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The independent’s pursuit of capital is an ongoing story. But once an independent can attract the attention of the investor community, they are poised to ascend to the next level. With a recently announced closing of a $25 million ‘BBB’ rated corporate note financing, Alliance Funding Group (“AFG”) has set its sights on a path of accelerated growth.

Monitor caught up with CEO Brij Patel and Senior Vice President Brent Hall, who discussed the company’s plans to become one of the top 10 independents in equipment finance.

“Our overall acceptance in the market and the execution on our deal was fantastic,” Hall says.  “Our whole story, how long we’ve been around, the depth of the management team, where we are now and where we’re going is really exciting, and the institutional investor market recognized that immediately,” Hall says.

AFG initially went to market with a $20 million bond through Brean Capital, which served as the company’s exclusive advisor and placement agent in connection with the transaction. “Brean  came back to us literally within a couple of days of launch and said, ‘Can we increase that to $25 million?’  The deal was oversubscribed in under two weeks.

Capital to Grow

Since founding the AFG 23 years ago, the company has funded more than $2 billion to more than 16,000 commercial customers across multiple economic cycles while continuing to expand almost entirely through its direct sales efforts. The corporate note financing, coupled with a revolving credit facility that closed in November, will enable AFG to take its business to the next level.

Patel says AFG’s primary focus over the last three years really has been in the vendor channel. “Our story is a little bit different than other stories as we have the ability to do small ticket, mid-market and working capital, a three-product

approach to the space,” Patel says. “So we can add a lot more value to the dealer or manufacturer that sells into multiple grades of credit profiles in small ticket and middle market.”

The capital will give us the ability to increase our senior facilities,” Patel says. “It will be used as a haircut capital effectively, and for our structured finance product. Where a vendor wants a deal to be structured with some vendor support, we’re able to use the additional liquidity to provide a value-add solution to the vendor and the dealer and the manufacturer. So it really sets the stage for us to take the business that has historically done small ticket, mid-market and working capital to the next level with the vendor channel.”

“When you look at the independents that are currently in the space, it’s who’s up next, right?” Hall says, pointing out that Ascentium Capital, which was the perennial No. 1 in Monitor’s Top Private Independents’ ranking has been acquired along with other larger independents.

“A lot of the larger independents that were active in ABS have gone through their cycle,” Hall says. “The investment grade rating followed by the successful capital raise of the corporate bond — all of this just stacks up to our future growth. Our five-year plan positions us clearly to become one of the top 10 largest independents in the country.”

Material by Rita E. Garwood 2021, Monitor Daily.