Southern Finance (SF) is looking to expand its asset-finance
book. Currently it finances some 20 per cent of non-wheeled assets
and commercial vehicles (CVs) compared to 80 per cent private cars
and company vehicles.
Miles Roberts, SF’s managing director, tells Leasing Life that
the aim is to alter the ratio to 40:60 in around three years
time.
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“We are already financing various types of plant and machinery,”
he says. “We expect the 2012 Olympics to stimulate demand for a
wide range of equipment finance including fork lift trucks and
other yellow goods.”
One new market sector in which SF is specialising is the
financing of electric CVs and cars, more especially in the Aixam
range. The Aixam CVs in the Mega marque come with a payload of
between 275 to 500 kg and are available in some five versions.
These include van, chassis cab, drop-side truck, pickup and
tipper. Being electric powered they also fit the green acceptance
level for operating in low-emission zones and large cities. They
are particularly appropriate for companies making local deliveries
of goods.
Something of a rebirth
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By GlobalDataSF has experienced something of a re-birth under Roberts who was
sales director at Singer & Friedlander Finance prior to its
exit from the motor finance market in 2005.
Southampton-based SF was formed in 1957 by Leslie Tracy, a
furniture manufacturer and retailer, to finance facilities
exclusively for his retail customers. The retail outlet was sold as
a going concern in 1968 but SF was retained. From that point it
began to develop its finance business under the aegis of Tracy’s
son, William.
In 2005 William Tracy, faced with growing industry regulation
and compliance, sold the business to the Lenlyn Group.
Lenlyn consists of International Currency Exchange, a provider
of services to travellers which it distributes through some 250
bureaux de change outlets located in 70 countries world-wide. The
group also owns Raphael’s Bank, a small but aspirational private UK
bank with roots back in the 18th century.
Roberts joined SF in 2005.
“I found a very carefully managed team who were underwriting
extremely prudent business in time-honoured fashion,” he says. “It
was a good profitable business but with no branches, a staff of 62,
and with all new business emanating south of Birmingham and
processed in Southampton. It badly needed to grow and to explore
new avenues to market.”
Funding sources now consist of a syndicated loan facility led by
Royal Bank of Scotland and Barclays with support from Bank of
Ireland and Alliance & Leicester. “It has proved a perfect
platform for growth,” stresses Roberts.
Since taking the helm at SF, Roberts has revamped the
underwriting criteria and cut out some of the less-promising
business sources – but subsequently lost no business.
He also began to look outside the box and successfully developed
specialist niches within the mobility motor sector. He concluded
vendor finance arrangements with companies which adapt
special-needs vehicles to fit wheelchairs.
The resultant vehicles are funded on either hire purchase or
loan agreements over a maximum five-year term. In addition he set
up finance arrangements for vendors of mobility scooters of which
SF is currently financing around 90 per month. Average deal sizes
for the latter are around £2,500 for a “mature” customer base.
Military financing
Roberts also has experience of funding the military and set up a
division at SF which provides finance for those soldiers who are
eligible for tax-free vehicles. Average balances are around £20,000
and usually relate to premium-brand models.
“The quality here remains very high,” Roberts says, “although
inevitably it has been affected by troop movements and commitments
abroad.”
In 2006 SF opened its first branch – in Bolton. The five staff
employed there previously worked for Park Finance. New products are
also being developed in conjunction with Raphael’s Bank and Roberts
sits on the bank’s board.
“The whole Lenlyn group is based on a determination to grow,” he
says. “The culture is one of cross selling and innovation in
developing new products. All staff are encouraged to think of new
ideas and new niches. For example, we have recently developed some
excellent affinity partnerships with some large organisations.”
The company runs a contact centre in Cardiff from which
facilities-management services are planned for growth. It currently
specialises in post-sale added value products and collection work –
all of which are available to third-party sources.
“We have recently completed a sizeable deal with a major dealer
group,” Roberts confirms.
Going that extra mile
The platform for growth has been complemented by the acquisition
of the web-based Codeweavers software system which Roberts says is
“fantastic and is significantly speeding the way we work.”
Given the credit-squeeze challenges facing the industry in 2008
Roberts is determined to stick to traditional lending values.
“Already there is evidence that lenders who use automated
scoring rules are tightening their lending criteria,” he points
out. “In a tough market, asset retailers need every sale they can
get, but automated scoring systems can reject individuals for
something as simple as not being on the electoral roll at a new
address. Many potential customers could slip through the net even
though they are in a strong financial position, making a big dent
in sales at a time when dealers need them most.”
Roberts stresses that by focusing on applicants’ income and
expenditure as well as their past payment history, SF can make an
informed lending decision rather than sticking to restrictive
automated rules. He adds: “With sales expected to struggle during
2008, asset retailers need to know they are not missing out on
potential deals due to unnecessarily stringent scoring systems.
Dealers should choose a finance provider that can help them
maximise sales, rather than turning them away.”
