Ponte Vedra Beach, Florida-based Navitas (nah-vee-tas) Lease, which was launched in 2008 by Gary Shivers and a team of industry veterans, announced in January 2014 it completed its first term securitization of equipment loan and lease contracts, Navitas Equipment Receivables LLC 2013-1, upon which the company issued $92.3 million of notes. In the press release announcing the securitization, Shivers, Navitas’ president and CEO, said, “This first transaction is a major step in validating that our strategy is proving to be a highly effective industry approach. The closing of this initial securitization will help Navitas continue to meet the financing needs of our customers and provide the capital to assist us in achieving our corporate vision.”

Shivers noted in a phone interview that the company had initially planned to do the first securitization (later) in 2014, but management found through conversations with various banks and investors that there was a high demand for product, as well as increased liquidity in the marketplace. “There was a good reception for first-time issues, so we [decided to] accelerate our plans to do our first term deal,” he says. “We went through a long process to choose a bank; we chose Bank of America Merrill Lynch as the lead underwriting and structuring agent and Wells Fargo as the co-manager. They both did a great job.”

As a first-time issuer, Shivers and company had to spend a lot of time reaching out to individual investors through telephone campaigns and a roadshow as a means to educate the investment community. “The thing that really sold is that our portfolio performance is really strong, and our management team has a strong reputation,” he explains. “Most of us have been with companies that had accessed the asset-backed marketplace in the past, and we were known by a lot of people in the industry. The combination of the portfolio strength and the resumes of our management team allowed us to access that marketplace at an early stage in our life cycle, and accelerate that.” He hopes to complete the company’s second securitization by the year’s end.

The Beginning

Shivers began his commercial finance career in Philadelphia, PA, when he got a job at First Pennsylvania Bank. While working in the commercial lending division, he sat across the hall from a colleague who financed small-ticket and middle-market leasing companies — this took place in the mid-1980s when the leasing industry was very entrepreneurial, he explains. After some time, that colleague left to start his own leasing company, and about a month later gave Shivers a call to join him. “I was at that point in my life where I could take a risk,” he confesses, “I said ‘Yes’ not knowing much about the leasing business. Fortunately, we kind of figured it out and did very well.”

The pair formed a company that became the forerunner to Advanta Leasing Corp., where Shivers spent about a decade. At around the 10-year mark, the parent company, with the consumer credit card portfolio, started having some problems. Shivers and the CFO of the leasing division decided to move on and formed Marlin Leasing, where he spent another 10 years.

He and his wife Laura — who also has a seasoned equipment finance career, having served with AT&T Capital, Newcourt and CIT — then moved to Florida, and after his 18-month non-compete was up, the couple formed Navitas Lease in September 2008. “That’s where we are today,” he declares.

Strong Foundation, Stronger Management

Over the course of his 20-plus years in commercial and equipment finance, Shivers says he has had the opportunity to meet many people in the industry and gain a lot of knowledge and skills. Navitas, he says, was to become the place where he could use that experience and those contacts that he and Laura have cultivated over the years in order to build a strong business foundation with “a lot of good, strong people.” He describes the Navitas management team as being “a very deep bench.”

The starting lineup includes experienced professionals each with at least 20 years under their belts. Mike Bruman, the chief credit officer, previously served in the same fashion in CIT’s small-ticket division. Richard G. Pfaltzgraff, CFO, was the treasurer of Advanta Leasing Corp. and was a banker on Wall Street for a number of years. Dwight Galloway, who runs the Navitas broker division, was the founder and past president of Republic Leasing, which became NetBank Equipment Finance.

Scott Rosner runs the company’s Structured Manufacturer’s Program group. He previously ran a successful company for 23 years in northern New Jersey. Debra Jones, senior vice president of Account Services and Operations, has 20-plus years of strong operational practice. Ken Sanders, the SVP of marketing, has been in the field for 20-plus years.

With such a strong team behind him, Shivers says that he has gone away from heavily managing his employees; rather, he serves to coordinate the goings-on to ensure all at Navitas are on the same page.

“Unlike in the past where I had to direct people, my primary function is coordinating activities, because the team has as much experience in their respective areas as I do, if not more,” he says. “My biggest goal is making sure we’re all heading in the same direction. I don’t have to spend a lot of time directing people to do things a certain way. It’s totally different than my past, when I was more hands-on with more junior people, directing their day-to-day activities.”

Gain Critical Mass

Shivers’ past experience has comprised a single strategy, single channel focus. He describes this “micro-ticket leasing plan” as small transactions with relatively high yields and a good amount of income from fees. While it was profitable, the market is not big, making it difficult to gain any sort of “critical mass.” At Navitas, Shivers sees his staff members as a collection of talented managers throughout the country, all of whom have experience in various marketing channels, which he looks to cultivate further.

“The real goal is to develop these channels in order to gain greater critical mass and to support a higher deployment of capital and size of growth over time,” he explains. “We ended up going to where the people are, so we’re not in one location.”

Navitas covers a variety of channels, including a dealer channel, a manufacturer channel, a broker channel, as well as a growing end-user direct channel. The marketers and sales folks who work in each of these segments also tend to cross-pollinate to build upon each relationship. “The market is very fragmented, so you have to come at it a number of different ways,” Shivers says.

Developing these channels and platforms is a top priority for the leasing company. With the market segments, management and capital in place, the next step is to use that as leverage to build the organization and bring the systems and assets together to groom the business. “In the short term, we’re really concentrating on business development and filling in the size of the company with volume,” he discloses.

As for long-term goals, Navitas has various options to pursue in the future. Shivers says he was with Marlin Business Services when the company did its IPO in 2003, an avenue he says could be an opportunity, should Navitas reach a certain size and the markets are still attractive. Also, he mentioned options in the marketplace for strong performers in terms of access to capital markets. Whatever direction Navitas chooses, Shivers says he wants the company to be a leader in the small-ticket leasing pack. “Our first goal is to be a dominate player within the small-ticket, under half a million dollar-size transaction marketplace.”

Opportunities Ahead

Over the course of the last several years, Shivers says the industry has seen extremely low business formation and expansion in the economy. He explains, “We still think small businesses are very conservative. They’re reluctant to expand; they’re worried about sales; they’re worried about regulations; they’re worried about taxes and costs. In terms of volume growth, I think it’s still going to be the number one issue.” However, he says the stronger companies that made it through the economic downturn, by being careful and conservative, have seen strong portfolio performances, and over the next couple of years they will turn their focus towards further developing their businesses.

Shivers looks for opportunities to advance his business with continually evolving technology, while trying to adjust accordingly. “Everybody is trying to find a technology solution in a way to do things better and reach customers more efficiently,” he says. “We’re doing all of that. We have a lot of plans and projects in place.

“Getting people on the phone is more difficult in today’s world than it was 10 years ago,” he continues. “People aren’t taking phone calls, and are doing things more electronically. Trying to find and communicate through those means versus making sales [with] a telemarketing process is a major change. It’s more difficult to talk to people. You’ve got to create a situation where people find you rather than you looking for them.”

The market, Shivers says, is more difficult, and there has been a significant reduction in small-ticket leasing companies that are competing for the business — but his team will be ready when the time comes. “We think that if the demand ever does recover, people who are in the industry will have some very strong growth in the next few years because there are a lot fewer people in the marketplace,” he predicts. “We’re trying to get strong and want to be positioned to take advantage of that opportunity when it comes.”

Megen Donovan is an associate editor for the Monitor.