Construction equipment rental co. Opifex secures financing to expand across Texas

Jul 22, 2022

By Will Anderson  –  Managing Editor, Austin Business Journal

Executives at Opifex LLC, already one of the fastest-growing businesses in the Austin area, hope an injection of capital will help spread operations into all of the state’s biggest metros.

The construction equipment rental company recently secured $65 million in debt financing led by GP Capital Partners LP, a Houston-based private credit and investment firm affiliated with prominent private equity player Genesis Park LP.

The deal closed in late June but has not been reported elsewhere. Additional money came from CNH Industrial Capital, John Deere Financial, Rabobank Group subsidiary DLL and Huntington Bank.

The new money will be used to buy more equipment and eventually set up operations in the Dallas and Houston markets.

“This deal is going to allow us to really grab the bull by the horns in Central Texas and grow into other markets around Texas … to grow market share and support our clients to the fullest,” CEO Stefan Gresham Jr. said.

Opifex — which rents out excavators, generators, scissor lifts and much more — was only established in 2018 and recorded about $500,000 in revenue that year. Revenue rose to more than $5.5 million in 2020, and that three-year compound annual growth rate of nearly 233% earned Opifex the No. 1 ranking among small companies in Austin Business Journal’s Fastest Growing Companies Awards.

In its first three years, Opifex focused primarily on the Austin market, with nascent operations in San Antonio and College Station.

During those initial years, company leaders identified access to capital as their biggest challenge.

Now, with the backing of GP Capital and others — founder and Chief Financial Officer Joseph “Jay” Vaughn called the financing a “classic” recapitalization and non-dilutive — they hope to build off their already speedy start.

Revenue reached roughly $11 million in 2021, Vaughn said. He predicted it will grow to about $25 million this year.

Opifex has already amassed a fleet of 1,500-plus pieces of equipment and has roughly $50 million in assets. Connor Navalta, president and chief operating officer, said the company aims to roughly double the size of that fleet.

The company had 43 employees as of July 19, although that number grows constantly, and execs hope to boost the headcount by about 20 in the wake of the financing.

Opfiex is also building a new headquarters in far Southeast Austin, in the Mustang Ridge area. The roughly 15,000-square-foot building is rising on 11 acres at the southeast corner of U.S. Highway 183 and State Highway 130.

The company hopes to move in by the end of this year, Navalta said.

Maintaining rapid growth

Construction equipment rental is a mature, competitive industry. The growth story of Opifex contains plenty of lessons that other business leaders can learn from, especially those looking to make waves in traditionally staid sectors.

Opifex leaders say there are a few differentiators that help them stand out.

One is a focus on the people in the business. At the new HQ, Opifex is building a “pro-style locker room” as well as a video game lounge. The idea is to give workers a place where they can grab a bite and a shower after a shift out in the sun and even hang out with friends while knocking out a few rounds of NBA 2K.

Every day, one of the company’s managers brings in hot meals for the hourly workers who service the construction equipment. Of the 40-plus people the company has hired in the past four years, only a handful have departed, executives said.

“We are investing a lot in our people, that’s why our turnover rate is so low,” Vaughn said.

Opifex leaders also put a lot of trust in employees. They say they will hire just about anyone if they get an internal reference.

“If someone believes that a person … could be part of Opifex, we always give them a shot. It hasn’t hurt us in the slightest just going off pure references,” Navalta said.

Another point of pride is being nimble and responsive to customer needs. The company says it maintains a 60-minute response time to service calls. That kind of turnaround can be critical on large construction projects where complex timelines mean even minor delays can be compounded into million-dollar problems. Opifex has supplied equipment to projects including expansions at the University of Texas football stadium and Austin-Bergstrom International Airport.

“It’s so important for the completion of the job but also the finances of the job. If you have a two- or three-month delay on a billion-dollar project, you can imagine the money wasted just due to delays,” Navalta said. “If the delay is from us not being able to fix your skid steer, that is not OK in my book, and it will never happen at our company.”

Plus, as a minority-owned business, Opifex has benefited from companies and governments trying to work more with diverse suppliers. The company claims to be the only minority-owned construction equipment rental company in Texas. All three executives said cultivating diversity within their own ranks and showcasing it within the construction industry are priorities.

Additionally, a unique camaraderie suffuses the core management team, who were friends before they were colleagues. Gresham, Navalta and Vaughn met while studying at Texas A&M University, and all graduated in 2018 or 2019.

“If I have to call Stefan, who I’ve lived with, or Jay, who I’ve lived with, it’s so much easier to have a real, productive conversation with constructive criticism, with problem solving and solutions,” Navalta said.

Opifex’s success attracted the attention of GP Capital, which focuses on the lower middle market, targeting companies with at least $10 million in revenue and $2 million in earnings before interest, taxes, depreciation and amortization.

“We are excited to partner with the Opifex team and support its growth,” stated Gina Luna, managing partner at GP Capital. “The Company is led by an impressive management team of ambitious and energetic individuals that provide outstanding service to their clients. The tremendous growth and success over the last three years are evidence of their ability to execute.”

Luna and Curtis Hartman teamed with Paul Hobby and Peter Shaper, founding partners of Houston-based Genesis Park, to launch GP Capital in 2021 with an initial $275 million. It is licensed by the U.S. Small Business Administration as a small business investment company, or SBIC, which can access government-backed capital to invest in small businesses.

“Even if capital markets are a little more tepid today than they were a year ago, our businesses is pretty resilient,” Vaughn said. “It’s not too cyclical. Our business grew during Covid, for example.”

The company has plenty of runway and fuel for expansion, although leaders have not ruled out raising additional financing in the future. For now, they feel like they have the freedom to pursue an already ambitious route.

“This definitely allows us to control our own destiny,” Gresham said.