Toronto-based Element Financial Corp.'s acquisition of General Electric's Australian and New Zealand fleet management business creates "significant strategic opportunities," according to the company.

The transaction, which is expected to close in the fourth quarter, is part of GE's sell-off of its non-core businesses, including North American and global fleet management units valued at US $9 billion.

GE Capital Fleet manages about 100,000 units in Australia and New Zealand, according to an Element Financial presentation. The portfolio offers net earnings of US $716.3 million in Australia and US $688.3 million in New Zealand.

In Australia, the fleet business relies primarily on novated leases that allow a business to lease a vehicle on behalf of an employee. The responsibility for the lease remains with the employee, who makes the payments from a combination of pre-tax and post-tax income. Novated leases are typically offered to Australian employees with more than 20 years of service time as part of their compensation package, according to Element Financial.

About 15 fleet leasing companies now operate in Australia and New Zealand in a stable environment, and banks don't directly participate in the sector.

Top Australian fleet management companies include GE Capital Fleet Services; Sgfleet with about 84,000 vehicles; Eclipx Group, LeasePlan, and Toyota Financial Services with about 80,000 units each; and ORIX Australia with about 40,000 units.