Financing vehicles and other assets is a topic relevant to all but a modest number of operators. It is a sector that has seen change in recent years. Asset Alliance Group is a finance specialist. It has a dedicated coach and bus arm, headquartered in Ringwood and headed by Michael Bycroft (pictured).
Forest Asset Finance became part of the group in 2015 and more recently a deal was struck to purchase Valley Finance.
That makes Asset Alliance a major player in coach and bus funding. It both uses its own money and acts as a broker. It predicts that in 2020, the value of vehicles it will fund will be around £140m.
Access to a range of funders
Because of that reach, Asset Alliance Group can fund any asset type. That includes vehicles that utilise energy sources other than diesel. Its sector coverage extends from the smallest coach operator to the largest bus groups.
“We service that spread with access to a wide range of funders,” says Michael. “That has been achieved by our extensive knowledge of the coach and bus market, and our recognition that no one size fits all.”
Asset Alliance Group primarily works with lower-rate funding, although that is naturally not available to all customers. It deals in all types of asset finance but predominantly with hire purchase and operating lease.
Each of those methods has its own attractions. Smaller operators typically prefer hire purchase. Even so, Michael points out that operating lease insulates the buyer from residual value risk. With hire purchase, that sits with the end user.
However, Asset Alliance Group has customers that utilise both options for different strands of their businesses. As an example, coaches for scheduled services are taken via operating lease. Those for private hire, tours and other contract work are on hire purchase.
One-stop shop
When applying for funding on an operator’s behalf, Asset Alliance Group handles the submission in its entirety, regardless of whether it is pitched in-house or through its capacity as a broker. In the latter case the funder makes the final decision, but Asset Alliance Group does everything else.
“We have a reputation for the quality of those applications. Our standard is the same regardless of whether the customer is looking for £20,000 or £20m,” says Michael.
The company has relationships with all manufacturers and dealers. Those extend to the multinationals with their own in-house finance arms.
While for large operators Asset Alliance Group’s business is predominantly built around funding new vehicles, it is different with smaller clients. There, the bulk of its work is done with used stock, and the relationships it has built serve it well.
“We work closely with asset management teams at the major banks, and we become aware of vehicles that are due off lease. Operators ask us about a particular requirement they have, and we are often able to connect the two,” says Michael.
As an example, Asset Alliance Group recently placed five double-decker buses that were off lease. It knew of a customer in the market for the model concerned. The deal, including finance, was done quickly.
“We are not a vehicle trader. Sourcing fleet additions is an added value service that we provide to customers.” As a further illustration, it is organising the ex-London vehicles’ conversion to provincial specification and their upgrade to Euro VI standards.
Coach retrofit funding
Providing funding for coach Euro VI retrofit can be undertaken by Asset Alliance Group. “We have done it already for a number of operators,” says Michael.
With coaches, the more that are retrofitted by the same operator, the simpler the process becomes to administer.
The easiest way to manage it is to use one or more of the operator’s fully owned vehicles as security. Money is raised against it or them through refinancing. That cash then covers the upgrade work.
“That’s the simplest method. It is difficult to finance retrofit equipment on its own, particularly if it is for attachment to a vehicle that is already part of an agreement with another funder,” says Michael.
Zero emission can be done
While diesel and diesel-electric hybrid vehicles remain Asset Alliance Group’s bread and butter, it has already funded biogas and battery electric buses. Long-term contracts make structuring such finance easier from a residual value point of view, but Michael is open to funding zero-emission coaches in due course.
What will make obtaining that money easier will be the spread of Zero Emission Zones. They will drive demand, and funders will become more comfortable with the whole idea.
But that’s for the future. In any case, Asset Alliance Group does not base its relationships with clients on single deals. 90% of its annual business is from repeat customers, illustrating that developing long-term collaborations delivers mutual success.
“Operators may see funding as something that is boring, but it’s an important part of business. How it is structured can influence profitability. Our strength is that we can build deals to suit individual requirements. We meet our customers’ needs. Not the other way around.”
