with Graham Randell, Senior Managing Director and Group Head of CIT Commercial Finance Europe

Elliott Forrest: Welcome to Five Minute Capital, CIT’s executive insight series which takes on financial issues in about five minutes. Today we will be talking about private equity financing in Europe and around the globe with Graham Randell, Senior Managing Director and Group Head of CIT Commercial Finance Europe. Thank you for being here.

Graham Randell: Thank you very much for inviting me. Looking forward to it.

Elliott Forrest: From your perspective let’s start with where does Europe fit into the global economy these days?

Graham Randell: Well, you’ve asked the right question when we talk about global because no economy can look inwardly just at its own markets. The European market has expanded dramatically over the last 20, 30 years and if I go back to how the market used to be in the late 80’s it was very much a UK market in Europe. In the early 90’s we saw expansion but the UK still made up 90 % of all activity that happened. Over the last 20 years we’ve seen massive growth and the UK market has expanded dramatically but now only makes up about 40% of the whole of Europe as it expands.

Elliott Forrest: Is it important for your clients to work internationally?

Graham Randell: I think it’s important for every client to work internationally. The days where people had a business which was in one single jurisdiction have long gone. In the US you have international clients and they have operations overseas. They are expanding their global reach. The same applies in Europe and the important thing is to be able to support those clients internationally as well so as your clients expand, you need to be where your clients are.

Elliott Forrest: Any success stories come to top of mind?

Graham Randell: Well, we are discussing international finance. One of the great success stories I think for us in CIT has been the company called First Technology Safety Analysis. What does that company do? It makes crash test dummies for the automotive market. And, they are the largest player globally producing these dummies in the US, in Europe, in the Far East wherever the automotive manufacturers happen to be. They need yen financing, they need euro financing, they need dollar financing. That’s been a key ingredient for CIT in winning the finance. If we hadn’t been in Europe, working with a UK sponsor who had bought the company we wouldn’t have won the deal.

Elliott Forrest: Any other success stories you wan to mention?

Graham Randell: Another one is - perhaps from the US perspective - is Sotheby’s the auction house, based in New York and in London. CIT needed to be in both jurisdictions to help provide dollar financing and euro financing. So being where the clients happen to be is key.

Elliott Forrest: You travel a lot. I’d like you to look into your crystal ball and tell us what you think the outlook is for international private equity financing.

Graham Randell: Well, I think the market will continue to be robust. Yes, we do have cycles. I mean we had one in the early 90’s when we had a deep recession in Europe and people sort of ran away with their checkbooks. We have a difficult time now, but the amount of money and investment that has gone into the private equity industry has always continued to increase and I don’t see that changing. And if you think about the nature of the business it really does help to have companies given the support of the private equity industry and you see so many areas now where even governments recognize the need for that private equity industry.

Elliott Forrest: And globalization - I assume, more countries?

Graham Randell: More countries. You’ve seen the trend in the US you’ve seen the trend in Europe. Will that expand across Asia? I think it will. The biggest problem is the regulatory, the financial laws, the accounting restrictions in these countries. In countries which are, let’s say, judged in the same way of the old English speaking countries such as Australasia that move has happened quicker. In India, in China it’s coming through but from largely private equity investment without debt financing. From the perspective of a client, the market is a global economy. The days where people were doing things within their own country have long gone. You cannot be looking inwardly at your own country anymore. You have to be looking outwardly.

Graham Randell: Graham Randell, Senior Managing Director and Group Head of CIT Commercial Finance Europe. Thanks so much for being with me.

Graham Randell: Thank you very much for inviting me.

Elliott Forrest: And thank you for listening to Five Minute Capital. Please log on to FiveMinuteCapital.com for more. I’m Elliott Forrest Forrest.