CoActiv Capital Partners: Getting to the Same Place

by Christopher Moraff June 2008

With Marubeni’s acquisition of Partners Equity Capital, longtime partners Steve Grosso and Don Campbell find themselves at the helm of a leasing powerhouse — CoActiv Capital Partners.

Steve Grosso President, CoActiv Capital Partners
Don Campbell Chief Executive Officer, CoActiv Capital Partners

Anyone who has spent any significant amount of time in the equipment leasing business is likely to know the names Don Campbell and Steve Grosso. The two have worked together, on and off, for nearly three decades, since their days with Fidelity Bank’s leasing operation. Along the way, the Campbell-Grosso team has acquired a reputation for launching successful start up ventures and for then growing those ventures into industry-leading organizations. It’s that trend that landed them on this year’s Monitor 100, as the chief executive officer and president of CoActiv Capital Partners.

CoActiv was formed last year by the acquisition of Partners Equity Capital (PECC) by Marubeni Corporation, and is the culmination of a 28-year collaboration between Campbell and Grosso.

As Campbell explains it, over time, the two men have evolved into a singularly focused unit with complimentary views on the industry. “I’d say at a very strategic level, Steve and I get to the same place, have the same goals, same motives and same drive, but we get there probably different ways; we compliment each other’s strengths really well,” Campbell says. “I could start a sentence and Steve would finish it,” he notes, adding that he and Grosso’s success has as much to do with their similar ideologies as the years they’ve spent working together.

After growing First Fidelity Bank Leasing to more than $1 billion in assets, the team went on to transform the small-ticket leasing business of Tokai Bank into one of the country’s largest leasing firms with a $2.4 billion portfolio and a leadership position in three industry segments. In 1998, they orchestrated the sale of Tokai Financial Services to De Lage Landen, where they helped the Netherlands-based bank grow the Americas Division to $4.5 billion.

From De Lage Landen, Morrison went on to serve a stint as president of Commerce Commercial Leasing, a division of Commerce Bank, before rejoining Grosso to launch Partners Equity Capital Company in 2002. “We started Partners Equity as founders and partners within that organization,” Grosso explains. “We saw an opportunity and continue to see an opportunity for a partner-oriented vendor finance company that specializes in great service and partnerships within those segments we’ve chosen to participate in.”

Over four years, PECC pioneered private-label outsourced equipment leasing programs for large commercial banks, developed relationships with manufacturers and large equipment distribution organizations, and developed specialized skills and knowledge in distinct industries and distribution channels.

Then, at the end of 2006, PECC announced that it would be acquired by Marubeni Corporation — one of the world’s largest companies — as part of the Japanese firm’s entrance into the U.S. leasing market.

“Marubeni’s financial strength and security provides a strong foundation for our commitment to program longevity, and greater access to capital allows for sustained growth and competitive pricing,” Campbell said at the time of the merger. Grosso emphasized the “immediate synergy” of the organizations.

Marubeni’s move came at a good time for both companies. Campbell says that at the time of the merger, Partners Equity was “capital starved” and growing, and was in need of a benefactor.

“We were fortunate to come across [Marubeni] … they are not necessarily operators so what they do is they go out and hire management teams that know businesses and they allow them to write the plan, submit the plan and execute on the plan and we like that because it gives us a great deal of independence and freedom while having a very strong parent behind us,” he explains.

Calling Marubeni “strong” is a bit of an understatement. The company ranked 211 on Fortune magazine’s listing of the world’s 500 biggest firms, and owns all or part of roughly 600 companies worldwide. Its largest subsidiary is Marubeni America Corporation, which is headquartered in New York and has 22 subsidiaries and affiliated companies across the U.S. CoActiv Capital Partners is run out of PECC’s suburban Philadelphia headquarters.

Marubeni said it selected the CoActiv name to reflect its approach of working together with manufacturers and bank partners. The company said it sees the launch of CoActiv Capital Partners as the beginning of a long-term strategy to position itself as a preeminent player in the North American financial services sector.

The strategy seems to be working so far. Barely a year old, CoActiv made this year’s Monitor 100 — hitting #85 — with new business volume up 168% in 2007 and managed assets of more than $240 million.

Grosso sees the growth as a reflection of the company’s market strategy, which he says is built on originating new business. “We’re not and have not been a company that just buys paper for the sake of asset generation; we are a strategic originations company that builds long-term relationships within industry segments,” he says. “The fact that we have an industry team and a core group of associates with a lot of experience to be able to focus on these core businesses, given the right set of resources, that’s accelerated our ability to perform.”

In March, CoActiv launched a new division focused on the specialized equipment financing and leasing needs of the construction and industrial industries. Grosso says CoActiv’s new Construction & Industrial Division grew out of demands to more closely meet the needs of existing program partners that require nationwide field sales support in these industries.

“We believe that there is significant growth ahead in C&I,” Grosso says. “We have the systems and processes in-place, and we have determined a real marketplace need.”

Beyond construction, the company is active in the medical and information technology sectors, and provides small- to middle-market private-label leasing to banks as an outsourced solution. Types of equipment that are typically leased include healthcare equipment (both diagnostic and therapeutic), telecommunications equipment, computer systems and peripherals, office technology, construction equipment, machine tools and materials handling equipment. CoActiv also recently launched operations in Canada.

The new C&I unit is headed up by Tom Pagnotti, a 30-year leasing and finance veteran with experience in launching and managing construction and industrial-based programs.

“We’re delighted to have Tom at the helm of our new C&I Division,” says Campbell. “Tom brings a wealth of experience in this business segment. But what’s most impressive about Tom is that he knows the importance of providing outstanding customer service that will give our partner manufacturers and their dealers and distributors a competitive edge in the marketplace.”

For both Campbell and Grosso, it’s this focus on customer service that will ultimately enable the company to triumph in an increasingly competitive marketplace.

“I think everyone in business today talks about giving great service, we take it to the next level,” says Campbell. “We’re a company of measurement…there are metrics in every department that we measure, and that focus on quality leads us to really good service and that allows us to grow. That clearly is a differentiator. We’re a breath of fresh in a market that’s a little bit troubled right now.”

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