Godspeed Capital banks on education infrastructure influx with Huckabee

Godspeed Capital will announce later this morning that it has made a strategic investment in Huckabee & Associates, an architecture, engineering and construction services firm serving public school districts in Texas. PE Hub spoke with Godspeed founder Douglas T Lake Jr about the firm’s latest deal in an exclusive interview.

“At Godspeed, we focus on government-related businesses: we target companies providing services, solutions, and technology to federal, state, and local government customers,” Lake said. “The architecture, engineering, and consulting niche is an attractive area for investment as part of our government strategy, as it offers attributes that we target, specifically, long-term contracts or programs with visible budgets and funding. The resulting backlog dynamics and predictable cash flow characteristics lend themselves very effectively to private equity investing.”

Huckabee’s business centers on serving independent school districts in Texas, which are government entities, and these government clients finance their education infrastructure requirements through municipal bond financing. The debt financing is backed by the Texas Permanent School Fund with a AAA credit rating from all three rating agencies. Texas is the third biggest bond market in the country behind California and New York.

“Across our government market focus the architecture, engineering, and consulting sub-sector is particularly interesting to Godspeed as it offers numerous market niches with meaningful growth potential while offering a strong tailwind from the Biden administration’s trillion-dollar infrastructure program,” said Lake.

“States like Texas, California and Florida offer large populations, which necessitate long-term planning around education infrastructure,” he said. “Schools are utilized nearly 365 days of the year and thus consistently require renovation or new construction planning and design. With Silicon Valley moving to Austin, Texas, and Wall Street institutions opening offices in Southern Florida, the demographic trends signal increasing demand for education infrastructure in certain growth markets.”

Lake noted that the school districts in Texas that Huckabee supports cannot afford to fall behind, as they need to “constantly think ahead of population growth trends to be ready with appropriate infrastructure to support their community,” according to Lake.

“There are over 1,000 ISDs in Texas, and Huckabee only serves 90 corresponding to approximately 9 percent of the market,” he said. “Considering that Texas has raised over $9 billion in municipal bonds annually for the last decade to finance education infrastructure, we see significant growth potential in our core Texas market alone.”

Lake added that a “key driver” of the investment in Huckabee for Godspeed was the opportunity to partner with CEO Chris Huckabee, and “his world-class leadership team.”

“The company possesses a culture of excellence with a depth of leadership that is passionate about education design innovation,” said Lake. “The technology investment and corporate infrastructure at Huckabee is comparable to a Fortune 500 company and offers a platform positioned to scale through organic and acquisitive growth.”

The strategic growth plan involves further expansion in Texas and branching out into other states.

“Our multifaceted organic growth strategy centers on further penetrating our core Texas market while expanding into other attractive geographies, investing in our design and engineering capabilities, and investing in our proprietary technology solutions,” he said. “When appropriate we will pursue acquisitions to accelerate these growth objectives.”

Lake told PE Hub that this investment closed in March and the firm is on track to close its first add-on “imminently” and a second one soon after. “We recently signed exclusivity with another target that will close later in the second quarter,” Lake said. “Both of these targets would expand Huckabee into new geographies. The education market is highly fragmented with numerous opportunities to pursue and accelerate Huckabee’s growth.”

For more on Godspeed’s recent investments, click here.