PPT Holdings I LLC

Overview Key strengths Key risks High re-occurring revenue profile and customer retention rates. High debt leverage above 7x. Diverse client base that spans numerous industry verticals. Small scale and participation in the highly fragmented and competitive third-party maintenance (TPM) provider market. Aggressive financial policy with a history of debt-funded acquisitions. TPM providers like PPT reduce their customers' costs by extending the life of their hardware and preventing costly replacement or premature purchases from original equipment manufacturers (OEMs) such as IBM Corp., Hewlett-Packard, and Dell Inc. The shift toward cloud infrastructure, including the maintenance requirements of hybrid cloud, should enable TPMs to capitalize on this trend. Aside from competing against other TPM providers, PPT competes with hardware OEMs who provide the

...We expect leverage to remain elevated due to sponsor ownership with an aggressive debt-funded acquisition strategy. Park Place Technologies (PPT) has completed 21 acquisitions since 2016. Debt-financing and ongoing integration and restructuring charges have led to S&P Global Ratings-adjusted leverage remaining elevated. The company incurred particularly high integration expenses in 2021 from the November 2020 acquisition of Curvature, which depressed S&P Global Ratings-adjusted EBITDA and resulted in pro forma adjusted leverage of 8.4x for the 12 months ended March 31, 2022. We expect the benefit of acquisition synergies and lower integration-related charges will help the company reduce leverage to the low-7x area by the end of 2022. Still, we believe the fragmented nature of the third-part maintenance (TPM) marketplace will allow PPT's financial sponsor owners, GTCR LLC and Charlesbank Capital Partners LLC, to continue pursuing its industry consolidation growth strategy. As a result, we...

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