Making Mitsubishi HC Capital America – A Calculated Rationale

by Ian Koplin

Ian Koplin is Editor for Monitor, ABFJournal, DealMaker and Commercial Factor magazines.

Craig Weinewuth, President and CEO of Mitsubishi HC Capital America, takes the reins with big plans on catapulting the recently combined company to new heights. In this Web Exclusive Q&A, Monitor delves into the inner workings of the new entity and what we can expect from Weinewuth’s team.

Craig Weinewuth, President & CEO, Mitsubishi HC Capital America

On April 1, 2021, Mitsubishi UFJ Lease & Finance Company Limited (MUL) 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 North American organizational structure, we saw four different business platforms that had a common approach to the market 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 Montreal, Quebec. Both were national lenders their respective countries.

In addition to those two businesses, there were two commercial finance businesses owned by MUL: Mitsubishi USA Group, which was a legacy commercial finance business that MUL owned within the U.S. for the past 20+ years, and ENGS Commercial Finance Co., which is a business MUL 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, planning what the new organization was going to look like and how the integrated company is going to operate.

We identified three primary business units: 1) a Vendor Solutions business unit within the U.S., which has about $4.4 billion of owned and managed assets, and is an equipment finance business across all major equipment verticals. 2) a Commercial Finance business in the U.S. that provides traditional lending products such as ABL, structured finance, senior secured loans and [other] commercial finance products with approximately $1.6 billion in assets; and 3) a Canada platform that combines both a vendor and  commercial finance business with approximately  $2 billion in assets.

This strategy gives us great capabilities to offer a wide array of financing products and services to our vendors, strategic partners and customers throughout the U.S. and Canada. It also allows us to deliver cross-border capabilities, 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 running commercial finance businesses for the majority of my professional career. I’ve led commercial finance platforms for a number of large Fortune 100 organizations, as well as built several commercial finance businesses 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 achieving accelerated growth with more nimble and innovative private equity sponsored businesses. Leveraging these skill sets will allow us to grow rapidly within the largest economy in the world, but in a controlled manner.

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. This also gives us the knowledge of key stakeholders and inner workings of our parent company, which is critical when you are trying to transform, scale and grow a business. So, maintaining this high degree of alignment and transparency between MHC Group company in Tokyo and the North American business together with our prior experiences will help facilitate very successful and positive changes 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: On the competitive side, one of the things that we’ve seen over the last several years is there is no single non-bank, non-captive commercial finance company that is dominating the market. We think we are well-positioned, based upon the size, scale and reach of the organization, plus the strength and interest of our parent organization, to continue to differentiate our business to fill this void in North America.

From an efficiency standpoint, 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 strategic partners. Each organization individually had leading proprietary capabilities that we can now utilize across the unified platform. Additionally, one of the things that we have always prided ourselves on is staying ahead of the curve with regard to digital capabilities.  Leveraging the combined datasets across the businesses allows us to deliver more predictive and automation solutions 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 organization across North America with a very large customer base, approximately 75,000 customers and thousands of valued vendor relationships. We are in a very healthy position today and are fortunate 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 in size and scope of offerings to provide increased value to our customers, vendors and strategic partners. In doing so, I think we will provide a greater level of differentiation to the market 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. Specifically, we have a global initiative to expand beyond our core lending capabilities. This corporate transformation will include asset ownership, service offerings, data utilization and other sustainable and digital offerings. This is an area that is evolving and goes beyond the more traditional commercial finance platforms. While lending will continue to be our core offering, we will look to utilize this knowledge base to develop and advance the platform into other sustainable, transformative and ROA enhancing capabilities.

What can we expect to see from the combined entity in the next five years?

Weinewuth: You will see more cross-border capabilities and offerings as we have enterprise solutions that go across both Canada and the U.S. As I mentioned earlier, not many lenders have this capability and 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.

You will also see a greater level of awareness and capabilities in sustainability. We have a whole team dedicated to advancements that are occurring around the SDG (sustainable development goal). When somebody is pursuing an SDG initiative, we want to be known as the organization to help address the financing needs, consultative services or asset business strategies associated with that opportunity in that market.

Digital means a lot to us and we will continue to focus on digital transformation. We leverage digital aspects within the organization in many different ways. We do all sorts of credit analytics and regression analysis from an underwriting and decisioning perspective. In addition to that, we’re leveraging data to provide the best service levels, creating AI-type of predictive analytics around buying behaviors and practice. As the market continues to evolve and as technology advances at an accelerating pace, we need to be adapting and changing. We do not want to be thought of as the old paper-documented organization. We are developing quite advanced workflow automation to ensure we’re operating the business in the most efficient manner as we can and delivering the most compelling solutions to the market.

Finally, when people hear the name Mitsubishi HC Capital America, I want them to think of a leader in the market from a lending perspective, our advancements in SDG solutions and innovative asset business service offerings.

ABOUT THE AUTHOR: Ian Koplin is editor of Monitor.

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