UPDATED: Masterlease and Leasedrive Velo to merge after Investec deal

Masterlease and Leasedrive Velo are to merge after Investec put up the cash to push the deal through.

Speculation has been rife about the future of Masterlease, with several suitors wanting to strike a deal to buy the contract hire company.

However, it is a joint agreement between Investec Capital Markets, part of Investec Bank, and Leasedrive Velo, which will now bring the Birmingham-based company under its stewardship.

Under the terms of the deal, Investec has bought Masterlease from Ally Financial for an undisclosed amount and appointed Leasedrive Velo to manage the company and integrate it into its existing business.

That will put the combined businesses in the top 10 of the UK’s contract hire companies with a total risk fleet of around 48,000 vehicles, according to the FN50.

A consultation process is now underway with staff and customers, but Roddy Graham, commercial director at Leasedrive Velo, said it was too early to say whether there would be any job losses.

“In the short-term, Masterlease will continue to trade as Masterlease, but we believe we can bring value with best practice and better service to its customers, and we’re looking forward to integrating the businesses,” he said.

GMAC-owned Masterlease had effectively been on the market for more than a year, with GE Capital thought to be one of five to six companies looking at the business. Sources suggest that it was believed to have reached a period of due diligence after nine months of talks, but was frustrated negotiations were taking longer than expected. It now appears to have been outbidded by Investec. 

Graham said: “We have been engaged with Masterlease for over a year with a view to making the acquisition, but we decided to put it on ice because of changes at the top of Ally Financial and changing market conditions.”

Leasedrive Velo had made a bid at this stage, but were also aware of who the other bidders were and returned to the process earlier this year.

“We understood Investec was looking to appoint a partner with the credentials and track record to make it work,” said Graham.
Leasedrive Velo had boasted of having “deep-pocketed investors” back in April and had brought in Robert Whitrow, as chief financial officer, to oversee acquisitions.

He claimed that a number of leasing providers were “hanging on by their fingernails” after the recent recession (Fleet News, April 29).
Masterlease, which until a couple of years ago was still expanding into new countries, had seen its UK risk fleet fall by more than 50% since 2008.

However, Graham insists the reduction was not indicative of bad business, just down to the company exiting certain sectors that were no longer profitable.

Industry expert Colin Tourick said that practically all contract hire companies had been hit by the downturn. “Masterlease had been around since the 1980s and it’s a shame that the heritage of Cowies and Interleasing has now ended,” he said.

“However, Leasedrive Velo is an experienced operator, committed to the market, so there’s no doubt that the deal will benefit Masterlease’s customers.”