Elemental Financial plans to split itself into two public companies

TORONTO – Element Financial Corp. (TSX:EFN) has outlined a plan for splitting itself into two separate public companies — including one with 2,600 employees focused on fleet management services in the United States.

Element Fleet Management — the larger of the two new public companies — would also operate in Canada, Mexico, Australia and New Zealand, but about 80 per cent of its assets would be in the United States.

Overall, it would manage about $19.5 billion of assets, including $2 billion of rail assets from the other spinoff business.

Element Commercial Asset Management would have about 200 employees, headed by Element CEO Steven Hudson.

Element Commercial would include Element’s current $3.3-billion portfolio of commercial finance assets and an established commercial aviation fund, which manages $2.2 billion of assets on behalf of 30 institutional investors.

Hudson said in a statement Tuesday that a strategic review had concluded that a split into two very different businesses would be of maximum benefit for shareholders, lenders, customers and employees.

The company is still analyzing the most efficient way to separate the companies but Element expects its shareholders will receive stock in both companies on a tax-free basis by the end of 2016.