Alaris Equity Partners has provided follow-on financing to US-based portfolio companies 3E, a utility services provider, and D&M Leasing, a vehicle sourcing and leasing services provider. Alaris, a Canadian alternative equity firm, invested $9.5 million in 3E and $5.3 million in D&M, in both cases to support acquisitions.
CALGARY, Alberta, Dec. 06, 2021 (GLOBE NEWSWIRE) — Alaris Equity Partners Income Trust (“Alaris” or the “Trust”) (TSX: AD.UN) is pleased to announce that it has made two follow-on investments (the “Follow-On Investments): 1) US$9.5 million (the “3E Contribution”) in to 3E, LLC (“3E”); and 2) US$5.3 million (the “D&M Contribution”) to Vehicle Leasing Holdings, LLC doing business as D&M Leasing (“D&M”). It is estimated that, as a result of the Follow-On Investments and associated cash flows, Alaris’ Run Rate Payout Ratio improves by approximately 1% and is at the low end of the 65% to 70% range. Alaris has deployed in excess of $350 million over the last twelve months, of which approximately US$43 million has been follow-on capital provided to existing Partners.
“Supporting our partners as they grow is a vital part of being a good long-term partner. As our portfolio has grown, follow-on investments have also become a larger part of our annual capital deployment program.” said Steve King, President & CEO, Alaris.
The Trust contributed an additional US$9.5 million into 3E, in exchange for initial annualized distributions of US$1.2 million, with the first reset based on year over year changes in gross profit to occur on January 1, 2023. Following the 3E Contribution, Alaris has US$39.5 million invested in 3E and is collecting approximately US$5.4 million in annualized distributions. Proceeds from the 3E Contribution were used to partially fund two acquisitions. The acquisitions will help diversify the business across service offerings and are in similar geographies in which they currently operate.
3E is a utility service provider that installs, inspects, maintains and replaces critical infrastructure for large investor-owned utility companies. 3E operates under multiple subsidiary entities with operations across the Mid Atlantic, Southeastern and Midwestern United States including Georgia, Illinois, Michigan, Texas, Oklahoma, Tennessee, Missouri, Kentucky, Louisiana, Arkansas, Mississippi, Virginia and Maryland.
The D&M Contribution consisted of US$4.5 million in preferred equity and US$0.8 million of a short-term subordinated note. Following the D&M Contribution, Alaris has US$75.4 million invested in D&M and is collecting approximately US$9.5 million in annualized distributions from the company, in addition to common equity distributions on the Alaris common equity investment in D&M. Proceeds from the D&M Contribution were used by D&M to acquire a complimentary business.
D&M is the largest independent direct-to-consumer provider of vehicle sourcing and leasing services in the United States. D&M is a fixture in the Texas market, with operations in Fort-Worth, Dallas, Grand Prairie, Austin, and Houston, as well as a prevalent online business. D&M has invested heavily in its online presence and has been providing online leasing and sales for over 25 years.
Alaris, through its subsidiaries, provides alternative financing to private companies (“Partners”) in exchange for distributions with the principal objective of generating stable and predictable cash flows for dividend payments to its shareholders. Distributions from the Partners are adjusted each year based on the percentage change of a “top line” financial performance measure such as gross margin and same-store sales and rank in priority to the owners’ common equity position.