FILED IN: SPRING 2024 TRENDS IN EQUIPMENT FINANCE, EQUIPMENT LEASE FINANCE ASSOCIATION TRENDS, ASSET FINANCE, LTI TECHNOLOGY FINANCE, DIGITAL TECH, OMAHA, NE FINANCE
by Randy Haug, EVP/Vice Chairman/Co-Founder, LTi Technology Solutions
INTRODUCTION
The 35th Annual National Funding Conference, hosted by the Equipment Leasing and Finance Association (ELFA), was again a resounding success. With over 700 industry professionals and more than 60 funders, banks, and industry service providers in attendance, this year’s event, held at the Palmer House Hilton Hotel in Downtown Chicago, April 16-18th, was truly outstanding.
The conference kicked off with an electric buzz as industry thought leaders from across the country gathered for private dinner meetings focused on “all things funding” and relationship-related. Features were Roundtable Discussions with leading thought leaders, and informational sessions led by industry experts, providing key insights on trends in critical industry sectors with a special focus on Funders, Buyers, Sellers, and Syndicators.
Despite the challenges posed by the current economic environment, there continues to be an overwhelming sense of resilience and forward-thinking among attendees from across the industry on strategies to continue to thrive in this complex $1 Trillion Equipment Finance industry. Below I’ve distilled what emerged as the five key strategic insights from the information-packed three day conference.
Top Five Key Insights
- Optimism in the Equipment Finance Industry: Despite the high rate environment, there was a positive buzz of optimism throughout the conference, especially among Independent Equipment Finance companies and Bank Equipment Finance companies. With plenty of dry powder available, these companies are seizing the opportunity to grow and thrive. Rates may be higher, but they are still experiencing significant growth, especially in sectors such as small ticket/vendor, middle market, and structured finance where the focus is on funding essential use equipment.
- Strategic Growth and Innovation: Many client partners are not only doing well but also growing and diversifying their portfolios into higher margin sectors. With strategic decisions to take advantage of new business sectors not subject to bank compliance restrictions and overhead and leveraging leading-edge technology, these companies are transforming the industry. Adept at leveraging their top-of-the-line marketing, credit, operations, and experienced executive leadership teams, they are setting new standards and driving the industry forward. A combination of strategic business thinking and powerful state of the art technology is a winning combination driving growth.
- Rise of Private Equity and Private Credit: Private equity and private credit-based funding businesses are creating niches in the Equipment Finance ecosystem and performing well. Born out of GE Capital, many of these businesses are led by former GE Capital professionals who are now competing in this fragmented sector. They’re innovative, smart, and growing quickly, making them a force to be reckoned with in the market. Will they all survive and thrive or will there be a consolidation? Watch this group closely, as they grow in size and number. Combined with the newly emerging financial backing and “clubbing up” strategy with traditional Bank lessors on large transactions, they will be a disruptive force in the industry to drive change. Smart, innovative and engaging, these leaders are driving growth, inspiring new ways of thinking, and growing both their footprint and their number with strong financial backing. Will they sustain this growth or succumb to consolidation as some take their profits off the table? A segment worth watching.
- Captive Finance Companies Experience Shift: Captive finance companies are also doing well, albeit with some concerns about funding. While their mission is to help parent manufacturers move equipment through their sales distribution channels, they are facing challenges due to dropouts of banks and regional banks that used to fund a large portion of their business. However, they are actively seeking additional sources of capital to sustain their growth as their manufacturers equipment prices continue to grow.
- Evolution In Bank Equipment Finance Marketplace: The bank equipment finance marketplace continues to evolve, with some banks focusing on existing clients and larger project financing opportunities. Some have plenty of capacity, others are moving up market, shifting focus to existing clients and larger project finance opportunities such as Clean Energy, Railcar Financing and projects funded with depositor relationships. Notably, many banks are getting liquidity back into their systems and exploring innovative ways to conduct business, including syndication and securitization vehicles while exploring new and innovative ways to conduct business in the future
CONCLUSION
The 35th Annual ELFA National Funding Conference was an insightful and valuable learning and networking opportunity. It is clear, despite the challenges posed by the current economic situation, the industry remains strong, resilient, and full of opportunities.
As we celebrate our 35th Anniversary at LTi as charter members in the equipment finance sector, we remain excited at the potential that lies ahead for the industry as a whole. While the current economic situation pose challenges, exciting new opportunities are emerging reflecting the resilience, innovation, and collaboration we have witnessed and participated in for decades.
It is an honor to again, for the 35th consecutive year, that we express gratitude to the ELFA for creating another successful conference, and we look forward to continued growth and success of the Equipment Finance industry.
