The growth comes as traditional lessors, subsumed in the clearing banks since the recession, become less willing – and capable – of setting residual values for anything other than minor asset classes.

2017 marks FAF’s 40th year as a structured asset finance intermediary.  It has been underwriting asset residual value risk on its own account since 2008, originating a book of over £250 million of equipment and commercial vehicle assets on over 2,000 items of equipment.

Growth target for FAF is to increase its funding of asset RV risk to a level of £500 million original asset cost by 2020.

Patrick Sherrington, previously head of corporate asset finance, commercial banking, at Lloyds Bank, (pictured above) has joined FAF with primary responsibility for its growth strategy, working with Simon Jones, who established FAF in 1977, and Martin Vodden.

Sherrington told Asset Finance International that FAF’s preferred lending scope lies within the £1 million and £50 million asset range – and includes a selection of asset classes from plant & machinery to commercial vehicles and aviation assets such as ground handling machinery.

Commenting on their expansion, Simon Jones said: “First Asset Finance operates a proven business model that has allowed bank owned lessors to offer competitive operating lease facilities to their own direct customers, and to clients introduced by FAF.

“The main customer benefit has been bespoke structured finance solutions to control whole-of-life acquisition costs for longer life equipment and assets. Our expansion plans will involve both growing our core business, and developing new RV funding products using our own capital and existing funding lines.   We are presently at an advanced stage in sourcing additional external funding and insurance based services to support our growth plans”.

Patrick Sherrington added: “We have identified strong demand for RV risk mitigation products from bank owned lessors who are restricted in their ability to offer operating leasing. FAF is well placed to meet this growing demand, and we operate on a case-by-case approach using external asset valuation specialists to complement our own internal expertise for specific asset classes.

“Industry sectors we will target include manufacturing, waste, energy and aviation”.

Sherrington said: “A key element of FAF’s success has been to work closely with end-user customers to identify the operational flexibility that customers need for their longer life assets, and to build cost effective finance solutions that incorporate  ‘treating customers fairly’  for short and long term lease extension options and at lease termination where asset return conditions apply.

“We will not deviate from this customer focussed approach as we expand our business with bank owned, independent and captive lessors”.

Sherrington also regards the online portal, DALIS, developed by FAF as a database tool for leased assets, as an important part of FAF’s product portfolio.

DALIS is designed to log asset, agreement and financial data in respect of the customer’s leases and asset finance agreements, and assets that have no financial data attached to them can also be tracked on DALIS. This creates a powerful central data set which allows the client to fully understand the day to day management aspects of their equipment fleet.

Commenting on the future for on-balance-sheet operating leasing following the introduction of new accounting standards in 2019, Simon Jones explained:   “Operating leasing today accounts for almost one quarter of the asset finance market, according to Finance & Leasing Association figures. The cash flow benefits of operating leasing, and the advantages of flexibility in asset use with optional lease extensions will not change as a result of new accounting rules.

“We firmly believe that the operating lease market will continue to grow beyond 2019, particularly for high value, longer life assets”.

As investors begin to steer away from the UK property market FAF is likely to find people knocking on their door seeking entry into this specialist but rewarding lending model.