LEASEDRIVE GROUP: A year's a long time in leasing
15 July 2011
It's been a dramatic 12 months for Leasedrive Group, trebling in fleet size from 15,000 after signing a contract to manage the former Masterlease portfolio. MD David Bird talks Paul Barker through the past, present and future
When BusinessCar met with David Bird and his Leasedrive Velo management team just over 12 months ago, there was plenty of enthusiastic talk about how the firm would be looking to expand through acquisition as some finance providers looked to make a discreet exit from the volatile contract hire market.
A year on and it's a different Leasedrive that sits in the market. The name is the most obvious change, with Leasedrive Group now being the name over the door. And the fleet, which stood at just over 15,000 vehicles a year ago, is now boosted to around 45,000 as a result of the deal late last in 2010 that saw Investec Capital Markets acquire the portfolio of the UK's number 12 leasing firm Masterlease. Investec immediately handed operation of Masterlease's fleet of more than 30,000 vehicles to Leasedrive.
"We were looking to acquire and were thrilled to bits to complete our transaction of Masterlease with Investec," Leasedrive Group MD Bird tells BusinessCar. "Fundamentally Investec bought the assets of Masterlease - the lease portfolio - and entrusted us with the running of the business. They appointed us to manage and look after their investment.
"What we got was what we wanted: the business - staff, customers and supplier relationships - and we'll carry on running the business."
The plan between Investec and Leasedrive is for current Masterlease clients to be migrated across to Leasedrive when their contracts end, running down Investec's Masterlease book until it reverts to a position of funding provider for Leasedrive in the next couple of years.
"Investec provides us with a line of funding, it's a clear ongoing, long-term commitment," continues Bird. "Stage one is us looking after their investment, stage two is them as an asset finance provider. It's a very good organisation and it's good we managed to work with them to get incoming investment in the industry."
Bird set out Leasedrive's intention to retain a Masterlease base in Birmingham, although negotiations are still ongoing as to whether that will be the current International House headquarters, and Bird was also keen to point out that there haven't been any compulsory redundancies as part of the deal. "We've gone out of our way not to can anything; a handful of people have volunteered to leave, but there have been no enforced redundancies," he says. "In the back-office delivery side there will be duplications so I would expect some reductions in staff, but the front office is where we want to deploy.
"We've got a good history of redeploying staff here and we've got a good opportunity to grow as a business, which will create opportunities - that's what we plan to do as we pull two businesses together."
The growth Bird talks of is planned to come from the blue chip sector Leasedrive Velo has built itself a reputation for serving. While there will be a short-term reduction in fleet numbers as both the GM UK business Masterlease used to operate and the SME business viewed as less desirable by Leasedrive come off the books, Bird feels there are good long-term growth opportunities.
"Blue chip is definitely where the organic growth would come from," he continues. "We can increase the business fairly substantially by taking on a few large customers rather than the SME route of lots of smaller customers. I would discount the provision of new leases into the SME sector." The combined fleet size will contract by around 5000 to 40,000.
As well as looking to grow the fleet, Bird says there will be opportunities in selling additional services to existing Masterlease clients. "We're seeing all sorts of opportunities within the Masterlease portfolio. Masterlease was a contract hire provider and Leasedrive Velo was more service provision so we're looking at cross-selling," he says. "Masterlease was focused as an organisation funded by a large firm with deep pockets - they made sure contract hire was first and foremost and other services weren't being sold. Our position is that we're happy to lead with short-term hire or accident management as a mainstream product."
The Masterlease deal hasn't taken Leasedrive's attention away from other areas of the business, with boss David Bird claiming that Leasedrive is set for a new record number of rental days from its short-term hire arm.
The company is on-track for 600,000 rental days this year, compared with coming up just shy of half a million in 2010.
"The short-term hire business is a good weather bell for the economy - it was the first to crash and the first to recover as we came out of recession," says Bird.
Leasedrive does not have its own fleet of rental vehicles, but works with daily rental companies as third-party providers. "Everybody we want we've got - Europcar, Enterprise, Avis, Hertz and Thrifty - they are the best providers in the industry," he says. "In my time we've never had them all on board so it's an indication of the maturity of our business that we're seen as a long-term provider with the best names in the industry."