Investors have handed Newcourt Credit Group Inc. founder Steven Hudson another $175-million to keep building his newest leasing company.
Mr. Hudson’s latest venture, Element Financial Corp., raised the money by selling subscription receipts Friday as part of a two-step plan to go public on the Toronto Stock Exchange. Element plans to combine with a shell company that trades on the TSX Venture Exchange, and expects to be trading by year end. The subscription receipts will be exchangeable for shares when Element makes its debut on the markets.
The offering was originally slated for $150-million, but despite choppy markets, there was demand for even more, so the sale was increased in size.
Mr. Hudson plans to use the money to buy more leasing companies, and he’s in a rush to do it. With many banks and financial companies facing turmoil, he believes there’s an opportunity that won’t last. He’s looking for businesses that provide financing for gear such as golf carts, medical equipment and construction equipment.
“This is the time to be acquiring, there’s some great platforms in equipment financing that are for sale, and the values are very attractive,” Mr. Hudson said in an interview Friday. “I imagine when the world heals itself here in 12 to 18 months the values will be materially higher.”
Element has already been on the acquisition trail. The firm raised $75-million in a private placement this spring, and then this summer bought Montreal-based finance company Alter Moneta.
He said he has been looking at “a number” of additional purchases but wanted more cash in hand before going ahead.
Mr. Hudson also built Newcourt by acquisition in the 1990s, going from a startup to the world’s second-biggest non-bank financial company. By the time he agreed to sell the company in 1998, the price tag was $4.1-billion (U.S.).
However, just as the sale was happening, the Russian debt crisis caused financing markets to seize and Newcourt began to struggle to raise the money it needed to fund leases at economic prices. In the end, Newcourt had to accept a much reduced sale price of $2.4-billion. Over all, the company was still a huge success, but the ending was not quite the fairy tale variety.
With Element, he plans on being more cautious, and investors are betting he will duplicate his successes from Newcourt and avoid the pitfalls.
This time, the focus is on Canada. The pace of expansion will be more controlled. And Mr. Hudson has said there will be much more conservative financing.
If Element does make acquisitions outside Canada, it will be because assets in the United States come as part of a deal to make Element bigger here at home.
“If we have to take a sliver of U.S., then we’ll take that as well,” he said.