The outlook for the Equipment Leasing industry and M&A activity appears positive for 2017 and beyond.
Non-residential construction markets continue to improve and the new administration’s talk of an infrastructure spending plan of as much as $1 trillion could drive additional growth longer term. Additionally, a more favorable regulatory environment has construction industry professionals optimistic about the future. John Crum, National Sales Manager, Construction, at Wells Fargo Equipment Finance indicated that his customers “believe a changing regulatory environment could be more conducive to expansion in the construction and infrastructure space”. President Trump’s campaign promises surrounding infrastructure spending and deregulation have resulted in the third highest Optimism Quotient recording in the last two decades, according to Wells Fargo’s 2017 Construction Industry Forecast.
According to the Equipment Leasing & Finance Foundation – Q2 2017, “Most equipment verticals should expect their growth outlook to improve relative to last year:
- Agriculture Machinery investment growth should remain sluggish over the next two quarters.
- Construction Machinery investment growth is likely to accelerate over the next three to six months.
- Materials Handling Equipment investment is likely to grow at a slow but stable pace over the next three to six months.
- All Other Industrial Equipment investment growth should improve over the next three to six months.
- Medical Equipment investment growth may slow over the next three to six months.
- Mining & Oilfield Machinery investment growth should improve over the next three to six months.
- Aircraft investment growth may strengthen over the next three to six months.
- Ships & Boats investment growth is expected to expand in the next three to six months.
- Railroad Equipment investment growth should rebound over the next three to six months.
- Trucks investment growth should strengthen over the next two quarters.
- Computers investment growth may modestly improve over next three to six months.
- Software investment growth is likely to remain stable or slow modestly over the next three to six months.”
The equipment leasing M&A activity was also very strong in 2016 – Source The Alta Group:
|Wells Fargo||GE Capital – 4 Divisions||First Quarter|
|Navitas Credit Corp.||Liberty Financial Group, Inc.||January|
|BofI Federal Bank||Pacific Western Equipment Finance (certain assets)||March|
|Hitachi Capital America||Creekridge Capital||June|
|Atalaya Capital Management||CG Commercial Finance||July|
|Engs Commercial Finance Co||Connext Financial, Ltd.||September|
|Hanmi Bank||Bank of California (Commercial Specialty Finance Unit)||October|
|Warbug Pincus||Acentium Capital||November|
|Radius Bank||NewStar Financial (equipment finance division)||December|
|Avolon Holdings Ltd.||CIT Group (commercial aircraft leasing)||Pending|
|Sumitomo Mutsui Banking||American Railcar Leasing (Icahn Enterprises)||Pending|
With the expectation of industry expansion through both spending and deregulation, the equipment finance space is likely poised for growth and significant M&A activity from private equity firms, banks and leasing companies.