Portfolio

Investment Portfolio Profiles

The following sample deal profiles are representative of the disciplined approach to loans and investing and that Diamond’s management members have completed across various economic cycles. The names of the firms have been modified for confidentiality and privacy reasons.

General Contractor (GC), Washington, D.C.
GC, a general construction-master glass installer, is an LMI minority-managed firm, located in an underserved area of Washington, DC. More than 75% of its employees live in LMI communities.

A member of the firm led a $1.7 million senior debt commitment to GC in 2010 for partnership capital and the acquisition of a building for expansion of its operations. GC had been in operation for 7 years, had revenues in 2009 of $10.7 million, profitability of 12%, and was cash flow positive. GC is projected to grow to $45 million in five years as a result of the signature of contracts in the $60 million range as it became an 8(a) firm. GC has the right to execute an additional $50 million asphalt contract with a duration of 10 years in its pipeline, as well as provide flooring parts for skyscrapers in the region. GC is a graduate of a major multi-billion dollar Construction company school of contracting and has a partnership with them on many projects such as BRAC, Metrorail development, and general construction.

The company is expected to provide steady cash flow in the federal markets sector and would be a prime target for the Partnership to issue up to $2 million in subordinated financing to assist them in the roll-up of competing firms, expand bonding capacity, and to expand into other regions without severe pressure on cash their flow. Our projected investment of $2 million in subordinated debt with warrants would yield a 2.0x return on capital and a 33% IRR.

Global Protection Services (GPS), Urban City, NC
GPS is a rapidly growing, 200 employee security firm that provides security and staffing around nuclear plants and higher security sites. Its CEO is an African-American woman who owns 100% of the firm. The majority of the employees are minority persons of which at least 50% reside in LMI communities.

A member of the team led a senior debt placement of a $500,000 line of credit in 2010. GPS was tracking to double its 2009 revenues of $3.5 million in the first 8 months of 2010 and was tracking a revenue growth of 40% YOY. The annualized revenues were expected to be $20 million by FYE 2011 with a profitability of 20%.

The Partnership would invest $2 million in convertible debt note of 20% with a preferred interest coupon of 8%. GPS has contracts with top energy firms such as Duke Energy and Southern Company. It just won a bid in competition against 40 firms to do security on a $2.6 billion project. GPS has been added to the GSA schedule. The Partnership would be able to exit in three years with a multiple of 2X money and an IRR of up to 40%.

Mid-Market Food Service Company, Inc., Urban City, TX
A Member of the firm invested in this condiment manufacturer formerly known as Mike Rose Foods. This is an LMI firm led by African-Americans.

A Member of the firm led a $10 million investment of preferred stock in October. This was an acquisition/buyout from a subsidiary of major national franchise chain based in a major southeastern city. This Member of the firm had significant food industry experience and contacts. The Member structured and priced the deal, hired the new management team, assisted in business development and strategic planning, and became Board Chairman. The company was repositioned from a captive supplier to a value-added supplier to the food industry. Within 24 months, EBITDA improved 29% from $11 million to $14.2 million. The sale of the company yielded an IRR of 72% via a sale to a billion dollar buyout firm in five years.

Latino Owned Cinemas, Urban City, CA
The company is focused on the development and in-line of movies to the Latino culture and offers first run movies to Latino’s. It is an LMI firm managed by Latino-Americans.

A Member of the firm invested $500,000 in subordinated debt in 2009 as part of a $14 million expansion capital transaction. This was the second investment in the company. The Series A round investment had generated a 21% IRR. A Member of the firm also introduced the company to new financing and a Fortune 100 firm for a possible joint business venture. Latino Owned Cinema has performed investment with a 19% IRR in April 2011.

Minority Specialty Foods, Suburban City, TX
The company is a value-added food processor for major restaurant chains.
The company, led by a Haitian American, hires a significant number of minority workers.

A Member of the firm invested $1.7 million in February 2000 as part of a $45 million expansion capital transaction where he sourced and raised $35 million from an insurance company. The Member sourced $60 million for an add-on acquisition in 2002. Thereafter, profits improved 87% and later he identified two of the three final bidders to acquire the firm. The deal was exited in August 2001 via a sale to a billion dollar buyout firm. The deal achieved a 42% IRR for the last round of funding that our Member sourced. The Member efforts resulted in adding over $45 million in realized enterprise value, turning a negative situation into a positive return for all stakeholders.

Inner City, LLC, Philadelphia, PA
This is a 50,000 subscriber base cable television system located in an LMI zone and is minority-owned and operated.

A Member of the firm arranged the initial investment in 2002 as part of a $200 million debt and equity syndication structured as a management buyout. The deal was sourced from a major multi-billion dollar northeast fund of funds.  Our team Member raised the initial $10 million from PNC Mezzanine Capital that allowed management to secure the deal to acquire the cable system. The Member led the sale of the firm and the investment was exited in 2005 via a sale to Time Warner. The Member realized an IRR of 18% in December 2005.