The Bottom Line: NewSpring Invests in Purple Holdings
September 15, 2023
NewSpring, a family of private equity strategies, today announced that NewSpring Mezzanine, the Firm’s dedicated private credit strategy, has invested subordinated debt and equity alongside Spring Capital and Salem Partners to support Directional Capital’s acquisition of Purple Cactus & Purple Horseshoe (collectively “Purple Holdings”).
Purple is a collection of Rent-A-Center (“RAC”) franchise locations
Purple owns and operates Rent-A-Center franchise locations across a broad geographic footprint in the Midwest and Southwest U.S. It currently has 39 locations in Arizona and 24 locations in Kentucky, Ohio, and Indiana. Purple carries a wide range of product categories, including furniture, consumer electronics, and appliances from premier brands, including Ashley, Dell, Sony, HP, and Whirlpool.
“Purple offers Directional Capital the opportunity to positively impact the lifestyle of consumers in an underserved community and invest back into the community that we have first-hand experience growing up in as children. Our mission as a firm has always been a combination of social impact and sound investments.” – Directional Capital Managing Partner Dwayne Boothe
Purple operates in the recession-proof rent-to-own business
The rent-to-own industry performs consistently through a variety of economic cycles, as the Company provides a critical service for a large portion of underserved customers by providing them with access to and the opportunity to obtain ownership of, high-quality durable products. The Company provides a fully integrated customer experience through its e-commerce platform and bricks and mortars locations.
“Purple has proven itself as a reliable and consistent operator of Rent-A-Center franchises as the business continues to expand its geographic reach and attract new customers. Purple has developed a strong relationship with its customers and leverages the company’s brand and support to continue to fuel its growth. We’re excited to partner with Directional Capital and the management team to take the business to the next level.”
The company has a close franchisor relationship with the leader in the rent-to-own business
Upbound Group (previously, d/b/a Rent-A-Center) is the leading rent-to-own brand in the U.S. with thousands of locations and billions of dollars in annual revenue. The company supports its franchisees by overseeing customized point-of-sale systems, maintaining its website, providing marketing services, and supplying customized data to help inform business decisions. Purple has a very close working relationship with Rent-A-Center and takes advantage of its purchasing relationships with top consumer brands to supply its high-quality inventory.
“The rent-to-own industry has shown resilience through nearly every economic period over the last several decades. We’re confident about our growth prospects in the geographies we serve as consumer interest in the rent-to-own model continues to rise.”