Uncertainty over future of DLL’s
involvement in €500m programme
Three major European bank-owned
lessors are vying to win a share of the lucrative Microsoft
Financing programme, it emerged late last month.
BNP Paribas Lease Group (BPLG), Key Equipment
Finance International (KEF) and SG Equipment Finance (SGEF) are
understood to be in negotiations with the software giant to win the
Meanwhile, there is uncertainty over the
future of De Lage Landen’s (DLL) involvement in the vendor finance
programme, which is believed to involve around €500 million of
software lease agreements.
In July, DLL, which was unavailable to comment
for this article, won a bid to replace CIT, which last month filed
for Chapter 11 bankruptcy, as the funding provider for Microsoft’s
products in Europe. However, it now appears that Microsoft either
plans to use more funding partners, or switch from DLL to another
Sources close to the deal said BNP Paribas
Group has become the frontrunner in the bid to win the
Nigel Jenkins, managing director of Microsoft
Financing EMEA, said no long-term partnership had been agreed.
“We are yet to contract with any organisation,
and should this occur, we will be making any announcements through
our PR team,” he said.
This is not the first instance that DLL has
taken over CIT’s portfolio. At the start of this year, when CIT
pulled out of the UK health care market, DLL stepped in to buy its
leasing portfolio – incorporating all of CIT’s operating leases
with the NHS – for €18.5 million.
Earlier this year, DLL also acquired CIT’s
Lansing Linde materials handling programme. CIT had previously
acquired this vendor finance agreement, along with several others,
from Barclays in 2006.
Several members of DLL’s UK materials handling
division, including some connected to the Lansing Linde vendor
agreement, are understood to have been made redundant in recent
weeks. They include Louise Hanlon, who was based in the West
Midlands, and Mike Dunn, who operated from Northampton.
Commenting on the reasons for the
redundancies, a source said: “It was not working out from a costs
perspective as they were not seeing enough volume coming
DLL has transferred some of its own internal
sales staff to manage the Lansing Linde programme, it is believed.
The ones made redundant joined DLL when it acquired the Linde
programme from CIT.
It is understood that DLL has been playing a
major part in Microsoft’s contingency plans, as it now looks after
the financing programme internationally.
At the end of November, DLL was responsible
for Microsoft Financing in Australia, Belgium, Canada, France,
Germany, Italy, the Netherlands, New Zealand, Spain, Switzerland,
the United Kingdom and the United States.
In July, a spokesperson for Microsoft said:
“We will ensure any credit-approved customer financing commitments
are honoured… Microsoft Financing has contingency plans in place to
protect our customers’ and partners’ needs.”
Sources have said that CIT’s flagship vendor
agreement with Dell remains stable. Although the Dell relationship
still has challenges to meet in terms of cost of funds, it is still
writing healthy business volumes and offering staff good bonuses.
Whether this was likely to continue in 2010 was a different matter,
however, the sources added.
CIT’s relationship with Belgian imaging
technology manufacturer Agfa-Gevaert is also still running. Agfa
Financial Solutions confirmed finance was still available through
CIT, and it would continue to work with CIT “for the moment”.
The industrial sector has been a more
difficult for CIT, however, with international tool manufacturer
Snap-On exercising its right to buy CIT’s stake in its financial
services joint venture during the second quarter of 2009.
Sources said CIT is seeking to exit Chapter 11
by the end of the year, and is using this to keep its ties with its
key vendor partners.
One well placed source commented: “CIT could
be out of Chapter 11 by the end of the year and is trying to raises
funds and secure lines so they can achieve this. CIT has very good
political ties with the senior guys at all the vendor programmes
they have at the moment. These vendors are giving them leeway to
sort this out.”
IT-related financing capability represents 3.9
percent of BPLG’s financing portfolio, while it is believed to
represent a much bigger part of SGEF’s business. However, once
Fortis Lease Group and BPLG become fully integrated, vendor finance
will represent around two-thirds of total business, making it well
positioned to handle a client the size of Microsoft Financing.
BPLG in the UK has a particularly strong
office and IT equipment finance division. Based in Bristol with 60
staff, the IT division is managed by Mike Camm, who reports to
management of the leasing company in Paris. Camm is said to have
regular meetings with the lessor’s UK country manager, Benoit
Tilly, who is responsible for all business lines for the lessor
Meanwhile, BPLG is said to be keen not to lose
headcount and to retain the strength of its business lines as much
as possible during its integration with Fortis Lease Group, which
is due to be completed in 2010.
One source said: “Across Europe, they are
trying to make sure they get rid of as few a number of people as
possible, and where possible are realigning staff in new jobs.”
A KEF spokesperson said: “Key Equipment
Finance does not want to comment on any relationships with any
existing or non-existing clients.”
UPDATE (01/12/09): Following
publication, Microsoft Financing has provided Leasing Life
with a statement denying that BNP Paribas Lease Group has become
the front runner in the bid to win the contract, or that DLL had
won a bid to replace CIT last summer.
“In August, Microsoft announced it was working
with De Lage Landen, among other vendors, after it ended the
relationship with CIT,” the statement said.