Element Financial Corp. plans to split into two publicly traded companies — one devoted to fleet management and the other to equipment finance.
The decision comes after completion of a strategic review of operations initiated in October and will lead to the creation of Element Fleet Management and Element Commercial Asset Management as separate, stand-alone companies.
Element Fleet Management owns and operates car and truck assets valued at $19.5 billion for corporations in the United States., Canada, Mexico, Australia and New Zealand. Element Commercial Asset Management provides loans and vendor financing of aircraft and rail assets valued at $7 billion.
“We’ve concluded that Element is comprised of two very different businesses that will be more effective at maximizing performance for the benefit of shareholders, lenders, customers and employees if they are structured and capitalized as separate public companies,” CEO Steven Hudson said in a statement Feb. 16.
Hudson will head up the new finance company, and Element President Bradley Nullmeyer will lead the fleet management business.
Element burst onto the scene with the purchase of PHH Arval’s fleet management business in 2014 and the subsequent purchase of GE Capital’s U.S.-based fleet opeartions in 2015. The deals made Toronto-based Element the largest vehicle lessor in North America with a combined fleet of more than 1 million cars and trucks under management.
Company officials said they are having discussions with institutional investors to support continued growth of the commercial finance business. The company’s current aviation finance business, however, will be discontinued.
The proposed split is expected to be completed before the end of the year, Element said.