Huntington Capital likes the security space

The PE firm’s $3 million loan to an Arizona door-knocking company is its first venture in the space, but it could make more
Monday, September 15, 2014

SAN DIEGO—The $3 million that Huntington Capital, a private equity firm based here, recently loaned to door-knocking company Envision Security marks Huntington’s first foray into the security space, but more such investments could be in its future.

Frank Mora, principal at Huntington, told Security Systems News: “If there’s an opportunity that we like, we’ll definitely do the same thing again. I think [security] is an interesting industry and a growing industry, and now with home automation and all the things that are to be offered, we think that there’s potential for good value creation, if it’s done well.”

Mora said the fact that Peoria, Ariz.-based Envision is well run is what attracted Huntington to the small, 3-year-old company, despite the fact it had no in-house accounts. Envision formerly was a Security Networks dealer and after Security Networks was acquired by Monitronics last year, Envision had been selling all its accounts to Monitronics, Envision founder and CEO Darryl Johnson has explained.

“Envision and Darryl in particular had a very good sales track record,” Mora said. “He’s a very good salesperson and he knows the industry and he had very good recommendations from some of the larger players that he’s done business with and they all consider him a top dealer for their dealer programs. And he had the right ideas about growing the business; he just needed the capital to be able to start retaining some accounts and create a recurring revenue base for himself.”

Johnson’s goal for Envision is for it to have more than 2,000 accounts in house and RMR of about $150,000 within about two years.

Huntington, founded in 2000, provides debt and equity financing to lower middle-market companies. Mora said the company is not industry specific but does focus on companies located on the West Coast and in the Southwest. Mora said that’s “primarily because we tend to be hands on as investors and we like to able to [quickly] get to our companies and work with them if there’s a need for us to do anything.”

Huntington plans to work closely with Envision and Johnson, Mora said.

“We tend to be very active in the management and we plan to do so with Envision and help Darryl in whatever way he needs us to,” Mora said. “Right now, we’re kind of performing the CFO/controller function for him and helping him put in those controls and reporting so as he grows his recurring revenue base, he can start becoming attractive to the senior lender universe and get him to that position where he has access to more and cheaper capital.”

Huntington also is helping Envision at the board level.

“We’re very excited, and being our first time in the industry, we also want to make sure we surround ourselves with good industry experts to help us from a board level,” Mora said. “So we’re helping Darryl put together a varied board of directors that can give him feedback into the operation.”