across multiple regions, and in
various equipment sectors.”