Vector secures $225 million

Petrow says lack of PE investors is a benefit for Vector
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Thursday, July 28, 2011

PITTSBURGH—Vector Security will use new financing to make acquisitions and investments that will better position the company for growth in the commercial space.

Vector, based here, announced July 28 the completion of a new $225 million credit facility that includes $75 million in new financing.

Vector CEO Pam Petrow told Security Systems News that the funding will be used to invest in three different areas.

“The first will be acquisitions [that position us] in a couple of different spaces: integration as well as managed network services.” The company has some target acquisitions in the pipeline. Second, new financing will support Vector’s authorized dealer program for “existing as well as new dealers.” And, third, Petrow said, Vector is “developing applications internally [and working with external people as well] that will position us as an integrated solutions provider.”

What kinds of applications? Petrow said the applications will make use of myriad data that Vector collects from customers everyday. The new applications will collect certain data, and organize and analyze it into meaningful information that Vector’s customers can use to make business decisions, she said.

The new applications will expand upon some that Vector now offers. For example, Vector has applications for retail customers that correlate data on high-loss areas of the store with records of when store security systems were armed and not armed.

“We really think, going forward, that the best way to position ourselves is to gather information [and provide it to customers in a way that they can make] decisions based on information, not just data,” Petrow said.

Vector’s financing comes from traditional banks, not private equity, something that’s unusual in the security industry. “I think you’d be hard pressed to find another company that uses traditional banking lenders for [all] their financing,” she said.

There’s a benefit that comes with doing business with traditional banks instead of with private equity investors, she said. “The cost of doing business is much lower when you’re not dealing with private equity,” she said. “We manage our performance to the expectations of the bank as well as our stakeholders,” she said. But unlike some companies that work with private equity, “we don’t have other people managing our business. [Our financing partners] look at our performance ... they are not managing our business or evaluating decisions we make with regard to how we position the company or where we’re going with the company.”

Senior debt financing was led by PNC Capital Markets LLC and Administrative Agent PNC Bank, National Association, with RBS Citizens also playing a leading role. Bank of America and US Bank also participated. The banking group includes a new bank: Huntington Bank, which is a regional bank near Pittsburgh.