Investcorp Keeps Pace With Minority Stake Trend –

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In its first minority stock investment, Investcorp last month acquired $100 million of perpetual convertible preferred stock in NationsRent, a publicly traded Fort Lauderdale, Fla.-based equipment rental company. The preferred stock is convertible into approximately 14.3 million shares of NationsRent common stock at $7 per share. The preferred stock has no dividend.

Investcorp’s move follows similar recent investments in publicly traded companies by such groups as Thomas H. Lee Co, The Blackstone Group, Apollo Advisors (BUYOUTS March 22, p. 1) and Hicks, Muse, Tate & Furst Inc. (BUYOUTS April 15, p. 12).

With this deal, Investcorp now owns 20% of the outstanding common stock of NationsRent.

Gene Ostrow, NationsRent’s executive vice president and chief financial officer, said his company discussed selling a minority stake with five groups, then narrowed the field to three before opting for Investcorp because of its experience in the industry and with strong brand names.

Culmination of a Six Month Search

Christopher O’Brien, a member of Investcorp’s Management Committee, said his group has been looking for a minority investment for the past six months. He said his firm invested in NationsRent because Investcorp has prior experience in the equipment rental industry. Investcorp bought Prime Equipment in 1994 for $280 million and sold it for $1.16 billion in 1997.

Mr. O’Brien said NationsRent did not have access to the capital it needed in order to grow. The company plans to acquire seven equipment rental companies this quarter. NationsRent is the fourth largest public company in the equipment rental industry, operating 140 stores throughout the U.S.

Investcorp, which is publicly traded on the Bahrain exchange, has offices in New York, London and Bahrain. It focuses on leveraged acquisitions, real estate investments and asset management. The group last month launched a euro 200 million bond offering to help supplement its traditional fund raising avenues (BUYOUTS July 5, p. 28).