Capital One is new entrant in security finance market

Three CapitalSource execs depart for Capital One; Schmidt named CapitalSource managing director
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Thursday, August 11, 2011

ST. LOUIS, Mo.—There were two separate, but related announcements in the world of security finance this week. Will Schmidt has taken over the role of managing director of CapitalSource and three CapitalSource executives—Bill Polk, Tom Pagnani and John Robuck—have left CapitalSource to head up a new security lending group at Capital One.

Schmidt joined CapitalSource as part of the 2004 SLP Capital acquisition. He started his career at CapitalSource as a loan officer. He has served in several roles over the past seven years, most recently as director and business development officer in the Security Lending Group.

“This is a great opportunity to take over the reins and continue the leading security practice in the U.S.,” he said. In his new role, Schmidt will develop new client relationships and structure, underwrite and fund transactions within the security and government services markets. CapitalSource does most of its business in the $10 million to $50 million range “to security businesses with a large RMR component.” It also does loans in the homeland security/government services business. In the past couple of years, it began loaning in the $1 million to $10 million range. CapitalSource will make loans in this range for “well-established companies and people we know well,” Schmidt said.

Schmidt expects to announce additional members of his team within a couple of weeks. “CapitalSource has been lending in the security space for seven years,” he said. “It is very high priority for senior management ... they know what a great asset class this is and they’re excited and supportive. As we continue to move ahead, we don’t intend to miss a beat.”

Former CapitalSource managing director Bill Polk is now Capital One’s managing director security, defense technology. His long-time colleagues, John Robuck and Thomas Pagnani have joined him at Capital One. “Capital One has targeted the security industry as a very attractive place to play in a significant way,” he said. Capital One will be able to offer the security industry “a set of financial products and services that will be very attractive to the security industry.” And, bottom line, it means more capital for the industry.

Capital One is “not just looking at the security monitoring sector, it’s looking at the whole expanse of the security industry," Polk said.

That includes: physical security—traditional burg, fire, access, video; the homeland security and disaster recovery market that’s emerged since 9/11 and Katrina; and public safety—in particular private sector companies that provide goods and services to public safety entities such police, fire, EMS and corrections.

“Capital One has the platform to work within and across all the different sectors in the security industry,” Polk said. “The team that joined Capital One has deep and longstanding experience in the security market. When you mix that with Capital One’s strong balance sheet, financial services, and back office processing capabilities, that’s a powerful cocktail of things to offer the industry.”