PNC buys Horsham leasing group for $1.25 billion: Updates

PNC Financial Services Group, the biggest bank based in Pennsylvania, says it has agreed to pay $1.25 billion in cash for the Commercial and Vendor Finance unit of Toronto-based ECN Capital Corp., which employs 110 people financing construction and office equipment, fast-food franchises, and other big-business expansion, at its offices in Horsham.

Don Campbell and Steve Grosso, who founded the business as Partners Equity in 2003, will stay to run the operation over the next year as it becomes part of PNC, Rich Doherty, boss of PNC Equipment Finance, told me.

"They have an established platform, process and reputation" funding deals for big, publicly-traded companies, Doherty added. "We're going to let them keep doing what they do, but more of it."

The deal adds ECN's staff and clients, who have used the ECN unit to finance a current $1.1 billion in customers' acquisitions of construction, franchise, industrial, technology and transportation equipment, to PNC's Cincinnati-based leasing-business group, which has around $13 billion lent, mostly to midsized companies.

Doherty, who was in Horsham this morning meeting with Campbell, Grosso and their team, says he expects the ECN unit will be among the fastest-growing leasing businesses at PNC.

PNC, based in Pittsburgh, is the nation's 6th largest commercial bank, with more than $350 billion in total loans and other assets, according to the Federal Reserve.

As Partners Equity, the business was founded by Campbell and Grosso after they left the larger Berwyn-based leasing company now known as De Lage Landen Financial Service. De Lage Landen, owned by a Dutch bank, was started in 1969 as Master Lease Corp. by Abraham Bernstein and Robert Morgan, who also developed the Aamco transmission franchise company.

The Partners business was sold to Japan's Marubeni Corp. after Partners' venture capital adviser, a unit of CIBC, the Canadian bank, wanted out during the late 2000s recession. Marutani sold the business, then known as CoActiv Partners, to Element Financial Corp. for $300 million in 2012. Element split into two companies, including ECN, last year.

In a statement, PNC said the deal, which it hopes to close this Spring, will add "modestly" to 2017 profits.

Element grew rapidly when it acquired fleet-management units from PHH Corp. (2014) and GE (2015). Last March, Campbell, the leasing group's CEO, said the company was considering relocating its Horsham operations to space large enough for 200 people in Center City or South Jersey. Instead, the former Element reorganized, and sold the unit to PNC.

The Philadelphia-based Dechert law firm advised ECN on the deal. New York-based Citigroup Global Markets and Wachtell, Lipton, Rosen & Katz advised PNC.