CORPORATE FINANCE – Born to run … and run.

Deloitte & Touche Corporate Finance has notched up its fourth deal with MG Rover, the UK car company sold by BMW last year.

The #340m deal allows MG Rover, through a joint venture with HBOS, to take over the leases of 58,000 cars which were originally financed by the German manufacturer.

As well as reuniting the company with a large proportion of its customer base, the deal will give MG Rover the ability to control resale prices for its products.

Customers who originally bought their cars using lease financing provided by BMW will now deal directly with MG Rover when the leases expire.

Deloitte’s Maghsoud Einollahi led the deal, which involved creating a joint venture between the Phoenix Partnership, owner of MG Rover, and HBOS, who supplied the bulk of the finance.

The joint venture, MGR Capital, acquired Rover Financial Services from BMW after the Land Rover assets were sold to Ford separately last month.

MGR will manage the financing arrangements of the portfolio, and will handle the eventual disposal of vehicles at the end of their leases with MG Rover.

Rover Financial Services was BMW’s in-house finance subsidiary which had been the provider of lease finance on Rover, Mini and Land Rover vehicles since 1998.

The leasing arm had been excluded for the original buyout of Rover by Phoenix last year, when BMW sold the troubled group for a nominal #10.

Deloittes led that deal, and has subsequently acted for MG Rover in two further deals, including the acquisition of US-Italian sportscar manufacturer Qvale.

Ian Barton, corporate finance director at Deloittes who worked alongside Einollahi, said the deal would benefit both the customer and the manufacturer. ‘There are lots of positives for both the business and the client base,’ he said.

Rover owners, who bought their cars when the group was owned by BMW, would benefit as the company tried to maintain the residual value of the cars after the leases expire, typically between one and two years time.

Rover itself will benefit as it will be in a stronger position to encourage existing owners to remain loyal to the MG marque.

Kevin Howe, chief executive at MG Rover, said: ‘It puts us in more control of the second hand value of MG and Rover cars. It also creates many new marketing opportunities for the future.’

Related reading

PwC office 2