IASG improves position as specialty lender

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Tuesday, November 1, 2005

ALBANY, N.Y.--After Integrated Alarm Services Group acquired Financial Security Services in October for $23 million in cash, the company now plans to use the purchase to grow its specialty lending business.
The firm first moved into the lending business after it acquired National Alarm Computer Center in November 2004. The company is eyeing the $1-to $5-million lending range as there are fewer specialty lenders in the security market who serve smaller alarm companies.
"The deal demonstrates a movement in the industry. It might be the first or additional step towards wholesale monitoring companies becoming full-service companies to dealers," Michael Barnes, partner at Barnes Associates and a security industry analyst, said.
FSS, a provider of financial services and the owner of an UL-listed monitoring center, served the loan needs of the smaller alarm company. The company, in 2004, placed a greater emphasis on its financial services and maintained its monitoring station, Securion Central Control.
Now with FSS's portfolio in hand, IASG will have greater capital opportunity.
"This appeals to the dealers of FSS because as a small lending company, they weren't able to lend all that the dealer wanted," Rogers said. "But now that the FSS portfolio has been merged with IASG, there will be more opportunity for that."
In the course of a few years, the specialty lending market has shifted.
In 2004, CapitalSource, a new specialty lender, made inroads in the market by buying industry finance firm SLP Capital and small alarm lender Milestone Security Partners. While others, such as MCG Capital, that provided financing to installers and systems integrators, decided to exit the security market completely.
These market shifts create an opportunity for IASG.
"They (IASG) are uniquely positioned. They have ability to access the quality of, and maintain control/ contact with the dealers accounts because they are monitoring them," Barnes said.
Barnes said that IASG seems to be well positioned as they are the largest wholesale monitoring business.
"They are financially savvy, and have historically raised capital at relatively low costs. The capital provided to these dealers should allow them to grow faster, which in turn allows IASG to grow faster," he said.