CV Holdings, Inc. (the "Company") announced that, as part of its strategic plan to grow into other finance-related businesses, it recently: (i) closed the acquisition of Centra Leasing, Inc. through a newly-formed subsidiary Centra Funding LLC, as well as (ii) formed and launched CV Capital Funding, LLC. Centra and CVCF join the previously announced VenSource business ("VenSource,") as new finance verticals that the Company intends to fund from the proceeds derived from the investment from funds managed by Tricadia Capital Management, LLC (collectively, "Tricadia").
Centra Funding LLC
On November 28, 2016, the Company closed on its acquisition of Centra Leasing, Inc. ("Centra") through its newly-formed subsidiary, Centra Funding, LLC ("Centra Funding"). Centra's business is focused on commercial "small ticket" equipment leases or finance contracts. Originations utilize a vendor-based model. Centra's business is nationwide across 16 industries, with an average finance contract or lease of $35,000. The Company acquired 100% of Centra's stock pursuant to a reverse triangular merger in which the founder and owner of Centra, John Boettigheimer ("JB"), received a "common" interest in 10% of the ownership of Centra Funding. This "common" interest is subject to the Company achieving a 10% preferred return on its capital invested, plus some other minor working capital and other agreed upon expense adjustments (including any indemnification obligations stemming from the acquisition of Centra). JB has the potential to earn an incremental 9.9% common interest in Centra Funding if certain IRR hurdles are achieved. The Company made a $10,000,000 capital commitment to invest in Centra Funding based on meeting certain conditions, with an initial $5,000,000 investment at the closing.
JB has been in the equipment leasing industry for over 30 years. In late 1984, together with Bernie Boettigheimer, he started and developed Pioneer Credit Corp. Together they grew the business into one that originated over $35,000,000 in annual volume and sold it to IFC Credit Corp. in 2004.
The Company intends to leverage its equity investment in Centra Funding by securing a warehouse financing facility to further grow Centra Funding's business as part of the Company's overall strategic business plan. Centra Funding may also selectively sell portions of its production to third parties and will retain the majority for its own balance sheet.
CV Capital Funding LLC
As part of its strategic plan, the Company identified the commercial real estate bridge financing business as an attractive business to enter, given the growth of the private real estate lending sector combined with its attractive risk-adjusted internal rates of return and the deep experience of the Company's senior management in this area. The Company's senior management spent a year researching the opportunity and looking at multiple avenues to enter such business, including acquisitions of existing businesses, joint ventures and internal hires. Given management's experience in the commercial real estate business and what management viewed as unrealistic valuation expectations for similar existing businesses, the Company determined to grow the business internally. On October 2016, the Company hired Anthony Iervolino, a proven originator in this business, and launched CV Capital Funding LLC or CVCF.
CVCF will provide capital for a wide range of real estate asset classes in the US, with a concentration in the New York metropolitan area, New Jersey, Connecticut, Delaware, Pennsylvania and Florida. CVCF will specialize in offering bridge loans secured by commercial real estate assets and other assets as part of special situations. Property types intended for consideration include: multi-unit residences, industrial, office, hospitality and other commercial properties. Core financial products are diverse with anticipated loan sizes ranging from $500,000 to $20,000,000. These would include:
- Bridge Loans
- Mezzanine Loans
- Renovation Finance
- Preferred Equity/Partnership Interest
- Debt Purchases
The Company is committing $20,000,000 of its capital to CVCF and intends to raise additional debt and equity capital to further capitalize the business. CVCF will act as the management company and will manage the Company's invested capital in CVCF Fund I, L.P., a new entity indirectly owned entirely by the Company. CVCF will be based out of the existing Company offices in CT, CA and a new CVCF office in New York City.