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Värde Partners hires Mamik to Lead Middle Market Lending Group

Värde Partners has hired Aneek Mamik to originate debt to middle-market companies. He started in September, and is based in New York.

He will be North American head of specialty finance, and a team of specialty finance employees will report to him. Currently, Mamik has two direct reports, and Värde Partners is planning to hire 2–3 more for this team.

Mamik reports to Rick Noel, head of global specialty finance at Värde Partners.

Mamik joined from GE Capital, where he worked in various M&A roles, most recently as head of mergers and acquisitions where he led the sale of more than $100 billion in assets.

Mamik started his career at GE’s Australian consumer finance platform, which was acquired by Värde Partners and re-branded as Latitude Financial Services.

Värde Partners’ specialty finance division invests in middle-market companies through three business lines: private equity, portfolio company acquisitions, and direct lending. — Abby Latour

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Late to party, Bain targets global middle market strategy for BDC

While no stranger to lending to middle market companies, Bain Capital is a latecomer to the BDC party. Other asset investment firms of its size embraced the structure years ago.

A combination of demand from institutional investors and lessons learned from the lenders that came and went during the credit crisis motivated the wait.

“We haven’t gone for explosive growth,” said Michael Ewald.

Calls for a BDC’s advantageous structure led to the SEC filing of the registration statement for Bain Capital Specialty Finance on Oct. 6. The BDC will invest in middle market companies generating $10 million–150 million in annual earnings, with ones that generate $20–75 million in EBITDA the primary target.

Ones smaller than those, generating $10–20 million in earnings, generally have very health relationships with regional banks, so lending to them is more competitive.

Bain plans to differentiate themselves from the crowded playing field of BDCs that lend to middle market companies by investment choices made for the 30% of assets in non-qualifying investments. Here, Bain aims to target European and Australian companies.

The credit originations team under Ewald reflects this: staff in Melbourne is increasing to four from three, seven people are based in London, and the rest are in New York, Boston, and Chicago.

The previous name of the entity is Sankaty Capital Corp, the filing showed. The BDC will be externally managed by Bain professionals through BCSF Advisors. The BDC’s board consists of David Fubini, Thomas Hough, and Jay Margolis. Investment decisions are made by the committee that governs other Bain Funds, and consists of Jonathan Lavine, Tim Barns, Stuart Davies, Jonathan DeSimone, Alon Avner, Michael Ewald, Christopher Linneman, and Jeff Robinson.

Investor capital at Bain has previously had exposure to the middle market lending asset class through other funds, including a dedicated $400 million direct lending fund raised at the start of 2015. In addition, Bain is currently investing from a $1.5 billion fund targeting junior debt investments at middle market companies, with another $3.5–4 billion targeting senior debt of middle market companies through others types of funds and managed accounts.

The BDC has been investing for about three weeks, and is expected to ramp up fully over one year. Excluding leverage, the size is $546 million. The private BDC has a 3-1/2 year investment period, after which it will be wound down, unless it is listed publicly before then.

Many BDCs in recent years have struggled with shares trading below net asset value, marring fundraising efforts through share sales. Before then, the BDC would need to be fully invested, and grow more, with at least $750 million in equity.

Per Ewald, “There’s potential to take it public, but we’ll figure that out when the time’s appropriate. There haven’t been a lot of BDC IPOs lately, so that might be the bigger news story.” — Abby Latour

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NewStar Prices $506M Middle Market CLO; YTD Issuance: $49.71B

Citi today priced a $505.5 million middle market CLO for NewStar Financial, according to market sources. This is the manager’s second middle market CLO of the year.

The transaction is structured to be compliant with risk retention in Europe, with the manager retaining a horizontal slice.

Pricing details are as follows, with the CLO upsized from its originally marketed size of $405.2 million:

The transaction will close on November 29 with the non-call period running until October 25, 2018, and reinvestment period ending on October 25, 2020. A weighted average life (WAL) test will also end on November 29, 2024. The legal final maturity is October 25, 2028.

Year-to-date issuance is now $49.71 billion from 110 transactions, according to LCD data. October issuance is now $3.63 billion from seven CLOs. Andrew Park

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Capitala Closes $500M Private Credit Fund for Middle Market Loans

Capitala Group, which lends to middle market companies, announced today it closed a new private credit fund, the $500 million Capitala Private Credit Fund V.

The private credit fund, which closed last month, is Capitala’s largest since the company listed its BDC in September 2013. The fund has no SBIC component since Capitala has already reached the $350 million limit for borrowing across a family of funds.

“We expect to be deploying the fund promptly,” Joseph Alala, Chairman and CEO of Capitala Finance, told LCD News. “The opportunities are there, and deals are still getting done. We have the opportunity to invest now, thanks to the fund.”

The fund will target the same investments as the BDC, traditional lower middle market and middle market companies. The BDC will have the opportunity for co-investment with the private fund.

The investment committee has been expanded for Capitala Private Credit Fund V. In addition to Alala, Jack McGlinn, and Hunt Broyhill, who make investment decisions for the BDC, the private fund’s investment committee includes Chris Norton, Randall Fontes, and Adam Richeson.

Alala said Capitala Group is actively seeking to expand its investment team, adding staff in Charlotte, N.C., and the Northeastern U.S..

The news of Capitala Private Credit Fund V comes on the heels of an announcement late last month that Capitala Finance exited four investments totaling $57.1 million.

These investments included $18.4 million of subordinated debt in Merlin International, an $8 million subordinated debt and a $10.6 million equity investment in MTI Holdings, a $6.4 million subordinated debt and $2.8 million equity investment in STX Healthcare Management Services, and a full repayment of a $10.9 million senior and subordinated debt investment toSparus Holdings.

Including the exit of Sparus, Capitala’s exposure to the troubled energy sector declined to 3%, on a fair value basis, from 9% at year-end 2015.

Alala added that there had been no new development to the situation at Sierra Hamilton, an oil and gas engineering and consulting services company. As of June 30, a $15 million 12.25% senior secured term loan due 2018 was booked at $7.5 million at fair value, compared to $10.1 million as of Dec. 31. The investment consists of a first-lien loan behind a working capital revolver.

On an Aug. 10 earnings call, in response to an analyst’s question, management said the borrower was current on interest payments.

Charlotte, N.C.–based Capitala Finance targets debt and equity investments in middle market companies generating annual EBITDA of $5–30 million. The company focuses on mezzanine and subordinated deals, but also invests in first-lien, second-lien, and unitranche debt. It trades on the Nasdaq under the ticker CPTA. Capitala Investment Advisors is its external investment adviser. — Abby Latour

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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LCD’s Middle Market Weekly offers comprehensive news, analysis, charts, and data detailing the U.S. Middle Market lending segment.

Here’s some of what you’ll receive in each Middle Market Weekly:

 

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  • New-issue volume (institutional, pro rata)
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Beechbrook Capital Raises €100M for Direct Lending Fund

Private debt manager Beechbrook Capital has reached a first close of more than €100 million on its third private debt fund. Private Debt III is targeting €200–250 million in commitments from investors with a hard-cap of €300 million, said managing partner Paul Shea.

The latest vehicle in the series maintains the same investment strategy and will provide private debt, including mezzanine and unitranche, to lower mid-market buyouts in northern Europe.

beechbrookLimited partners in the first close include the European Investment Fund and British Business Bank’s investment arm as well as other European institutional investors. Beechbrook expects to hold a second close at the end of 2016 before the final close, which is now slated for 2017, to allow allocations from next year to come in.

The new fund is an English limited partnership, said Shea, adding that there will be at least two years after the U.K. triggers its departure from the EU before access to the single market becomes an issue. He said that the question of passport access to the EU single market wasn’t flagged as a major issue by investors ahead of the close.

Of more concern to investors, Shea said, was the short-term impact of Brexit on the U.K.’s economic outlook. The lower mid-market, Beechbrook’s specialty, is relatively insulated from the fallout focusing more on micro issues. Potential falls in asset prices could limit appetite for mezzanine debt, but that is balanced out by lower availability of senior debt and potential for improved returns from Beechbrook’s equity kickers, he added.

Beechbrook’s private debt fund focuses on European private equity–sponsored businesses with turnover between €10–100 million. Its loans generally range from €5–15 million per transaction and support acquisitions, shareholder re-alignments, and growth plans.

The firm has a separate UK sponsorless fund which reached a first close of more than £100 million in January.

One of the firm’s most recent deals was from the sponsorless fund, an £8.6 million loan to 4Most to support a reorganisation of shareholders and the business’ growth plan. 4Most provides regulatory and credit-risk analytics consultancy to banks, credit card providers, and other businesses with consumer credit exposure.

In total, Beechbrook has executed 36 transactions across the European lower mid-market and has fully exited 10 of those deals. — Rachel McGovern

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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SAExploration Wraps Debt-for-Equity Restructure, Nets New Loan

SAExploration entered into a new $30 million term loan agreement as part of a successful debt-for-equity restructuring.

Bondholders received new second-lien notes and equity at below-par value.

SAExplorationIn exchange for $138 million of 10% secured notes due 2019, the company issued $69 million of new 10% (11% PIK) secured second-lien notes due 2019, and 6.4 million of new common stock, following a reverse stock split.

The company announced in June it had entered a comprehensive restructuring support agreement with holders of 66% of 10% secured notes. At the close of the offer, which expired on July 22, nearly 99% of notes were exchanged.

Liens on the new second-lien notes due 2019 are subordinate to liens on an existing $20 million revolver with Wells Fargo dating from November 2014, as well as on the $30 million multi-draw senior secured term loan that SAE entered into on June 29 with certain 10% secured noteholders.

As of May 16, the borrower owed $13.4 million under the revolver.

Low oil and natural gas prices hurt the company, as well as a delayed payment for a large receivable from a specific customer due to uncertainty over tax credits from the State of Alaska.

In a debut high-yield bond issue, SAExploration placed $150 million of 10% secured notes due 2019 at par in June 2014 via sole bookrunner Jefferies. Proceeds refinanced debt and funded equipment purchases for operations in Alaska.

SAExploration provides seismic data acquisition services to oil-and-gas E&P companies, specializing in logistically challenging, remote, and environmentally sensitive regions such as Arctic Alaska, tropical South America, and shallow and deep-water marine environments. — Abby Latour

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Craig Joins Middle Market Private Equity Co. Hidden Harbor, from HIG

Hidden Harbor Capital Partners has hired Brett Craig to source middle market investments. He joins as principal.

hidden harbor logoCraig most recently worked at H.I.G. Capital, where he sourced and managed investments, including distressed buyouts and add-on acquisitions. He previously worked at Quad-C Management and Blackstone Group.

Hidden Harbor Capital Partners, based in Fort Lauderdale, Fla., targets companies generating annual revenue of $50–500 million and EBITDA up to $25 million for control investments. The firm’s co-founders are John Caple and David Block. — Abby Latour

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Breakwater Expands Middle Market Direct Lending with Chung Hire

BreakwaterWalter Chung has joined Breakwater Investment Management to source and manage lower middle market direct loans to private companies and equity investments.

He is based in Los Angeles. He joined the firm last month as director.

Chung joined from THL Credit’s Direct Lending platform.

Previously, Chung worked at Los Angeles–based investment bank Libra Securities, on private placements and M&A transactions. He also was part of the corporate finance department of FTI Consulting and worked in the assurance and advisory practice of Ernst & Young.

Co-managing partners of Los Angeles–based Breakwater Investment Management are Eric Beckman and Saif Mansour. —Abby Latour

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Epiq Systems Eyes $1.3B of Debt for Buyout by OMERS, Harvest Partners

Bank of America Merrill Lynch, Goldman Sachs, Antares Capital, and Golub Capital have agreed to provide roughly $1.3 billion of debt financing to back the acquisition of Epiq Systems by OMERS Private Equity, the private equity arm of OMERS pension plan, and funds managed by Harvest Partners, a middle market private equity fund, according to an Epiq Systems statement.

Epiq SystemsEpiq Systems this morning announced that it had entered into an agreement to be acquired for $16.50 per share in cash, representing a total value of roughly $1 billion, including assumed debt. The acquisition is expected to close in the fourth quarter of 2016.

Upon completion of the acquisition, Epiq will become a privately held company and will be combined with DTI, a legal process outsourcing company majority-owned by OMERS and managed by OMERS Private Equity.

In April 2015, Epiq Systems obtained a $75 million fungible add-on to its B term loan due August 2020 (L+375, 0.75% LIBOR floor). As of March 31, there was roughly $366 million outstanding under the B term loan, $19 million outstanding under its $100 million revolver due 2018, and roughly $12 million outstanding under its capital leases.

Kansas City, Kan.–based Epiq is a global provider of integrated-technology solutions for the legal profession. Corporate issuer ratings are B+/B1. The company’s shares currently trade on the Nasdaq under the ticker EPIQ. — Richard Kellerhals

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This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.