Leasing Professionals

Asset finance acquisitions in focus for Lovell Minnick Partners

armstrong brad

US-based private equity firm Lovell Minnick Partners will consider new investments in the asset finance sector as part of a long-term strategic growth plan as the firm continues to focus on investing in financial services and related business services companies.

The firm already has made some investments in the sector, such as Commercial Credit Group, which provides heavy equipment financing to the construction, transportation and waste industries, and its subsidiary Manufacturers Capital, a specialist in machine tool and fabrication equipment financing.

It also owns Currency Capital, a company that has developed technology to streamline approval and funding processes for business owners to obtain access to financing from numerous lenders.

These businesses reflect LMP’s strategy of investing in companies that specialize in business service areas to drive customer loyalty and deliver long-term growth.

Brad Armstrong, a partner at LMP, said: “Asset finance is a core sector, so we will be looking for acquisitions if they complement our existing platforms or enable us to develop a separate strategy or special expertise. For asset finance companies, specialisation is critical to be competitive and win.”

For Commercial Credit, a key USP is the level of engagement it has with clients through specialising in their industry sectors, to enable in-depth finance discussions that get to the heart of client strategies. This close relationship with clients means that the majority of its originations come from existing clients.

Armstrong said: “The human touch and expertise is important from the point of view of originating, servicing, and collecting through the full lifecycle of credit. You need engagement.”

As an independent supplier, Commercial Credit is also able to streamline the lending process for companies by offering a single source of finance for multi-brand acquisitions.

Armstrong added: “Its independence provides flexibility that could not be afforded through dealing with a captive. For example, if you acquire a truck and a trailer from different suppliers, that is two agreements with separate captive finance houses, whereas you have a single agreement through Commercial Credit.”

Recent major business wins for Commercial Credit, including construction, transportation and machine tools, show the benefits of such strong industry relationships he said, adding: “The business wins were based on its deep expertise in client categories.”

Another key factor driving business growth is its direct distribution strategy, which further enhances client loyalty and regional sector knowledge.

He said: “Long-term you need an direct distribution model or have very good connections through intermediaries.”

Armstrong was recently made a partner at LMP, which has offices in Philadelphia, Los Angeles and New York.

Since 1999, LMP has raised $1.9 billion of committed capital, enabling it to complete more than 45 portfolio company investments, including the 2012 acquisition of Commercial Credit Group.

Online equipment financing exchange Currency Capital was acquired in 2017 and through its online portal offers small businesses competitively-priced loans for equipment purchases within minutes.  This delivers an alternative business model for small businesses that require a ‘one-stop-shop’ that offers convenience and simplicity.

Armstrong said: “For a lot of smaller businesses that have no chief financial officer, having a one-stop-shop is better for them.  Convenience is important when you have limited time or resources to source financing.”

For the year ahead, Armstrong says the US economy is looking robust, with companies investing on the back of business-friendly fiscal policies.

As a result, an emerging trend is the growing presence of banks in equipment finance which are looking to increase their market share as the sector continues to provide consistent revenues.

He added: “We are seeing growth through their own recruitment and through their acquisitions. There is an uptick in deal activity.”

This is leading to a decline in independents because acquired companies are not being replaced at the same pace by new entrants, which raises interesting questions about the future development of the market in years to come.

Armstrong is nearing his tenth anniversary with LMP, having joined the business in 2009.

Prior to LMP, he was part of the financial institutions group at Bank of America Merrill Lynch, where he focused on mergers and acquisitions along with capital raising transactions for the firm’s investment banking clients.

He is a former assistant vice president in Bank of America’s finance group and began his career in a strategic advisory group within Wachovia Corporation, following graduation from Kellogg School of Management at Northwestern University, where he received an MBA with a concentration in finance and accounting.

He is currently a member of the boards of directors at a number of LMP companies, including Commercial Credit, Global Financial Credit, LSQ Group Holding and Tortoise Investments.

Armstrong is one of three partnership appointments this year, alongside Jason Barg and Trevor Rich.

At the same time Steven Pierson and Robert Belke have been appointed managing partners with responsibility for running the business day-to-day, overseeing finance, operations, and investor relations, and continuing to grow the team and resources over time.

Pierson will chair a newly-created management committee that includes partners Robert Belke, John Cochran and Spencer Hoffman.

Belke has been appointed chairman of the firm’s investment committee, which includes the management committee members as well as company co-founders Jeffrey Lovell and James Minnick.

Lovell, who remains co-chairman alongside Minnick, said: “These changes ensure the successful continuity of our strong financial and business services franchise through a new leadership structure that positions LMP for further growth over the next 20 years.

“They will improve our organizational management processes, better align the firm’s decision-making resources, and strengthen our teamwork culture.”