New lender in the security space

Boathouse Capital looks to build a regional security company as well as do debt and equity financing in the $2m to $15m range
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Thursday, October 6, 2011

WAYNE, Pa.—Boathouse Capital, a middle-market mezzanine debt and equity investment fund located here, wants to expand its investments in the security industry—both as a lender and as the owner of a new regional security company, Boathouse partner Chong Moua told Security Systems News.

The investment group, which was founded in 2008 and has $125 million in capital under management, wants to make debt and/or equity investments to stable security companies that have less than $500, 000 in RMR. Boathouse is also looking to acquire in a small- to medium-sized alarm company and use that acquisition as a platform to build a regional security company.

Moua is heading up Boathouse’s new security practice. The group, which has six non-security portfolio companies, made its first investment in the security alarm industry in October 2010 when it invested in summer-model company Platinum Protection.

In terms of its plan to build a regional security company, Moua said Boathouse has for the past 12 months actively sought a company to use as a platform. It’s not looking for a summer-model company like Platinum, he said. “We’re more interested in a traditional mom-and-pop type security alarm company that’s focused on high-end residential and small commercial—the companies we’re looking at are 60 percent residential and 40 percent commercial,” he said.

“The platform company will likely have $150,000 to $300,000 in RMR,” he said. From there, Boathouse plans to buy smaller alarm companies “and tuck them in to build a regional security company.”
The location of the regional security company is yet to be determined. “We are currently focused on the Eastern Seaboard, but we’re also looking at a company on the West Coast,” Moua said.

Boathouse’s other lending strategy “is something we can repeat over and over again. There are a lot of smaller alarm companies that have less than $200,000 in RMR who can’t get access to capital from traditional senior lenders. That’s where we come in. We’ll provide debt or equity financing in the amount of $2 million to $15 million,” he said.

Boathouse decided to expand its reach in the security industry, “because we like the industry, it’s a good, stable investment ... and we believe it’s an underserved market,” Moua said.