LeasePlan sale is good news

So, second time lucky. Last April, talks on the sale of LeasePlan fell through. They have now been successfully concluded. Volkswagen and the German Metzler bank, 50/50 owners of the world's largest leasing company, will sell it for the tidy sum of €3.7 billion to a consortium with no previous involvement in the leasing industry.

This is good news, not just for the consortium but also for Volkswagen. And not just for LeasePlan, but also for the wider leasing industry.

This is a good move for Volkswagen. VW acquired its half of LeasePlan in 2004, but that stake was increasingly at odds with the company's drive to refocus and cut costs – the aim is to save €5 billion per year by 2017 to close the profitability gap with Toyota. So it seems only logical that the Wolfsburg-based manufacturer concentrates its leasing efforts via its in-house specialist, Volkswagen Financial Services and Volkswagen Leasing. This brings Volkswagen in line with its German competitors Daimler and BMW, each with their own prominent captive leasing company (Daimler Fleet Management and Alphabet, respectively). We can expect to see and hear a lot more from VW Leasing pretty soon.

It is also great news for the buyers. After its abortive attempt earlier this year, the consortium, led by private equity firm TDR Capital, has now managed to aqcuire LeasePlan. It is a glittering prize: as the global industry leader, it manages 1.42 million vehicles across 32 countries, posting a net profit last year of €372 million, a gain of 14%.

The sale is also good news for LeasePlan itself. The consortium, consisting also of Danish and Dutch pension funds and sovereign wealth funds from Singapore and Abu Dhabi, will inject fresh capital into the company. But it has no intention of being a hands-on parent. Following the “If it ain't broke, don't fix it” philosophy, it has explicitly expressed its support for LeasePlan's own expansion plans, and confirmed its confidence in Vahid Daemi, LeasePlan's current CEO and President of the Board.

Finally, the sale is also a vote of confidence in the leasing industry per se. It proves that the leasing industry is seen as a healthy, attractive investment opportunity. The LeasePlan sale thus confirms the positive vibes resulting from the sale of GE Capital's fleet business to the Element-Arval Alliance a few weeks back.

Who knows? Perhaps this is just the beginning of a dynamic season of sales and acquisitions in an increasingly upbeat industry...


Authored by: Steven Schoefs