Kennet brought with it a 25-year record of equipment financing and a total of around £500 million in funded balances.
Kennet’s sector specialism lay in the funding of soft assets ranging from garage equipment to cleaning equipment. Individual financings range from £250 to £250,000 per transaction with an average deal size of around £10,000.
As is Star’s business model and policy, Kennet continues to be run by its experienced management team headed by managing director Steve Swift and operations director Tim Tainty.
A second purchase took place in March 2015 when Cornwall-based Ignition Credit was added to the group. Ignition focuses on the provision of funding for harder assets – predominantly plant & machinery and classic cars.
Star’s chairman, Sam Geneen, told Asset Finance International that Star, managed by Star Capital Partners, has the goal of consolidating independent asset finance providers across the UK.
Star Capital Partners itself is headed by Tony Mallin, a man with a sound knowledge of asset lending. Before establishing Star Capital Partners in 1999 Mallin spent 20 years at Hambros Bank (most recently as vice chairman) responsible for its banking division. During that time he founded the vendor, project and structured financing operations as well as a private equity and an aircraft investment business. His experience also covers leasing, structured and tax-based finance and risk management.
“Our aim,” Geneen stressed, “is to provide owners of asset finance businesses with the opportunity to take an equity participation in the longer term growth and value creation associated with a much larger asset finance entity which has balance sheet strength, critical mass and economies of scale.”
He added: “With the commitment for owners to re-invest in Star what we are really doing is acquiring a series of experienced skill sets. The end result is that our principal focus lies with developing relationships with our end users.”
Geneen is himself an industry veteran with some 26 years’ experience heading Five Arrows Leasing Group with its exceptionally broad-based specialisms ranging from print, engineering, manufacturing equipment to IT and veterinary equipment.
“Following the acquisitions of Kennet and Ignition,” he said, “Star obtained a facility provided by Commerzbank of £50 million and guaranteed by the European Investment Fund to provide additional funding to small and medium-sized businesses.”
Commerzbank has an established track record in financing small businesses in particular in Germany and for creating innovative financing facilities designed to enable companies to grow.
Attractions for Star of both Kennet and Ignition were their “hybrid” structure based in both cases on a mixture of funder introductions and own-book lending. Business is originated from end users, equipment dealers as well as selected broker relationships. “We don’t want to lose the ability of sourcing business through intermediaries,” Geneen said.
Another “regionally focussed” acquisition by Star is on the stocks for later in 2015. “This would give us a turnover of around £125 million which puts us well on our target for £200 million a year.”
According to Geneen growth will come both organically and with further acquisitions. He refuses to identify specific industry sectors for growth preference saying that the reliance is rather upon “following the established business route of good experienced people”.
Quest for a managing director
Star’s “hands off” management style to date has relied mainly on monthly management reporting by its subsidiaries and “keeping abreast of trends and cycles”.
Growth has been such, however, that the company will very shortly require an additional hand on the tiller and a managing director is being sought for Star Asset Finance.
“It’s a great opportunity for the right person,” Geneen stressed. “The planned capital growth will be an exciting experience for someone who understands the risk and is capable of making the right decisions.”
Similarly, Star is on the lookout for further acquisition of companies run by “like-minded people who want to grow their business, who have the business relationships but perhaps not the equity to support their future ambitions – and who are looking for a stake in their future”.
With his vast leasing experience, and as a prior chairman of the UK Finance & Leasing Association, few people have a closer finger on the pulse of the equipment finance industry than Geneen. With the ongoing support of its parent, Star Capital Partners, and a following wind of a buoyant economy, Star Asset Finance is undoubtedly going places.