the future of UK’s number one lessor.
Just a few weeks into his new job at the helm of Lombard, the
UK’s largest leasing company, and Alex Baldock is filled with
optimism.
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The credit crunch, he explains, has put the leasing industry in
the enviable position of being able to hoover up masses of new
work.
This, he says, is being driven by small and large companies
alike no longer regarding the owning of assets as being
“financially efficient”, and that this gap is being filled by
leasing.
“Leasing,” he concludes, “has much more potential to grow as an
industry.”
This is not the first time that Baldock has been involved in the
selling of leasing. He joined Lombard from Barclays where he was
commercial director of its commercial bank.
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By GlobalDataThere he was responsible for selling a variety of financial
products – including asset finance – to customers with annual
turnovers of between £1 million and £20 million.
Speaking with a determined tone, there is a missionary feel to
his campaign to continue to grow Lombard. He has, however, a fair
amount to live up to. Under his predecessor, Paul Lynam, who left
Lombard in August after three years as its managing director, the
leasing company continued to show good promise.
According to its latest Companies House submissions, profits
submitted to the company’s equity shareholders in 2007 totalled
£83.8 million (€105 million) – against £28.7 million the year
before.
However, despite Royal Bank of Scotland (RBS), Lombard’s parent,
taking a hit from the crunch, Lombard itself looks set to provide
another decent set of results this year.
Customers – besides increasingly seeing the benefits of leasing
over ownership – are also seeking fresh ways of refinancing as more
traditional sources of lending dry up. Again, says Baldock, Lombard
can fill the gap. For companies seeking an injection of fresh
capital, doing a sale and leaseback on a fleet of vehicles or
sourcing invoice finance are the ways forward. Lombard has been
given a one-off £1 billion pot of cash to help RBS customers with
their refinancing activities.
Baldock is not the only one to have cottoned on to the value of
refinancing – using asset or sales finance as a tool – during a
downturn. Last month the Asset Based Finance Association (ABFA)
revealed that lenders in this specialist finance area advanced
£17.3 billion to UK companies in the first half of 2008 – up 15
percent over the same period last year. There is also some evidence
of sale and leasebacks growing in popularity. Lombard Vehicle
Management, for instance, has done such deals in the recent
past.
Baldock, meanwhile, hints at future plans to scale up the
business.
“We need to be a near universal provider of leased assets,” he
remarks, adding that the Lombard is seeing particular growth at
present in the corporate jet and yacht markets.
Also, despite Lombard being historically a determinedly domestic
player, Baldock now says “international expansion is one of the
things we are looking at”.
In terms of growing by acquisition, Baldock’s lips are sealed.
However, this is a course which Lombard has steered in the past.
According to Companies House, in June and December last year
Lombard acquired business worth a total of just over £86
million.
Either way, now is a good time to be buying – and RBS is
rumoured to be in exclusive talks to acquire the asset finance arm
of Kaupthing Singer & Friedlander. Long may the optimism
continue.
Brendan Malkin
