CHP af50

It comes as a surprise to realise that there hasn’t been a thoroughly researched ranking survey of the UK asset finance industry produced in the 21st century. That gap has now been filled by the Asset Finance 50 − published by Asset Finance International, prepared by Julian Rose’s Asset Finance Policy and sponsored by CHP Consulting − which looks set to become the essential annual survey of UK business equipment and fleet lessors.

chp af50The AF50 is based on data from the latest audited company accounts and the inaugural survey confirms that the big four banks remain by some margin the largest lessors. RBS on its own accounts for 21% of the market, and the top four make up well over half the total investment in leasing.

But their dominance is slowly being eroded, with three of the big four banks’ most recent figures showing a decline in leasing volumes while the rest of the top 10 have all posted increases.

The tables show the market is highly dynamic and that there is rapid growth amongst independents and fleet lessors. One table highlights top performance, with category growth leaders Aldermore (bank-owned leasing company: +45%), Hitachi (independent: +28%), and Arval (fleet lessor: +25%) illustrating just how vibrant the market is.

The survey also tackles the important distinction of ‘non-legacy’ bank business leasing by looking at bank subsidiary operations. This produces a table with quite a different balance, with Close Brothers and LeasePlan vaulting into the top four.

The survey is augmented by insights and analysis from a number of industry leaders. While they don’t see the dominance of the mainstream banks disappearing anytime soon, they agree that the historic status quo is changing. This is demonstrated by the arrival in the AF50 of new entrants, and the experts provide some tips of their own for names to look out for in the next edition.

It may be gradual, but the market dynamics are changing. In the view of the experts, such developments may take time to feed through to the AF50 but they are issues for the industry and investors to note.

For instance, consolidation through acquisition may affect the structure of the market, as well as strategic investment by lessors, according to Gavin Wraith-Carter of Hitachi Capital Business Finance, who tells us: “The number of acquisitions in the industry has significantly increased and they will undoubtedly have an impact. Those lenders who can tap into the significant capital expenditure by businesses will be those that have the better chance of influencing their positions within the tables.”

Another development is the entry of private equity investors, particularly into the broker market and driving the growth of ‘own book’ business which could lead to further consolidation.

As IAA-Advisory’s Lindsay Town, says: “The relatively recent arrival of external investors seeking their goal of yield has helped to re-shape the UK industry, but this is far from the endgame. The impact of new external sources will be to allow the smaller lessor or more specialist lessor to grow their market share.”

This inaugural edition of the AF50 provides new analysis of the current shape of the market and insight into its future development. A principal aim of the AF50 is to support the industry’s future success − a more open and transparent industry should have a higher profile, helping to attract new business, external investment and more favourable policy and regulation.

Please note:
Some companies have kindly subsequently provided input on the data in this first edition of the Asset Finance Top 50:
The 2014/5 net investment for Clydesdale Bank should read £401 million, for JCB Finance £674 million and for Volvo Financial Services £496 million (includes estimate of operating leases), and SQN Asset Finance £41 million. 
Any further input from firms is invited for publication here and use in the next survey.

To download your copy of the Asset Finance 50 report, use the form below.