Element CEO Weighs C$1 Billion in Acquisitions in 2014

Element Financial Corp. (EFN) plans two purchases in 2014 totaling at least C$1 billion ($898 million) as the Canadian lessor seeks to expand its North American railcar unit and enter the U.S. for vehicle-fleet management.

One of the deals may come as soon as early next quarter, according to Chief Executive Officer Steve Hudson, who said the acquisitions would each be C$500 million or more. He said he has been looking at eight to 10 companies as possible targets.

“I have a rule of thumb: You should look at 10, and do one,” Hudson, 55, said today in an interview at Bloomberg’s Toronto office.

Element Financial provides financing to companies for car and truck fleets, helicopters, construction equipment, and railcars. The Toronto-based company divides its business into five areas: fleet management, commercial finance, vendor finance, aviation finance and railcar finance.

“The two that I’m kicking around obviously are fleet and rail,” Hudson said of potential takeover candidates. “We’ve got what we need in commercial finance, we’ve got what we need in vendor finance.”

Element Financial fell 2.3 percent to C$13 at the close in Toronto. That pared the shares’ gain to 61 percent in the past 12 months, topping the 12 percent advance for Canada’s benchmark Standard & Poor’s/TSX Composite Index, and gave the company a market value of C$2.46 billion.

Assets Increase

Element Financial’s assets have soared to C$3.45 billion as of the end of December, from C$47 million three years ago, as the company pursued acquisitions in Canada and the U.S.

Assets will reach C$7 billion by the end of this year, moving closer to Element Financial’s target of C$10 billion to C$12 billion by the end of 2015 -- a year or two earlier than expected, Hudson said. He said this year will be “transformative” for the company.

“It’s an important year because we’ve put all the building blocks in place, and we will double the company in assets,” Hudson said.

Deal.com reported yesterday that Element Financial is in talks to acquire the fleet management unit of Mount Laurel, New Jersey-based PHH Corp. (PHH), citing an unidentified person.

Hudson said today that he was “interested in the business” while declining to comment on whether he is in talks with PHH. That company said Feb. 11 it was exploring the sale of its fleet business and mortgage unit.

To contact the reporters on this story: Stefanie Batcho-Lino in Toronto at sbatcholino1@bloomberg.net; Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net; David Scanlan at dscanlan@bloomberg.net

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