The credit rating of FLEET LLC (hereinafter, FLEET or the Holding) is based on the adequate assessments of the business profile, risk profile and capital adequacy amid satisfactory assessments of funding and liquidity.
FLEET is a holding company that was founded in 2023. The Holding’s key assets include three companies (Fleet Finance LLC, FLEET AUTOLEASING LLC, and Bilantlia Corp.; hereinafter, the Group or the Holding’s Companies), which provide financial and operational leasing services, short-term leases, and also specialize in the leasing of passenger cars, light commercial vehicles, trucks, and equipment for agriculture, freight transportation, logging and road construction. The Holding’s Companies were acquired by Insight Investment Group from their previous owners and transferred to FLEET. The ultimate beneficiaries of FLEET is a group of individuals.
KEY ASSESSMENT FACTORS
Adequate business profile assessment. The competitive position of FLEET takes into account the size of capital (size of equity as of January 1, 2024 amounted to around RUB 8 bln) and has a neutral impact on the assessment of this factor. At the same time, individual lines of business of the Group occupy leading positions in the Russian leasing market. The Holding’s Companies resumed active operations in March 2023, which was expressed in significant growth of volumes of new business in 2023 and 2024 (over H1 2024, the volume of new business of FLEET amounted to RUB 9.3 bln, which exceeded the indicator for all of 2023). The volume of the lease portfolio (RUB 15.7 bln as of January 1, 2024) also demonstrates better-than-expected growth, and, according to the Holding’s projections, may grow by approximately threefold over the next two years.
FLEET employs a single strategy encompassing all subsidiaries that involves developing and scaling up business in traditional areas, optimizing group operational processes, and centralizing funding and liquidity management.
The Group’s business models ensure its presence in most of Russia’s federal districts. Industry diversification is assessed as moderate — agricultural machinery and equipment, as well as passenger cars and trucks account for more than 30% of the total lease portfolios of the Group. The liquidity of leased property is assessed as adequate.
The neutral assessment of the quality of corporate governance, organizational structure of the Group, risk management system, and transparency of the ownership structure takes into account the relatively recent changes to the controlling owners of the Holding’s Companies and the mechanisms for exercising strategic and management control over the Holding’s operations. The Holding has a board of directors that includes independent directors. The management of FLEET has multiple years of relevant work experience.
Adequate capital adequacy assessment. The capital adequacy ratio (CAR) calculated according to ACRA’s methodology is rather high (39.5% as of January 1, 2024) and provides significant potential for expansion of the Holding’s business. The capitalization of FLEET was supported by the write off of debt of the Holding’s Companies to Insight Investment Group in 2023.
The averaged capital generation ratio (ACGR) has been calculated for the period after the change of owners and amounts to around 160 bps. Over the next 18 months, this indicator will be under pressure by the difference between the interest rates on the assets and liabilities of one of the companies of the Group, which has arisen due to transactions that accompanied the transfer of the rights of ownership to the company.
Adequate risk profile assessment. As of January 1, 2024, the share of potential non-performing, in the Agency’s opinion, and credit-impaired assets according to IFRS accounted for less than 5% of the lease portfolio. Concentration on the largest lessees is relatively low — the share of the 10 largest clients in the leasing portfolio was about 16% as of January 1, 2024.
The Agency does not note any significant market or operating risks; there is also no significant amount of other assets potentially subject to impairment.
Satisfactory funding assessment. The moderate concentration of the funding structure on the largest source in the form of bank loans (more than 56% of liabilities as of January 1, 2024) is based on the presence of a significant volume of equity. ACRA expects an increase in concentration on this source of funding as the scale of leasing activity increases and the accompanying debt is raised from banks. At the same time, amid growth of volumes of lending, it is likely that the concentration of the resource base (currently assessed as heightened) on the largest lenders will fall. The share of funds obtained from the largest creditor exceeded 30% of the total volume of liabilities, while the share of funds raised from the five largest creditors amounted to 55% of the total volume of liabilities. The Agency does not expect any significant change in the funding structure over the next 12 months.
The satisfactory liquidity position is determined by the positive cash flow in ACRA’s base case scenario over the next 12–24 months (the assessment of current liquidity was carried out taking into account the analysis of standard ratios reflecting the Group’s ability to meet obligations over a horizon of up to one year). In the stress scenario, the possible materialization of a liquidity shortage may be offset by sources of additional liquidity and rapid adjustment of development plans.
KEY ASSUMPTIONS
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Maintaining the current business model over the next 12 to 18 months;
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CAR at no lower than 18% over the next 12 to 18 months.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
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Lower concentration on the largest creditors coupled with no worsening of the concentration on the largest funding source;
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Expansion of business amid improvement of strategic planning and approaches to corporate governance;
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Stable growth of ability to generate capital.
A negative rating action may be prompted by:
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Deterioration of lease portfolio quality;
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Higher concentration on the largest funding source;
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Lower ability to generate capital;
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Deterioration of the liquidity position.
RATING COMPONENTS
Standalone creditworthiness assessment (SCA): a-.
Adjustments: none.
ISSUE RATINGS
No outstanding issues have been rated.
REGULATORY DISCLOSURE
The credit rating has been assigned under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings to Leasing Companies on the National Scale for the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
A credit rating has been assigned to FLEET LLC for the first time. The credit rating and its outlook are expected to be revised within one year following the publication date of this press release.
The credit rating was assigned based on data provided by FLEET LLC, information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the RAS and IFRS financial statements of FLEET LLC, Fleet Finance LLC, FLEET AUTOLEASING LLC, and Bilantlia Corp. The credit rating is solicited and FLEET LLC participated in its assignment.
In assigning the credit rating, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided no additional services to FLEET LLC. No conflicts of interest were discovered in the course of credit rating assignment.
