Xerox Holdings Corporation has entered into a Forward Funding Agreement with PEAC Solutions to drive the continued growth of Xerox’s FITTLE financing business.
FITTLE is a global provider of equipment leasing and financing solutions for businesses. Its unique expertise in dealer and vendor financing programs provides valuable solutions to industries with increasing growth in capital spending, such as IT services, office equipment, and 3D print.
PEAC Solutions is a portfolio company of the Asset Value Funds sponsored and managed by 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.