Three Greater Cincinnati equipment finance industry veterans decided to leave their established company less than five years ago and form their own startup. They’ve already built it into one of the industry’s top players.
Verdant Commercial Capital, based in Blue Ash, originated just under $400 million in financings last year. It’s forecasting that number will soar to $535 million this year, representing 34% growth. Back in 2017, when the company was launched, it originated just $7 million in financings. To be fair, it started in July that year. But the growth is exponential.
Verdant doesn’t plan to stop there, either.
“Our goal is to reach $1 billion in annual originations in the next three to four years,” CEO and co-founder Mike Rooney told me.
That growth has prompted several Verdant milestones in the past six months: it crossed the $1 billion mark in total company financings, moved its headquarters to the Landings II office building in Blue Ash and added a team of people in Detroit who focus on alternative energy, a new area of specialization for the company.
Verdant is an equipment financing and leasing company. It provides capital to companies so they can acquire equipment. That takes a lot of expertise. Verdant has that with co-founders Chris Kelley and John Merritt, both of whom are executive vice presidents, along with Rooney. Each has more than 30 years in the business. And it’s added more knowledge by bringing on teams such as one in Detroit late last year.
Rooney attributes the growth largely to that knowledge base.
“We focus on knowing the market where we are lending money,” he said. “We have the expertise or the ability to recruit people in those markets.”
The growth and projections for this year should lift Verdant to the nation’s third-largest independent equipment leasing company, Bob Rinaldi, who runs a Texas-based industry consulting business and co-founded Information Leasing with Rooney, told me. It’s also among the top 50 overall. More than two-thirds of the top 50 are owned by banks.
Verdant focuses on six specialty areas: technology and office automation, renewable energy, specialty vehicles, industrials, manufacturing equipment and a new golf, sports and entertainment category that includes a lot of golf cart financing.
It provides strictly vendor financing. Verdant works with dealers, who use Verdant’s products to offer financing to buyers.
Its largest deal so far is $63 million. But Verdant’s financings range from as little as $10,000 to that huge deal. Its customers include companies like manufacturers of forklifts and excavators as well as solar project developers and others.
The company has 71 employees, including 20 in Greater Cincinnati.
The three have worked together for decades. Rooney was a co-founder in the late 1980s of Information Leasing Corp., a Cincinnati equipment leasing firm. Merritt joined the company a few years later and Kelley came aboard after Provident Bank bought in the late 1990s. The company later became PNC Bank’s national equipment leasing business, which is still based in Cincinnati.
But a few years ago they decided to venture out on their own.
“At some point you have to decide, are you an entrepreneur or a banker,” Rooney said. “We decided, with the three of us, let’s do the same thing we’ve been doing but with our own company.”
Rinaldi credited Verdant's expertise for its remarkable growth.
“Mike, Chris and John have a very rare perspective which contributes greatly toward the extraordinary success of their equipment leasing business model,” Rinaldi told me. “At the forefront of the Verdant model is the knowledge that you have to add the most talented outside sales people with deep industry sector experience. In less than five years since its startup, they have built what normally takes decades.”
Verdant’s growth and rise in the industry has made it easier to raise money, something equipment financing companies frequently need to do. The company is owned by the founders and others, including a family office it brought on board as an investor.
They’ve already raised more than $35 million in investment capital. Most of it is from local investors. And that number could go up, Rooney said.
It finances deals using “significant” lines of credit and relationships with banks, Rooney said. In addition to financing deals, Verdant also has built a solid foundation with capabilities to handle a much larger organization.
“Now it’s about leveraging that investment,” Merritt said. “We want to grow the business on top of that infrastructure. We’ve funded in the first two months this year more than we’ve ever done in a 60-day period.”
The company expects to begin issuing bonds through the public markets later this year, Rooney said.
“Once we do that, liquidity will be much more available,” Merritt said.
The three founders and Verdant’s CFO are all over 60. That begs the question of how its succession plan is set up. The company's deep bench leaves it in good hands for the future, the founders say.
"We have a lot of highly talented people who are 10 to 15 years younger than we are," Rooney said.
Cincinnati has developed into a hotbed for big players in the industry. In addition to Verdant and PNC, Mason-based Summit Funding Group Inc. became the nation's fourth-largest independent equipment financing company before being acquired by downtown-based First Financial Bancorp in December.