Finance firm scoops up SLP Capital

Saturday, May 1, 2004

ST. LOUIS - Commercial finance firm CapitalSource has bought one of the most well-known names in financing for the security industry, acquiring SLP Capital in early April.

The sale follows a management change at SLP Capital, with co-founder Henry Edmonds leaving the firm last year, and a liquidity issue in the security market. In recent years a number of finance companies for the market, including ADT Security and MCG Capital, either changed their financing scope or all together left the industry.

For SLP, the acquisition “came at the right time for us,” according to Bill Polk, president of SLP Capital, a firm that has placed more than $400 million in capital for hundreds of alarm companies since its inception in 1991.

Tthe transaction not only represents opportunity for SLP Capital and Embrasure account management software, but also for alarm companies, as well.

CapitalSource, a $2.5 billion market cap company, intends to broaden its financing scope in the security field as a result of this transaction

While it has been funding the security market for more than three years, a number of its deals top the $12 million, $15 million and $24 million mark, it will offer both purchase facilities and hypothecation facilities, or make loans secured by receivables. SLP, on the other hand, only offered purchased facilities.

“We intend to be a big player in this market and be a consistent player in this market,” said Mike Szwajkowski, managing director of CapitalSource in New York.

By acquiring SLP Capital, CaptialSource gains nearly forty employees, an office in St. Louis and a $125 million loan portfolio to 60 different clients. Polk is also expected to remain with the company.

Traditionally SLP’s loans ranged from $300,000 to $15 million, but the company’s sweet spot was between $2 to $5 million, said Polk. CapitalSource, however, has the financial resources at its fingertips to fund transactions up to the $50 million mark.

“To provide that kind of financing capital, SLP had to be part of a larger organization with that kind of balance sheet,” said Polk.

Now with SLP Capital under its belt, CapitalSource plans to increase its marketing efforts and client base in the industry. Within the next 12 months, Szwajkowski said the firm plans to complete $300 million in business in the security market alone.

“All the players felt the liquidity squeeze,” said Polk. “This is good news.”