Leading the way
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Words: Andy Salter
As head of Alliance & Leicester’s commercial finance division, Willie Paterson oversaw an asset book of 40,000 vehicles. After a couple of years away, he’s back with Asset Alliance – CM finds out what he’s got to offer
IT IS A gloomy day in Wolverhampton when we visit Willie Paterson’s new offices, so we need something to brighten things up – and an hour with this ebullient Scotsman achieves just that.
Willie Paterson has spent his life in the CV sector: hailing from a family of hauliers, he’s done his time at the coal face of the industry and, while we won’t hold the fact he’s been a banker against him, it’s given him a wealth of experience of what makes this business tick.
As the founder and head of Alliance & Leicester’s (A&L) commercial finance division in 2003, Paterson spent five years creating the CV industry’s leading lender, and generated an asset book worth close to £1bn with 40,000 vehicles on the register. When Santander took over A&L back in 2008, the writing was on the wall.
Although Paterson argued hard for a continuation of the asset business under Spanish ownership, he called it quits in 2009 and A&L’s commercial finance division was disbanded. Since then he has been beavering away on a new venture, Asset Alliance, which by the sound of it is the culmination of his umpteen years of experience around this business. What’s more, he’s got a war chest of funding and is already starting to write new business – £10m of it since May.
“I established Asset Alliance in January 2010. I picked the whole contract hire team out of A&L and recruited them to join us. I spent a year putting the business together, the systems, the processes, the diligence, the branding and the risk structures, setting up relationships and getting some customers,” he explains. “In the first couple of years we were doing fine, but not setting the heather alight.”
Bring it on
Paterson has now secured £25m of investment from private equity firm Cabot Square Capital and then matched it with a further £20m of senior debt against the initial capital. “We’re now able to go up against anybody in the market,” he says.
“We have the knowledge in the team to set our own residual values, which makes us a genuine operating lessor, and there aren’t many companies in that space now. A&L’s exit left a £1bn-a-year hole in the funding to this industry, which presents us with a fantastic opportunity.” Asset Alliance is focused on any company operating CVs, though due to the size of the current business Paterson recognises there are only so many customer relationships the company can manage and is trying to be disciplined in the companies he targets and the business he writes.
“It’s important people don’t think we’re only cherry picking the biggest customers,” he explains. “We are looking for customers who recognise the value we can offer their business: those that need better support; a company that is looking for the best residual values; those who see the value of proper fleet management and those who are prepared to pay for that service. Those are the types of companies that get that we will bring savings and value to their business by running their fleet better.
“Lots of lenders don’t want to extend contracts any more. They just want the truck back to get it off their balance sheet and discuss how much you owe them in return conditions. We’re coming across fleets who can’t get the lessors to extend their leases. So we’ve been brought in, acquired the assets from the lessors and then been engaged in setting up an operating lease with the company on fiveor six-year-old assets.
“We’re happy to do that because we understand that those fiveor six-yearold assets have still got value left in them. This sort of commitment should show our value to the customer, proves we have an appetite to get involved with their assets and we’re going to be here for a long time. The banks haven’t got the appetite for this sector. I’d argue there’s only two other companies, along with us, that can offer this asset finance and management offer.”
Asset management is key
Asset Alliance has a close strategic relationship with independent truck and trailer dealer ATE, and is relying on ATE to assist with much of the asset refurbishment and marketing of end of lease vehicles. “The asset management part of our business is absolutely key to our success as it drives our understanding of residual values, which underpins the whole business. It’s our job to make sure the assets are managed best as that’s what protects the residual value.” If you needed an illustration of the old adage ‘you should never stop learning’, then Willie Paterson is it. In launching Asset Alliance he has brought an offer to market that is the culmination of a life’s work in this sector.
Through constantly listening, learning by mistakes and throwing in a bit of personal magic, he has developed a business that has some serious credentials. “We aspire to be the best in what we do,” he says. “This country has a wealth of first-class operators who are getting better, getting smarter, more structured and deliberate in their planning and cashflow. Fuel economy is absolutely paramount, these fleets are looking at all new technology. If we keep our scale down we can play in this arena and play safely, building a good, clean and sustainable book that will secure our long-term future.” With £10m of assets in the book and a pipeline fast filling up of new customers, he is focused on driving forward with a sustainable business model offering customers value. For an industry reeling from the impact of the past four recessionary years, that’s certainly something to lighten the mood. n