UPDATE 1-Element Financial to explore sale of certain Canadian assets

(Adds analyst, CEO comments, company plans)
By Euan Rocha
TORONTO, Oct 14 (Reuters) - Element Financial EFN.TO said
on Wednesday it plans to sell its Canadian commercial and vendor
financing operations as it bolsters its newly acquired status as
North America's leading fleet management and services
enterprise.
The Toronto-based company said it will reinvest proceeds
from the sale of the C&V business into growth and acquisition
opportunities in its fleet management business.
In June, the company became the North American leader in that
area when it acquired General Electric (N:GE)'s GE.N fleet management
business in the United States, Mexico, Australia and New Zealand
for $6.9 billion.
The company said it has retained Barclays (L:BARC) Capital to act as
its advisor in the development of strategic alternatives for its
Canadian C&V segment, which finances a diverse array of products
from trucks to printers.
Element said it plans to be in a position to act on any
recommendations in the first-quarter of 2016.
"We love the fleet business because of our scale, we are the
big barkin' dog in the North American sector - that scale brings
value to us and our clients" said Chief Executive Steven Hudson,
on a call.
Hudson said Element plans to do small tuck-in transactions
in the fleet business in the current and upcoming quarter. He
said Element is still eyeing one more large acquisition in the
fleet business likely toward the end of 2016.
Element Financial finances and manages vehicles of companies
that own vast fleets for sales staff, technicians and others on
the move. GE sold its Canadian fleet unit to Element in 2013.
Hudson said Element has received significant bank interest
in its Canadian C&V business, which oversees a portfolio of C$1
billion in finance assets.
"Element has previously discussed refocusing the business on
Fleet and so the announcements today on the potential sale of
the Canadian C&V business are consistent with that," said RBC
analyst Geoffrey Kwan, in a note, adding that the Canadian C&V
business is just under 50 percent of Element's total C&V unit.
The company also expanded its bet in the rail leasing
sector. It signed a new 4-year deal with Dallas-based Trinity
Industries under which it will buy up to $1 billion of leased
railcars from Trinity's inventory, allowing it to boost its rail
business by about 25 percent in 2016.
Element said it expects to exit 2016 with about 75 percent
of its earning assets, revenue and operating income all coming
from its fleet management business.