PNC Financial Services Group is positioning itself to issue equipment lease ABS. Steve Geis, managing director at PNC, said the bank is attempting to increase the size of its equipment-lease warehousing facilities through talks with a number of equipment finance companies. Once it has expanded those facilities adequately, the bank plans to begin issuing term deals in the sector. Geis declined to name the companies or give a timeframe for the first possible deal.
PNC has existing relationships with various equipment finance companies, but only as a conduit arranger. "We've identified the equipment-lease sector as a growth sector overall," said Geis of the decision to expand. PNC's efforts, for now, will be focused on small-ticket vendor finance, and construction and agricultural equipment leases.
Geis said the recovering economy and an overall increase in business investment have made the sector ripe for expansion, and smaller, start-up equipment finance companies are starting to pop up again. For nearly a decade, the trend in the industry was consolidation and most of the smaller companies disappeared. Now, however, the start-ups are back with stronger and more experienced management teams that are institutionally focused. Geis said he is familiar with start-up equipment finance companies that have raised anywhere from $10 million to $100 million in equity capital.
Geis said he expects equipment lease ABS issuance to be flat to slightly higher than last year, but expects a significant increase in issuance in 2006 and 2007 as the start-ups gain footholds in the industry.
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