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fransrent: New kid off the blocks
Page 15
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• According to Alan Wilson the est time to enter a market is /hen it's on its knees. After all, the oss of trailer rental and leasing .ompany Transrent points out, 'dogs can only get better. Its a isky philosophy. The trick is rowing when the market has hit ock-bottom—rather than just ausing on the way down.
Wilson's timing seems to lave been spot-on. Prior to his Nivel from TIP in 1997 ransrent was hardly a front Linner. Since its formation in 994 it had achieved minimal Towth until Wilson, fresh from ailing out with TIP owners GE, ook over the reins.
Since then its growth has leen little short of spectacular. Vhile the big two—TIP and hansamerica—continue to iorder their short-term goals, Vilson's strategy is to take l'ansrent to the number two position in the market, and then, through continued growth and acquisition, to become market leader. Easier said than done, maybe, but Transrent's recent results show that it must be doing something right.
Last year its turnover rose by 64% to 28.3m while operating profits increased by 42% to £2.8m. And the company says lt's already on-line to bring in a profit in excess of 23m for 2001.
Its sales and leasing business, formed in 1999, is also on target to achieve increased operating profits of about 21.5m—up 2500,000 on 2000.
Not content with serving just the dry-freight market, Transrent is adding reefers to its rental fleet and by the end of the year hopes to have 500 temperature-controlled trailers on its books. It has also recently entered the asset finance market through its wholly owned subsidiary United Transport Finance. When it comes to customers the company is prepared to deal with single hauliers right up to blue-chip big fleets with a variety of packages from plain, old-fashioned spot-rental to long-term deals including contract maintenance.
Meteoric rise
While industry watchers may wonder if Transrent can sustain its meteoric rise, they don't doubt the high standard of its equipment. As one industry insider told CH "It's all top quality kit, all on discs." That statement is underpinned by the fact that over 80% of the fleet is less than three years old—and the fleet is expected to number 4,000 by the end of the year.
Another factor in the corn pany's recent success is that Wilson's management team, which includes director of finance and administration Keith Burnell, are all dyed-inthe-wool "trailer people" with plenty of experience in rental, leasing and sales.
In road transport timing is everything and Wilson acknowledges that his decision to enter the market place coincided with a major upheaval in trailer technology.
Rapid expansion doesn't normally happen without the moneymen, and Transrent has clearly attracted their attention. It recently secured £5rn worth of funding from a joint partnership of Aberdeen Murray Johnstone Private Equity (AMJPE) and Penta Capital to bankroll its continued expansion.
According to Bill Nixon, director of Aberdeen Asset Managers' (AMJPE's parent) Private Equity Division: "This is our second commitment to Transrent in the past year in conjunction with Penta Capital, and takes our combined investment to abrn in the business. It is quite rare to encounter such a fast growing 'old' economy business, but Transrent offered us the ability to back some exceptional people in a market space where there is continuing growth potential. This is confirmed by the fact that like-for-like earnings have more than doubled since the time of our first investment."
Wilson is obviously delighted to have attracted this support and says Transrent aims to develop itself into a leading player within the UK and on the Continent, "both organically and through acquisition in this competitive marketplace", Mark Phillips, director at Penta Capital, endorses the current Transrent management, adding: 'With relatively few players of any scale in what is a very large market, significant further growth opportunities exist for this company and we see our investment continuing to support Transrent's future development into a leading business within the trailer rental sector."
Industry watchers
Of course, industry watchers will be only too delighted to point out that they've seen it all before. The business is littered with the corpses of trailer rental companies (including those created by trailer manufacturers themselves) which have enjoyed early success then faltered when the economy heads for the basement.
Fleet utilisation is so much easier when the market is on an upswing and your equipment meets customer demands. Wilson clearly has enough experience in the rental market to know that what goes up can come down. But right now, Transrent shows little sign of going anywhere other than up.