TORONTO, ON – Element Financial Corp. has closed on US$4.8 billion in rated asset-backed security (ABS) funding that will fuel the company’s aggressive move into the U.S. fleet management business.

In addition to establishing the Chesapeake Funding II conduit, Element Financial has issued US$1.5 billion in variable funding notes and is expected to close an additional US$1.8 billion in term notes by Dec. 31, the company has announced.

Following these issuances, Element will have US$1.5 billion from Chesapeake Funding II to fund future growth in fleet assets.

In June, Element Financial Corp. reached an agreement to acquire GE Capital’s remaining North American fleet management operations in the U.S. and Mexico, along with as GE Capital’s fleet management operations in Australia and New Zealand. 

“By gaining early access to our new rated Chesapeake ABS conduit to permanently fund the U.S. fleet assets that we recently acquired from GE, we are ahead of schedule in bringing the funding costs attributable to these assets in line with the US$90 million to US$95 million in integration cost savings that we had earmarked for the GE fleet acquisition,” said Steve Hudson, Element’s CEO.

Chesapeake Funding II was established on the same structuring principles as Element’s initial fleet ABS conduit Chesapeake Funding that has closed more than 17 offerings in the term market since 1999 and has issued more than US$7.7 billion in ABS securities to private and public investors since 2003, including four offerings of more than US$2.2 billion in 2009 in the wake of the financial crisis.

JP Morgan Securities acted as the sole structuring agent and lead arranger for these transactions with a syndicate of 14 lenders.