NEWS ANALYSIS: Arval's sale of Allstar
03 January 2012
Leasing giant sells Allstar fuel card business to FleetCor and signs a five-year partnership. Jack Carfrae reports
It's not every day the fleet industry learns of a landmark multi-million pound business deal, but that was the case at the very end of 2011.
Leasing firm Arval sold off its Allstar fuel card business to FleetCor (see 'Who is FleetCor?', below) for £194 million and both parties signed up to what they describe as a "strategic partnership" that will last for "at least the next five years".
The leading fleet fuel card provider in the UK, Arval claims that its reason behind the Allstar sale was primarily because it felt that it would be too complicated to expand further and break into overseas markets. Speaking immediately after the sale, general manager of Arval UK, Bart Beckers, told BusinessCar: "We looked at expanding fuel management into other countries but this would have required a completely different IT structure and new contracts and these are quite difficult to set up from scratch. The only way to expand it would be to move abroad or to create other services. That's basically where we're coming from and we think it's better to look at outsourcing these opportunities."
He added that FleetCor already has the relevant infrastructures in place and will therefore be better placed to cultivate the fuel card business overseas. It also has a number of existing commercial accounts in Europe, the US, Africa and Asia. FleetCor was unable to provide a comment about the sale before BusinessCar went to press.
Despite the fact that Arval no longer owns Allstar, the partnership with FleetCor will allow it continue to provide a fuel management service.
Beckers, who took over as general manager of Arval UK in February 2011, said that the profitability of the fuel card business remained in rude health and that it was at roughly the same level as the company's leasing business before the sale. He also pointed out the partnership will allow Arval to continue raising funds from the fuel card business: "We will continue to capture quite a few of the revenues from this as a result of the partnership. It's a combination of outsourcing to a partner and retaining an important part of the revenue."
The move also allows Arval to offer fuel management via other card providers, but it maintains that Allstar will remain its first and usual port of call.
"If Allstar would not be capable or willing to meet the standards of certain clients then we can look elsewhere. These are usually very highly specialised clients such as LCV firms with a heavy presence in a local area. If we need to adapt we can do so."
Beckers said that the company felt it had received the best possible price for the sale and the move would allow Allstar to offer its services to Arval's rivals, where it previously wouldn't have been able to. Following the sale, the company will be "focussing on our business model and we do believe that we have some good opportunities in risk management - this is possible now because we can focus on Arval as a group".
Around 250 staff are employed by Allstar, within Arval's UK headquarters in Swindon. Both companies promised that no redundancies would result from the sale but Arval said that the staff would be relocated to another floor within the existing premises over the Christmas period.
Arval has promised that existing customers will see "very little change to the service they receive" as a result of the sale. Firms that receive both fleet and fuel card services from the company will see fuel management and billing further integrated into their existing bundles.
The company has yet to commit to a use for the profits from the sale and, when asked whether it was considering the acquisition of another leasing firm, said that it had no plans to but would consider it should the opportunity arise. Beckers said that the plans for 2012 are modest with aims to grow gradually.
He summed up by saying: "You shouldn't expect anything spectacular in 2012 as far as Arval UK is concerned - and if you do see anything spectacular then it will be a surprise to us."