As Kennet Leasing celebrates its 20th anniversary, Fred
Crawley catches up with the broker-cum-lessor that is making
headway in the sales-aid sector.


“We certainly could have done more to grow
quickly, but it would have put our reputation at risk,” says Steve
Swift, on the 20th anniversary of Kennet Equipment Leasing.

“Our reputation with customers and funders has
always been our big priority, and it’s something we want to stand
in our favour whenever we pick up the phone to a new funder.”

This point is backed up well – names such as
Aldermore, Black Arrow, Armada and General Asset Management have
all joined Kennet’s list of more than 20 funders in the past year,
and it is in negotiations with another name at the time of

Reputation has been particularly important for
Kennet given its position as an introducer of sales-aid business –
an area in which the broker market has seen many controversies over
the last year.

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Tony Devenney, a director of distribution at
Kennet, emphasises the caution with which Kennet approaches the
products and sales tactics of its partners.

He remarks: “These days, it’s even more
important to know your dealers than to know your customers, and
many of our high-volume relationships have 10 years or 15 years
behind them. In any case, the proof is in the pudding – our funders
have had very few write-offs or debit backs from sales-aid business
we’ve introduced.”

Interestingly, Kennet has seen a significant
increase in interest in its sales-aid business as competing
introducers have had their fingers burnt by troublesome suppliers
in the last 18 months.

But in straight financial terms, 2009 will
take some time to recover from. Total business volume dropped from
its peak of £36m (€41.6m) to just over £20m over the year, although
it looks likely it will exceed £25m again during 2010.

Kennet is also on a post-recession recruitment
drive, taking on additional sales support staff to ensure smoother
links with dealers, while also employing three staff to generate
return business from its existing customer base of 50,000. In
addition, while the overall funding market remains constricted,
deal volume is returning quickly.

Already this year, Kennet is 30% up
year-on-year on deals done through primary funder ING Lease, and
25% up on business with growing player Investec Asset Finance.

Interestingly, there has also been a 68%
increase in business done with Siemens Financial Services, contrary
to market rumours of the German industrial giant pulling away from
the broker market.

But one area in which Kennet never saw a
cessation in growth is its own lease book, which as of 31 December
2009 had grown 84% year-on-year.

The firm began building up its own portfolio
from working capital in 1997, on the back of a deal that was “just
too good” not to be underwritten, and has been selectively
continuing to build it up since then.

These days, Kennet’s book has around £4m in
outstanding receivables, and is funded through block discounting
facilities with Hitachi, ING and Siemens.

Developing an underwriting function to handle
its own book has helped Kennet in terms of introduced deals too,
with a standing acceptance rate of around 90% with its primary

In general, the lessees appearing in Kennet’s
book are a mix of public sector bodies and businesses with
“top-end” credit.

Customers have included the BBC, Sainsbury’s,
Eddie Stobart and Hamleys, as well as several local authorities. To
minimise risk, deal size is never greater than £250,000 – to date,
the largest write-off on the book has been £8,000 for water coolers
leased to Lehman Brothers in 2007.

As such, the wholesale withdrawal of many
funders from certain sectors as a “flight to quality” reaction to
recession has ramped up Kennet’s leasing business impressively.

Some £2.3m was written on Kennet’s portfolio
during the 12 months of 2009, more than doubling the company’s size
and producing “excellent” profits on the back of high margins on
new business.

Kennet has also secured joint ventures with a
number of suppliers specifically for own-book growth during 2009,
suggesting that ambitions as a full-scale lessor may not be too far

“Eventually, we’d like to reach out to the
market as a major funder ourselves,” says Devenney, making the idea
more than just a suggestion.