Macquarie Corporate and Asset Finance has made an initial £1.2m equity investment in the UK vehicle leasing business XL Group.

XL Group offers short-term contract hire of executive cars and supercars to both corporate and private clients.

It has a fleet of around 700 vehicles currently throughout the UK controlled from its head office in Lincolnshire, England.

Macquarie’s Vehicle Finance team will partner with XL’s management team to expand existing operations through the equity investment and with an initial £10m operating lease facility which may be extended to facilitate the anticipated growth of the business.

The investment in XL enables Macquarie to increase its foothold in the UK mobility and specialist vehicle finance sector and provides XL with access to Macquarie’s global leasing experience and direct funding for growth of its fleet.

Julian Liddy, regional head of asset finance in EMEA, said: “Having become a leading provider of vehicle finance in Australia, we are now looking to selectively expand the business into new markets and saw great potential to partner with XL in the UK.  A key element of our vehicle finance strategy is based on the migration of customers from a ‘finance to own’ to a ‘finance to return’ model which XL already operates through its short-term contracts – and which we believe could be deployed across similar markets.”

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Gordon Young, head of vehicle finance for Macquarie in EMEA said: “We are always trying to identify new ways to benefit from the evolving disruption currently being experienced in the UK vehicle finance market.  Consumers are changing the way they want to finance vehicles moving towards a “car subscription” service. We want to be part of that shifting sentiment and XL has developed a business model that services this growing segment.”

Martin Walker, XL’s founder said: “This deal is a milestone in the company’s evolution and I am delighted to have such a global financial powerhouse on board to fulfil our vision for this business”.

Steve Hampson, chairman of XL, said: “This investment presents an exciting opportunity for XL to expand and fortify its position as market leader in this specialist market place. We are looking to secure additional avenues into market in early 2019 and aiming to bring the numbers of cars on lease to over 5,000 in the shortest timeframe possible. Our vastly experienced team working together with Macquarie, who bring with it over 20 years of global experience in vehicle finance and an ability to understand customer behaviour and market demands, will enable XL to further accelerate our plans for growth, both within the UK and internationally”.

Macquarie said it has been active in the car leasing industry since 1998, with a portfolio of over 600,000+ vehicles globally as of this date.