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Element Financial Ascending: Exclusive Interview With Bradley Nullmeyer

Date: Aug 06, 2014 @ 07:00 AM

It’s an endeavor we had been chasing for nearly two years and it gives us $4.5 billion in assets … it’s  a steady stream of cornerstone business from which we can build our other units in the other verticals I mentioned.

Equipment Finance Advisor:  How do you respond to those who hold the view that Element’s growth since 2011 has been too rapid?

Nullmeyer:  When people look at our growth rate and say that rapid growth spells disaster for a finance company, I certainly agree if you just have an 800 line that says “Bring us your transactions and we’ll try to give you the best deal out there and we’ll approve all of your credits.” One the other hand, it doesn’t when you’ve acquired a company that’s been around since 1946 and you’ve taken on their policies, their procedures, their governance and in essence, their customer base. PHH is a business that’s experience less than three basis points loss over the last three cycles.

Our CoActiv acquisition in the U.S. that we bought from Marubeni in late 2012 was specifically acquired to give Element a North American vendor platform. It was a company that originated about $220 million in volume with well-established vendors when we acquired it. We took that platform and took the  vendor business up to $380 million last year and we’re looking something in the neighborhood of $750 million this year. All of this has been accomplished with the same people, the same processes and the same manufacturer relationships.

We don’t just buy assets or acquisitions and let them wind down … that doesn’t do anything for the business. We buy them for the platform and the ongoing relationships. That has been an absolute priority in each of those verticals. You will never see us do an acquisition that isn’t accretive to our shareholders or that our funding partners don’t like. They will all fit into one of the four verticals and will bring strong management expertise with them. 

Equipment Finance Advisor:  What is Element’s outlook for the equipment leasing and finance marketplace going forward for both Canada and the United States?

Nullmeyer: To begin with, we view North America as one marketplace and we consider an asset to be exactly the same whether it’s in Wisconsin, Saskatchewan, Montreal or Atlanta. Steve and I wanted a North American platform and that’s exactly what we have. Given the difference in the size of our two countries, we factor in that there will always be a 10:1 ratio in financing. Using Bobcat as an example, we will just naturally have ten times more business in the U.S. as we do in Canada, but we are indifferent to that as long as we service our partners. Today our asset base is about 50/50 and it will start to move up a little more in the U.S., but only because of the relative sizes of the two marketplaces.

When all is said and done, for us it’s a very homogeneous market and manufacturers will do business across North America seamlessly and that’s exactly what we offer them.

Equipment Finance Advisor:  In closing, is there anything else you would like our readers to know?

Nullmeyer:  I think the whole story is we saw an opportunity in the marketplace to re-equip and retool North America and at the same time, build a very solid steady company that brings good long term value to our shareholders. We’ve done it before with the management team and with our narrow focus and skilled management ability; I’m more than confident that we can do it again.

Whether its life insurance companies, banks or pension funds, there continues to be a very substantial need for yield-enhanced paper. At Element, we can meet that need by packaging the transactions for any of our businesses … we can give them some yield enhancement because we are out on the street originating the deals.

Our single biggest risk as an independent company is capital market disruption, which we have mitigated by having one, two and three-year commitments in pre-committed funding from our life insurers and bank partners.  We don’t take currency risks across countries and as I said earlier, we’re very focused on only four verticals.

We feel really good about our flight path, we think the platform is built and we have equity in place … now we’re looking for substantial growth in North America.

Executive Editor | Equipment Finance Advisor
Stuart Papavassiliou is the Executive Editor of Equipment Finance Advisor and ABL Advisor.

Contact Stuart Papavassiliou at 484.380.2964 or

[  View APN Profile for Stuart Papavassiliou  ]

Comments From Our Members

Dexter VanDango • View APN Profile
"To improve is to change; to be perfect is to change often." -- Winston Churchill Nice job, Stuart. The test of time will measure the results of the "changed" Element management team. Regardless of the outcome, the journey is the reward. . . one that is fascinating to watch unfold.
8.6.2014 @ 10:45 PM
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