July 27, 2023 Mitsubishi HC Capital America Grows aaS Financing

Almost three-quarters of the division’s portfolio is in assignment financing due to the rapid demand for aaS models from OEMs.

Minneapolis, MN – Mitsubishi HC Capital America, the largest non-bank, non-captive finance provider in North America with $7.5 billion in owned and managed assets, is setting record growth with its assignment financing programs.

Assignment financing allows an OEM, manufacturer, reseller, or vendor to receive upfront cash payment for their customer’s as-a-service (aaS) contracts. The company’s number of new assignment financing programs has more than doubled since 2020, under the leadership of Jim Teal, Senior Vice President of Healthcare, Technology & Franchise with Mitsubishi HC Capital America’s Vendor Solutions division. Now, almost three-quarters of the division’s portfolio is in assignment financing due to the rapid demand for aaS models. Last year, the aaS market was valued at $559 billion and is projected to grow from nearly $700 billion in 2023 to $3,221 billion in 2030, according to a market analysis report by Fortune Business Insights. Investments in digital transformation initiatives aimed at improving business agility and operational efficiencies are seen as a significant driver for the projected growth.

As Mitsubishi HC Capital America further expands this funding solution to meet the changing customer landscape, this demand stems directly from manufacturers in the tech space and from the robotics/automation industry, Teal said. “These companies are no longer relying solely on traditional funding sources. They are seeking new alternatives for smart growth.” He notes that companies also like that they don’t have to change their sales model or business operations. “They can continue to sell products and services as they always have while accessing immediate liquidity,” he said.

$200+ million as-a-services financing agreement

As one example, the company has provided private-label financing to a medical automation equipment manufacturer for more than 15 years for its automation-as-a-service (AaaS) subscription contracts. Mitsubishi HC Capital America’s financing of the OEM’s contracts for its bundled AaaS solution of equipment, software, supplies and services has totaled over $200 million, with fundings ongoing. The financing was structured to monetize contract payment streams so that the OEM has access to immediate cash value of their AaaS contracts.

This structure provides two major benefits to an OEM, explained Teal. First, the OEM receives funds it can use for other business purposes now – versus waiting months or years for payment. Second, Mitsubishi HC Capital America’s private-label financing eliminates the burden on the OEM of administering financing while providing a seamless, single point of contact for customers.

Removing up-front capital requirements

“Just like as-a-service offerings have revolutionized the way customers buy everything from software to robotics, so has our approach to financing,” said Teal. “In monetizing as-a-service contracts, we’ve developed a structure to reduce – or remove – up-front capital requirements, while providing a cash infusion that, in many cases, eliminates the need for companies to seek outside funding for business investment.”

Monetizing as-a-service contracts is not a new concept, Teal stated, but few lenders, including banks, offer this type of program. With their tighter lending standards and reluctance to offer customized and innovative solutions to keep pace with market demands, bank customers are looking elsewhere. “At Mitsubishi HC Capital America, it’s core to our spirit and philosophy to understand a company’s current and future business needs to design and offer solutions that enable them to maximize market share and cash flow. This approach, combined with our core services, is clearly addressing what the market wants and needs.”

About Mitsubishi HC Capital America
Mitsubishi HC Capital America is a specialty finance company that has extensive capabilities throughout North America with its affiliate, Mitsubishi HC Capital Canada, combining a consultative approach and expansive digital platform to help organizations of all sizes accelerate growth. With $7.5 billion in assets and more than 800 employees, the company is the largest non-captive, non-bank commercial finance company in North America. Mitsubishi HC Capital America partners with equipment manufacturers, dealers and distributors, as well as end customers, in providing customized financial solutions, including transportation and commercial finance. Dedicated to improving the communities where it operates, the company is committed to the United Nations Sustainable Development Goals. Visit https://www.mhccna.com/en-us

Media contact: Katie Mullin, Vice President of Marketing Communications, kmullin@mhccna.com

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