Jan 31, 2022, United States: Arcapita Group Holdings (“Arcapita”), the global alternative investment firm, announces today the acquisition of a significant controlling interest in Nationwide Property and Appraisal Services, LLC (“Nationwide”), the second largest independent appraisal management company in the United States, which serves mortgage lending institutions across all 50 states.
Nationwide is a market leader with a network of over 15,000 licensed appraisers, with its clients including more than 100 blue-chip lenders and 21 of the top 25 wholesale lenders in the US. The company has industry leading appraisal turnaround times and accuracy rates. Having completed and integrated 5 add-on acquisitions over the past few years, the company has grown revenues at a CAGR of 14.3% over the past four years and Nationwide management estimates revenue and an adjusted EBITDA of $144 million and $15 million, respectively, in 2021E.
Atif A. Abdulmalik, Arcapita’s Chief Executive Officer, said: “We are extremely pleased to have completed the acquisition of Nationwide. This investment is a good fit for our US private equity investment strategy which is focused on acquiring asset-light business services and logistics companies, and also allows us to bring to bear our deep expertise in global real estate. We were attracted by Nationwide’s asset-light, highly cash generative business, experienced management team, and strong base of clients across the country. Close to 50% of Nationwide’s customers have maintained their relationship with the company for over 6 years, highlighting the longevity of its customer relationships, and the company benefits from a free cash flow conversion rate of over 99%. Nationwide is a strong fit within our US private equity strategy and also allows us to bring to bear our deep expertise in global real estate.”
Neil Carter, Managing Director and Arcapita’s Head of US Private Equity, said: “Residential real estate is the US’s largest asset class, with sound fundamentals driven by population growth in the primary homebuying demographics, and increasing levels of new home construction. With appraisals being a regulatory requirement for mortgages for new home purchases, refinancing, and foreclosures, the $7.5 billion real estate appraisal services market has cumulatively grown by 32% since 2008. Nationwide is a leader in this sector and is well-positioned to accelerate organic growth, drive efficiency and achieve margin improvements through its tech-enabled platform, and continue to complete accretive acquisitions.”
Sri Velamati, Chief Executive Officer of Nationwide, said: “Nationwide is extremely pleased to be partnering with Arcapita, a leading alternative asset manager partner, that shares a mutual vision for the future and will support Nationwide in continuing to build on its core strengths of customer service, purposeful acquisitions and technology investment. Nationwide and its partners share the genuine goal of becoming a true leader in the appraisal management services industry that serves the interests of both its lender clients and appraisal vendors through adoption of best-in-class service models and investment in technology to streamline the appraisal process. This next chapter in Nationwide’s story will yield truly industry altering change for everyone.”
Arcapita’s management team has completed over $15 billion in US private equity investments over the past 24 years. The firm’s US private equity investment strategy has predominantly focused on acquiring asset-light business services and logistics companies which benefit from the trend for large organizations to outsource their non-core activities, such as facilities management, to reduce costs and achieve operational efficiencies.