IFR: Servpro debut ABS draws heavy demand despite high leverage

September 18, 2019
Original article by David Bell

The International Finance Review reported that property reconstruction firm Servpro enjoyed a strong debut with its whole business securitization on Tuesday.  Final books were around four times oversubscribed, with investors overlooking Servpro’s  high leverage ratio and partial use of proceeds to finance a dividend to Blackstone.

Despite these factors, investors view Servpro as a strong company with a positive sales growth trajectory.   Demand for property restoration services is on the rise,  as housing inventory grows, property values increase, and severe weather events occur more frequently.

“With names where you have a lot of demonstrated history and equity in the business, you’re seeing investors getting comfortable with higher leverage,” said Senior Portfolio Manager Jake Remley of Income Research + Management.

“This is another way for merger and acquisition activity to manifest itself, but it is being received well by the market, which continues to look for yield.”

Read the full article here (paywalled).