Equipment financer Element Financial Corp to split into two companies – FINANCIAL NEWS-ecozik.com
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Equipment financer Element Financial Corp to split into two companies

Equipment financer Element Financial Corp to split into two companies.

TORONTO – Element Financial Corp. is splitting itself in two, moving executives say will help it boost the worth of its core fleet-management business while meeting investor demands to have an expanded group of funds.

When the separation is finished, Element shareholders will own stakes in two separate publicly traded companies – Element Fleet Management, with $19.5 billion in fleet and rail assets, and Element Commercial Asset Management, with $7-billion worth of equipment, rail and aviation financing.

Brad Nullmeyer, current president of Element, will run the fleet business, while CEO Steve Hudson will run the asset management business.

Tuesday’s announcement follows a four-month strategic review that was initially focused on the best way to realize the need for Element’s growing fleet business, which leases and manages vehicles for customers which range from Tim Hortons to DuPont.

At the time, Toronto-based Element said it was putting its Canadian commercial and vendor finance business on the market having a plan to use any proceeds to expand the fleet business.

However, Element CEO Steve Hudson said the company’s institutional investors didn’t like this idea.

“Strategic investors, upon the announcement in October, requested that we create more investment-grade yielding funds, not less,” Hudson said on a business call Tuesday.

“This request, along with unprecedented possibilities to acquire yield assets at or below book value have led us to accelerate the transition in our commercial finance business to an asset manager business having a strong investment-grade balance sheet.”

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