On April 1, 2021, Mitsubishi UFJ Lease & Finance Company Limited and Hitachi Capital Corp. merged and changed its corporate name to Mitsubishi HC Capital, Inc. At that point, Mitsubishi UFJ Lease and Finance was an approximately $65 billion global commercial finance business and Hitachi Capital was an approximately $35 billion global finance business. As the two companies’ combined over the last two years, Mitsubishi HC Capital has become one of the largest commercial finance companies in the world. Craig Weinewuth, president and CEO of its North American entity, Mitsubishi HC Capital America, spoke with Monitor on the planning and lead up to the merger as well as his anecdotes on leading the company to greater heights.
According to a recent press release, Mitsubishi HC Capital America and its subsidiary Mitsubishi HC Capital Canada, as well as Mitsubishi HC Capital (USA) and ENGS Commercial Finance, merged on April 1 to create a North American non-bank, non-captive finance provider with more than $7.5 billion in owned and managed assets. What was the primary motivation behind this move?
Craig Weinewuth: North America is the largest economy in the world, so it makes sense that our parent company, as one of the largest lenders in the world, would want to demonstrate its global capabilities throughout North America. When we looked at the organizational structure of the merged entities in Japan, what we saw was there were really four different business platforms that resided within North America that had a fair amount of similarities but had very little overlap. Two of the businesses were previously owned by Hitachi Capital: the legacy Hitachi Capital America in Norwalk, Connecticut and Hitachi Capital Canada, which is headquartered in Trois-Rivières, Quebec. Both were national lenders their respective countries.
In addition to those two businesses, there were two commercial finance businesses owned by Mitsubishi: Mitsubishi USA Group, which was a legacy commercial finance business that the Mitsubishi organization owned within the U.S. for the past 23 years, and ENGS Commercial FinanceCo., which is a business they acquired in 2018.
What we saw was the opportunity to create one brand, one platform in one company to create the largest non-bank, non-captive commercial finance company throughout North America.
What will change as the three entities merge and what will remain the same?
Weinewuth: We’ve been aware that this merger was going to take place for a year and a half or so. We’ve been spending a lot of time leading up to what we call “Day One, Integration Date” of April 1, really planning what the new organization was going to look like and how we as a company are going to operate.
We have identified three primary business units; a Vendor Solutions business unit within the U.S., which has about $4.4 billion-worth of owned and managed assets, which is principally an equipment finance business across all major equipment verticals. And then we have a Commercial Finance business in the U.S. that is providing traditional lending products such as ABL, structured finance, senior secured loans and [other] commercial finance products.
In Canada, we have one platform. The commercial finance business in the U.S. is about $1.6 billion and the [combined] Canadian business is about $2 billion. This gives us great capabilities to offer a wide array of financing products and services to our vendors and our customers throughout the U.S. and Canada individually, in addition to providing a unique ability to deliver cross-border capabilitiesl, which is a very unique aspect from a lending perspective. There are not many institutions that have the ability to provide such strong capabilities throughout all of North America.
What makes you the best leader for the combined entity?
Weinewuth: I have been in and around the commercial finance business for the majority of my professional career, and have been running commercial finance companies for the bulk of that time. I’ve led a number of large Fortune 100 organizations, as well as several platforms for private equity sponsors. So, I have a unique experience of being able to approach the business and transform organizations from both a large institutional perspective that brings a lot of rigor, structure, discipline, governance, etc. – all really meaningful and important things in operating a large platform. I also have the experience of working for some of these smaller, more nimble, and more innovative entrepreneurial platforms that were associated with some of the private equity sponsored businesses that I led. So, combining both aspects of those into benefits associated with how both types of institutions are managed and run, I think gives us the ability to approach this from what will be a very successful business transformation strategy.
I’ve also had the benefit of working with our Japanese-based parent company since 2018 and the senior leadership team there. This provides us with a high degree of alignment between the North American and the global strategies, and also gives us the knowledge and inner workings of our parent company, which is critical when you are trying to transform, scale and grow a business. So, I think this knowledge base and strong relationship that has been developed over almost the last five years will help facilitate very successful and positive change to the organization going forward.
According to the press release, by combining the resources and expertise of the existing businesses, Mitsubishi HC Capital America intends to enhance its competitiveness, improve efficiency, expand business scale and create greater customer value. Can you talk about the steps that you will take to achieve these results?
Weinewuth: One of the things that we’ve seen over the last several years, is that there is no single strong non-bank, non-captive commercial finance company that is dominating the market. We think that we’ll be well-positioned, based upon the size and scale and reach of the organization, plus the strength and interest of our parent organization, to continue to scale the North American platform.
There’s a real desire to continue to see the organization globally grow. And with North America being the largest economy in the world, [Mitsubishi HC Capital America is] naturally identified as a growth area. And so those resources that will be afforded to us by our parent company will position us well to take what is already a very attractive platform and continue to expand it throughout North America.
As an integrated company, we’re really able to leverage the best aspects across the integrated platform and utilize those best practices to the benefit of our customers, vendors and frankly – to create more efficient processes. One of the things that we have always prided ourselves on as an integrated company and as individual organizations is trying to stay ahead of the curve with regard to digital capabilities in automation to create efficiencies both internally and externally to our clients.
Can you share some long- and short-term goals for the company?
Weinewuth: We are now a combined $7.5 billion dollar organization across North America with a very large customer base, almost 100,000 customers across the North American platform [with] thousands of vendor relationships. We are in a very healthy position today and we happen to operate in the largest market in the world. There’s no reason why we shouldn’t be able to contribute in a much more meaningful regard to our parent company in the coming years.
Some of the long-term goals are to continue scaling the business to provide increased value. And in doing so, I think we will provide a greater level of differentiation to the market as well. As we become larger and can provide more offerings, we should be able to differentiate ourselves from competition and be a more relevant and meaningful partner to the industry.
There are a number of things that I think we can do as a non-bank lender, where others may be restricted. This is another area I think is evolving – that maybe some of the more traditional commercial finance platforms that are focused only on lending will be limited, whereas we, I think, will be able to provide both a lending solution as well as a more advanced asset business strategy to partner with the market.
What can we expect to see from the combined entity in the next five years?
Weinewuth: You will see more cross-border kinds of capabilities and offerings as we have enterprise solutions that go across both Canada and the U.S. As I mentioned earlier, it’s a differentiated kind of capability that we have as an institution. Many of our vendors and customers conduct business both in Canada and in the U.S., and oftentimes, have to find alternative lending solutions depending on what country they’re in. We are able to provide a seamless and smooth transition across the border and throughout North America.
I think you’re going to see a greater level of awareness and capabilities in that regard. We’re going to continue to emphasize supporting the companies and the lending, and some of the asset business strategies around the SDG (sustainable development goal) advancements that are being made. When somebody is advancing an SDG initiative, we want to be known as the lender to go to help address the financing needs or asset business strategies associated with that opportunity in that market.
Finally, digital means a lot to us. We leverage digital aspects of the organization in many different ways. We do all sorts of credit analytics and regression analysis from an underwriting and decisioning perspective, but in addition to that, we’re leveraging data to provide the best service levels, creating some AI-type of predictive analytics around buying behaviors and practice. We’re going to continue to focus on that. As the market continues to evolve and as technology advances at an accelerating pace, we likewise don’t want to be thought of as the old paper-documented organization. We are developing quite advanced automation with regard to not only our decisioning processing, our documentation processing, but our internal processes as well – and workflow automation – to ensure that we’re operating the business in the most efficient manner as we can and delivering the most compelling solutions to the market.
ABOUT THE AUTHOR: Ian Koplin is Editor of Monitor.
