LeasePlan says the sale of its Dutch parent company to a consortium of investors for £2.6 billion will not affect its plans for future growth.
The deal came just a few months after LeasePlan had terminated talks with an unnamed consortium over its possible sale, declaring it had no plans to pursue further options leading to a “divestment of LeasePlan in the near future”.
Hans Dieter Pötsch, chief financial officer of Volkswagen Group, said the change of heart was due to an “attractive offer received from investors”.
He added: “Since Volkswagen acquired its stake in LeasePlan in 2004, the investment has developed positively.
“With the expansion of our own fleet management activities at Volkswagen Financial Services, the time has come to hand LeasePlan over to new investors.”
Volkswagen Group Leasing has seen rapid growth of 900% in the UK since 2006. It is now the sixth leasing company to pass the 100,000 vehicle risk fleet threshold.
John Lindsay, director at leasing and automotive analyst JLSR, told Fleet News that it was not surprising Volkswagen wanted to offload its investment in LeasePlan due to the clear “conflict of interest” between the two leasing companies and to reinvest the money from the sale in growing its own leasing division.
The sale of the leasing giant is now expected to be concluded by the end of the year pending approval by the Dutch Central Bank and the European Central Bank. LeasePlan will remain an independent company.
LeasePlan UK is still expecting to grow its total funded fleet from 139,698 vehicles by another 5,000 to 6,000 vehicles this year. The company is also planning for growth of 30% over the next six years, which would take the business to 181,607 vehicles.
Dyer said: “The acquisition allows us to continue our growth strategy with our customers at the heart of our business. This is a consortium of long-term oriented investors who recognise the strengths of LeasePlan as a business and our long term strategy.”
Lindsay believes the acquisition is good news for UK customers. He said: “For the time being it maintains the status quo and gives a stable footing for growth.”
However, he believes having investors like Goldman Sachs and TDR Capital involved will put more pressure on the UK management team for increased growth and to innovate with new products. This could include acquisitions to accelerate growth in the business.
He said: “These investors will want their pound of flesh and they will expect results and to build scale quickly.”
Lindsay admitted it would take some impressive growth for LeasePlan to overtake Lex Autolease as the market leader in the UK’s leasing industry, but he would not be surprised if that was the new consortium’s goal. He said: “It would be a huge challenge to overtake Lex and it would mean acquisitions.”
Lex currently has a risk fleet of 289,317 vehicles, according to the latest FN50 data. This would mean LeasePlan would have to increase its growth plans by a further 60% in order to surpass the scale of Lex’s current business in the UK.
While Dyer would not comment on whether the sale would mean any acquisitions in the UK to grow the bus-iness, he told Fleet News in April he had an “open mind” about acquisitions.
He said: “There has been some consolidation in the industry, and I think that will continue.”
LeasePlan created a new business development division in 2014 to “take the way we develop, market and innovate our products to the next level”.
Dyer concluded: “Finding new market segments, and products for those segments, is going to be crucial for LeasePlan’s success in the future.”
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