The Portuguese economy is not expected to perform up to scratch
this year, but Carlo van Kemanade, executive vice president and COO
of De Lage Landen (DLL), is unperturbed as the Dutch-based
specialist in vendor finance forges ahead with the set up of its
newest European office, based in Lisbon.

Instead, van Kemanade shrugs off talk of a downturn as something
that will affect everyone, but says it is De Lage Landen’s business
model that will keep the group resilient.

As with all its expansion strategies in the past, DLL’s assault
on the Portuguese leasing market was partly driven by demand from
its vendor partners.

“In the past we’ve always applied the concept of ‘follow the
vendor’. Today we don’t just follow. In many cases we lead vendors
into new territories where they are or will be active in,” van
Kemanade says. “As part of our global expansion strategy, besides a
heavy focus on the CEE and Asian region, we identified the need for
entering into Portugal as this country is considered important for
many of our vendors.”

After obtaining permission from the Portuguese Central Bank, the
Lisbon office opened for business on April 1 with seven staff. The
team is also supported by resources in DLL’s Madrid office,
although van Kemanade says Lisbon is scaling up its sales force
rapidly and will likely house some 15 staff within the first

Meanwhile, deals are flowing in quite smoothly. Van Kemanade
says DLL is receiving plenty of requests and applications and
having some fruitful discussions with its vendor partners.

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Within the first 12 months of starting up, DLL expects to have
written some €50m to €60m in new business in its specialist areas
of transport, food and agriculture, technology, materials handling
and healthcare.

DLL’s confidence in achieving that target is partly reinforced
by the presence of Cargobull Finance, a joint venture with trailer
manufacturer, Schmitz Cargobull in which DLL has a majority

A fifth of its new business target for Portugal may come from
Cargobull. DLL expects to write roughly €10m to €11m in finance
deals for trucks and trailers. This is expected to grow rapidly
within three years.

In recent weeks Cargobull Finance, in tandem with DLL, entered
the Russian market following the move there by Schmitz Cargobull in
1999. For DLL it is an important strategic move as it is seeking to
ramp-up its CEE capability. Schmitz Cargobull UK announced a sales
increase of 40 per cent for the first nine months of the 2007/2008
financial year, and the pan-European contingent experienced strong
double digit growth in trailer sales ahead of the previous year.
Notwithstanding this, Anne Smith, a sales support manager at
Cargobull Finance, says that the truck leasing market, particularly
in the UK, is competing against an increasingly “tough climate”.
“It’s a funny market, a lot of haulers have closed their doors;
it’s a tough time, particularly with the rising cost of fuel,” she

According to van Kemanade, one of the performance benchmarks for
vendor finance is the penetration rate, that is, the proportion of
vendor sales closed with a finance deal. Thus, a 50 per cent
penetration rate means that for every €1 of vendor sales, €0.50 is
financed by DLL

In Portugal, DLL will aim to progressively achieve the
penetration benchmark of between 40 per cent and 50 per cent for
all sectors within the first three years of operations although, it
can be quite common for penetration in the wheeled assets sector to
be higher than in the technology finance sector.

“In certain regions we have seen that for example, the financing
of assets on wheels seems more common than for instance the
financing of technology finance related assets,” van Kemanade

Given the small size of the Portugese economy, deals originating
there aren’t likely to match its much larger neighbour, Spain,
which wrote some €500m in new business in 2007. Portugal’s market
for leasing is about a quarter of the size of Spain’s, by DLL’s

Still, Portugal did report a healthy rate of investment and
there’s even more infrastructure spending to come. In Lisbon, for
instance, plans are afoot to build more hospitals, while a €3.6bn
airport 50km north of the capital, linked by high-speed rail to be
completed in 2018, has been placed under the Government Priority
Infrastructure Investment Programme.

That at least, should keep capital spending robust for a