M and A

Arbuthnot Latham Gets Behind The Wheel

Tom Burroughes, Group Editor, London, 11 December 2020


In a move away from traditional private banking territory, the UK firm has agreed to buy a commercial vehicle financing firm that runs more than 4,000 vehicles such as lorries and buses.

UK-based private and commercial bank Arbuthnot Latham, has agreed to buy all share capital of vehicle financing firm Asset Alliance Group for about £4.1 million ($5.46 million), broadening its reach into commercial financing.

Asset Alliance is mainly focused on the truck and trailer, and bus and coach markets. It operates from five locations in the UK and manages more than 4,000 vehicles. As at 31 August 2020, Asset Alliance had assets for lease with a net book value of approximately £150 million.

The group has been looking at diversifying its revenue streams and has developed areas such as Renaissance Asset Finance, provides funding in particular for high value and classic cars but also business assets (2017); its Arbuthnot Commercial Asset Based Lending (2018), and Arbuthnot Specialist Finance, which provides short-term secured lending solutions to professional and entrepreneurial property investors (2019).

Shares in the Asset Alliance business are being bought from CS Capital Partners III LP – aka “Cabot Square” - and a small number of other investors which include the senior management of Asset Alliance, the bank said in a statement yesterday.

Completion will take place subject to regulatory change of control approval. This process is expected to be completed within three months, Arbuthnot Latham said in a statement. 

The third-party funding of Asset Alliance at completion, which is associated with the assets available for lease, and includes a revolving credit facility of approximately £140 million, is expected to be refinanced by Arbuthnot soon after the completion date, it said. 

Asset Alliance had adjusted net assets of £8.1 million as at 31 August 2020. It reported earnings before interest, taxation, depreciation and amortisation of about £7.2 million for 2019 and is expecting to record £2.3 million for the same measure in 2020. This is anticipated to increase to £5.5 million in 2021. In addition, this acquisition should generate a net negative goodwill accounting adjustment of £1.7 million, the bank said.

The bank said the deal should be accretive to its earnings in the year ending December 2021.

“This acquisition of Asset Alliance is complementary to our strategy of diversification and developing businesses in the specialist commercial finance sectors. Their experienced management team have built the foundations for future growth and now that it will no longer be constrained by third party funding limits,” Sir Henry Angest, chairman and CEO of the group said.

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