Seacoast Capital Invests $20M in Regional Delivery Provider LSO

Private equity firm Seacoast Capital said Wednesday it has invested $20 million in regional parcel delivery carrier Lone Star Overnight, more commonly known as LSO in the parcel trade.

Boston-based Seacoast said in a statement that the investment consists of subordinated debt and preferred equity. The proceeds will be used to buy out an unidentified minority shareholder, refinance part of LSO's debt, and "support the near-term growth" of the carrier's business, Seacoast said.

Austin, Texas-based LSO operates in 10 states, including every ZIP code in Texas and the main commerce centers of Oklahoma. In September, the company expanded into Missouri, Illinois, and Kansas and deepened its existing coverage areas in Louisiana and Arkansas. Like all regional delivery carriers, LSO has experienced tremendous volume growth due to spikes in e-commerce fulfillment and moves by UPS Inc. UPS and FedEx Corp. FDX to cap the traffic they traditionally accepted from their large customers. Many of those businesses have increasingly turned to regional providers like LSO as delivery alternatives.

Formed in 1994, Seacoast invests in businesses in the lower middle market tier of valuations. The firm typically invests between $5 million and $25 million in firms with at least $10 million in annual revenue and $2 million in annual earnings before interest, taxes, depreciation, and amortization. It does not take control of the businesses that it invests in.

Seacoast's portfolio encompasses multiple industries and, before the LSO investment, included nine companies that fall under the "logistics and infrastructure services" category. Those include delivery companies UX Specialized Logistics and Deliver-iT Overnite, vehicle maintenance firm Amerit Fleet Solutions, and third-party logistics providers The Jay Group and NEPW Logistics.

LSO is controlled by WeDo Logistics, a holding company that is owned by Ocelot Capital management, an Austin-based concern.

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