Paragon Bank has agreed to acquire Five Arrows Leasing Group for £117 million.
Five Arrows Leasing is currently owned by Five Arrows Leasing Holdings Limited, which is part of Rothschild & Co. It was formed in 1988 and offers a range of asset finance products, through its subsidiary brands, to UK SMEs, including equipment, vehicle and construction equipment finance and is also a provider of lease servicing.
At its last audited balance sheet, Five Arrows Leasing had assets of £245.1 million financed by £42.9 million of shareholders’ funds and a £178.0 million loan from Rothschild & Co.
In the year to 31 March 2015, Five Arrows Leasing made a pre-tax profit of £10.2 million and profits after tax of £8.1 million. From 2010 to 2015, Five Arrows Leasing achieved a 17.6% compound annual growth rate in receivables balances.
Five Arrows Leasing’s loan book currently stands at around £240 million financed by a £193 million loan from Rothschild & Co.
The future for the staff has not been clarified, beyond the statement to the Stock Exchange that: “The Five Arrows Leasing team is highly regarded, has a strong credit ethos and will have a strong cultural fit within the wider Paragon business.”
Paragon said that Five Arrows Leasing will form the basis for further SME finance development within Paragon Bank and it will be re-branded in the near future to reflect its change in ownership.
Nigel Terrington, Paragon’s chief executive, said: “I am delighted that we have acquired Five Arrows Leasing, a business we have admired for many years as a market leader in the asset finance sector. The acquisition provides the opportunity to continue pursuing our strategy of diversifying the Group’s income streams, building strong and sustainable earnings growth and enhancing our return on equity.
“The Five Arrows Leasing culture, philosophy and operating model is an excellent fit with the Group and we look forward to working with their management team and to supporting growth opportunities across the SME markets.”
Nigel Higgins and Olivier Pécoux, co-chief executive officers of Rothschild & Co, said: “Five Arrows Leasing has been part of Rothschild & Co for nearly 20 years. During that time we successfully created a leading UK asset finance company that now serves more than 2,600 customers. We believe, however, that now is an appropriate time to sell Five Arrows Leasing given the focus on our core businesses: global financial advisory; wealth and asset management and merchant banking.
“We are delighted that Paragon Bank is to acquire the business. We believe Paragon Bank will be a great home for the business and its employees and the transaction represents an exciting opportunity to maximise Five Arrows Leasing’s future growth potential. We would like to thank the Five Arrows Leasing team for their hard work and dedication to Rothschild & Co over the years and wish them well in the future.”
