Xerox Holdings Corporation entered a Forward Funding Agreement with PEAC Solutions to drive the continued growth of Xerox’s FITTLE business.
PEAC Solutions is a portfolio company of the Asset Value Funds sponsored and managed by leading global investment firm HPS Investment Partners.
Under the Forward Funding Agreement, FITTLE has the option to sell eligible pools of lease receivables, which PEAC Solutions is committed to purchase on a monthly basis. FITTLE will continue to service the lease receivables for a specified fee and will be paid a commission on lease receivables sold. The Forward Funding Agreement primarily covers U.S. direct originations and has an initial term of one-year, with automatic one-year extensions thereafter, unless terminated by either party. FITTLE expects to sell lease receivables, which would otherwise have been funded by Xerox, totaling approximately $600 million during the initial term.
“Since FITTLE’s inception, we have been dedicated to being a best-in-class provider of leasing services and solutions, and this strategic shift in our business model will drive our next phase of growth. With the majority of our future origination volume expected to be funded by third parties, we can expand the financing of our valued business customers and partners, and free up capital for Xerox,” said FITTLE’s President Nicole Torraco.
“Our new strategic partnership with FITTLE demonstrates PEAC Solutions’ innovative leasing capabilities, identifying us as a leading partner to both vendors and captive finance providers. This new partnership represents an exciting opportunity for both FITTLE and PEAC and is one more step in executing PEAC’s growth initiatives,” said Global CEO of PEAC Solutions Bill Stephenson.
Xerox and FITTLE are exploring similar forward funding arrangements for other portions of FITTLE’s portfolio of future lease receivables, which are expected to provide incremental growth opportunities for the FITTLE origination platform.
Xerox expects proceeds from the Forward Funding Agreement to more than offset a use of free cash flow to fund continued year-over-year growth of FITTLE originations in 2023. Xerox coupled this new funding solution with an opportunity to reduce the commitments under its revolving credit facility by 50 percent and eliminate its quarter-end minimum liquidity requirement. Accordingly, the amendment to Xerox’s credit agreement provides cost savings on the facility, which has never been drawn.
Mizuho Americas acted as exclusive financial advisor to FITTLE in connection with the Forward Funding Agreement.
About Xerox Holdings Corporation
For more than 100 years, Xerox has continually redefined the workplace experience. Harnessing our leadership position in office and production print technology, we’ve expanded into software and services to sustainably power today’s workforce. From the office to industrial environments, our differentiated business solutions and financial services are designed to make every day work better for clients — no matter where that work is being done. Today, Xerox scientists and engineers are continuing our legacy of innovation with disruptive technologies in digital transformation, augmented reality, robotic process automation, additive manufacturing, Industrial Internet of Things and cleantech.
The equipment financing business of Xerox Holdings Corporation, rebranded FITTLE in 2022, is a leading provider of innovative business financing and payment solutions to help businesses adapt and grow. We offer dealer and vendor financing programs for a range of offerings including IT Services, software, audiovisual and security hardware, 3D printing equipment and other business technologies. FITTLE enables innovation and growth through value-add solutions such as bundled billing for support, supplies and maintenance. We currently serve over 150,000 customers in 18 countries, in addition to managing more than 700,000 leases, and drive solutions for more than 1,000 dealers and network partners around the world.
About PEAC Solutions
PEAC Solutions is a multi-national asset finance platform, operating in 12 countries across Europe, the United Kingdom and the United States. We specialize in originating and servicing high-volume, small-ticket leases and loans with a variety of end users, as well providing innovative finance solutions to equipment manufacturers, distributors, dealers and vendors. As at December 2022, PEAC Solutions had over 800 full-time employees globally and maintained a portfolio of approximately USD 5.1 billion across multiple asset classes, including business equipment, plant and heavy machinery and working capital loans.