Financing

Publicly-traded investment bank Houlihan Lokey has formed HL Finance LLC to arrange senior secured leveraged loans for private equity-backed, privately-held, and public corporations.

HL Finance will act as the arranger on syndicated loan transactions and has entered into an agreement with HPS Investment Partners, as its initial strategic investor, to participate in the transactions and provide underwriting commitments of up to $1 billion. HPS Investment Partners (formerly Highbridge Principal Strategies), is a New York-based private equity firm specializing in debt and mezzanine investments (www.hpspartners.com).

HL Finance will pursue both committed and best efforts transactions of at least $50 million for leveraged buyouts, acquisitions, dividend recapitalizations, and refinancings. Borrowers will typically have EBITDA of at least $40 million.

“The creation of a syndicated leveraged finance platform leverages our core advisory capabilities and relationships and combines them with the credit underwriting and portfolio management strengths of market-leading asset managers. Importantly, this initiative is driven by significant client demand and is consistent with our advisory business model,” said Scott Beiser, CEO of Houlihan Lokey.

HL Finance will operate as part of Houlihan Lokey’s Capital Markets Group which is led by Global Co-Heads Chris Dunlop, Anthony Martino, and Gregg Newman.  As part of the new HL Finance strategy, last September the group hired two structuring and syndication professionals, Matthew Lyness and Ed Ribaudo, both former managing directors at GE Antares in New York.  The group now consists of 35 professionals and last year raised approximately $12.5 billion in capital across 40 transactions.

“We are very excited about the continued growth of our Capital Markets Group and believe this new capability, combined with our deep expertise across industry sectors, substantially increases the opportunity to support our clients’ needs,” said Scott Adelson, Co-President and Co-Head of Corporate Finance.

Houlihan Lokey’s Capital Markets Group has acted as an underwriter, an agent, or a strategic advisor for a variety of transactions, ranging from leveraged loans, private mezzanine debt, and high-yield debt to structured equity, private equity, PIPEs, convertibles, and IPOs. The group has offices in New York, Los Angeles, Houston, London, Madrid, Milan, and Sydney.

Houlihan Lokey (NYSE:HLI) is an investment bank that provides mergers and acquisitions, capital markets, financial restructuring, valuation, and strategic consulting services. The firm is headquartered in Los Angeles with offices across the United States, Europe, the Middle East, and the Asia-Pacific region (www.HL.com).

© 2018 Private Equity Professional | July 23, 2018

Tree Line Capital Partners was the provider of a first lien credit facility to support Huron Capital Partners’ acquisition last month of Direct Connect Logistix (DCL).

Indianapolis-based DCL has a network of pre-qualified carriers that are used to offer truckload, partial truckload, expedited freight, small parcel, and air freight brokerage services to customers that operate in the food and beverage, plastic containers and packaging, and consumer packaged goods industries (www.dclogistix.com).

DCL is led by CEO Roger Singh, President Greg Humrichouser, and Vice President John Leininger, and all three will continue to manage the business under Huron ownership.

“We’re very excited to be partnering with Huron Capital, Mr. Singh, Mr. Humrichouser and Mr. Leininger. DCL has a proven team with a strong track record of market leadership. We look forward to the partnership and supporting the growth of DCL,” said Jon Schroeder, Managing Partner of Tree Line.

Tree Line is a direct lender focused on providing first lien term loans, unitranche term loans and equity co-investments to North American-based lower middle market borrowers with at least $3 million of EBITDA. Since inception in October 2014, Tree Line has completed over 50 transactions representing over $720 million in loan commitments for acquisitions, recapitalizations, refinancings, expansion projects and other growth capital needs. Tree Line is headquartered in San Francisco with additional offices in New York and New Orleans (www.treelinecp.com).

“We appreciate Tree Line’s thoughtful and efficient approach,” said Michael Zukas, a Vice President at Huron Capital. “Tree Line spent considerable time upfront understanding the business and opportunity, which provided certainty to close.”

Huron Capital invests up to $70 million per transaction in middle-market companies that have revenues up to $200 million and EBITDAs of $5 million or more. Sectors of interest include specialty manufacturing, business services, consumer goods & services, and healthcare. Huron was founded in 1999 and has offices in Detroit and Toronto (www.huroncapital.com).

© 2018 Private Equity Professional | June 7, 2018

Abacus Finance Group was the Administrative Agent and Lead Arranger for $22 million in senior secured credit facilities to support the recent acquisition of GAHH, a portfolio company of Argenta Partners, by River Associates Investments.

GAHH is a designer, manufacturer, and marketer of aftermarket convertible tops, Jeep tops, and other vehicle interiors including seats, carpeting, and door panels. The company’s portfolio of brands includes GAHH, Robbins, and E-Z ON. GAHH’s parts are designed for use on Mercedes, Porsche, Jaguar, BMW, Rolls Royce, Lexus and a range of other automotive brands.

GAHH, led by CEO Rodney Wells, was founded in 1979 is headquartered in North Hollywood, CA (www.gahh.com).

“We chose once again to partner with the Abacus team because of their expertise in financing companies in niche industry sectors and their ability to assure certainty of close early on,” said Mike Brookshire, Co-Managing Partner of River Associates.

River Associates invests in US and Canadian-based companies with revenues of $20 million to $100 million and EBITDA of $3 million to $15 million.  Sectors of interest include niche manufacturing, high margin distribution, industrial services, and business services. The firm is investing out of its seventh fund which closed in June 2017 with commitments of $285 million. River Associates was founded in 1989 and is based in Chattanooga, TN (www.riverassociatesllc.com).

“Over the years River Associates has been terrific to work with and have proved to be a great fit for us given their investment strategy and lower-middle market focus,” said Tim Clifford, President and CEO of Abacus Finance.

Abacus provides cash flow-based senior financing to private equity-sponsored, lower-middle market companies that have EBITDA between $3 million and $15 million. Debt facilities can be as large as $60 million with a typical hold size ranging from $10 million to $30 million.  New York-based Abacus was formed in June 2011 and is an affiliate of New York Private Bank & Trust (www.abacusfinance.com).

“River’s due diligence preparation was very thorough, and their team meshed smoothly with ours,” said Abacus Senior Vice President Eric Petersen. “As in other transactions, the critical success factors came down to our flexibility and our ability to provide certainty of close – both important aspects of what we call our Total Partnership Approach™.”

“Working with Abacus, the transaction process is quick and streamlined from due diligence to close,” said River Associates Vice President Blake Lewis. “They make it look easy, and they are simply great to work with.”

© 2018 Private Equity Professional | May 24, 2018

Abacus Finance Group was the Administrative Agent and Sole Lender for $22.5 million in senior secured credit facilities to support the leveraged buyout of Transnet YX by Thompson Street Capital Partners. Abacus also made an equity co-investment in Transnet YX.

Transnet YX is a molecular diagnostic laboratory that provides research animal genotyping services to the pharmaceutical and academic research communities. The company was founded in 2004 and is headquartered in Memphis, TN (www.transnetyx.com).

Abacus provides cash flow-based senior financing to private equity-sponsored, lower-middle market companies that have EBITDA between $3 million and $15 million. Debt facilities can be as large as $60 million with a typical hold size ranging from $10 million to $30 million.  New York-based Abacus was formed in June 2011 and is an affiliate of New York Private Bank & Trust (www.abacusfinance.com).

“As usual, it was a pleasure to work with the Abacus team,” said Elizabeth Borow, Managing Director of Thompson Street. “Abacus is a terrific partner, provides great service, and can always be relied upon to come through efficiently when we need a quick close.”

Thompson Street makes investments in companies with annual revenues between $20 million and $200 million and EBITDA between $4 million and $15 million. Since its founding in 2000, Thompson Street has acquired more than 100 companies in the business services, healthcare services and engineered products sectors. The firm held a final close of Thompson Street Capital Partners IV LP with $640 million of capital commitments in December 2015. Thompson Street is based in St. Louis (www.tscp.com).

“Our longstanding partnership with Thompson, which shares our lower-middle market focus, is without question one of our top client relationships,” said Tim Clifford, President and CEO of Abacus. “We know that when they come to us with a transaction, it will involve a high-quality company, and Transnet YX certainly fits that mold.”

“We know Abacus and their processes well,” said Thompson Street Vice President Stefan Sigurdson. “They are easy to work with, and once again they were able to provide certainty of closure early on.”

Other Abacus team members involved in this transaction included Managing Director and COO Sean McKeever and Associate Joseph Lee.

© 2018 Private Equity Professional | May 3, 2018

Monroe Capital was the sole lead arranger and administrative agent on the funding of a senior credit facility to support Frontenac’s acquisition of TPC Training and its sister company JADE Learning from Renovus Capital Partners.

TPC Training is a provider of maintenance, repair, and operator skills training. The company has more than 300 industrial skills and safety course titles to choose from and more than 2,000 instructor-led seminars. Using online, classroom, virtual, and on-the-job methods the company has assisted more than 40,000 clients to train over 3.5 million skilled workers.

Companies utilize TPC’s programs to train industrial workers to maintain and operate complex machinery, observe proper safety precautions and comply with government regulations. TPC is headquartered near Chicago in Buffalo Grove, IL (www.tpctraining.com).

Jade Learning is a provider of electrical code, electrical safety, and security alarm continuing education services. The company’s services allow electricians to renew their operating licenses online and it also provides an online product that is used by journeyman and master electricians to prepare for certification tests. The company was founded in 1996 and is headquartered in Raleigh, NC (www.jadelearning.com).

Monroe provides senior and junior debt and equity co-investments to middle market and lower middle market companies based in the US and Canada. The firm is led by Ted Koenig, President and CEO; Michael Egan, EVP & Chief Credit Officer; and Thomas Aronson, Managing Director, Head of Originations. Monroe has approximately 90 professionals including 50 investment professionals averaging over 17 of direct investing experience.

Monroe has $5.2 billion of committed and managed capital under management. In 2017, the firm financed 77 direct lending investment transactions, involving over $2 billion of new capital. Monroe was founded in 2004 and is headquartered in Chicago with additional offices in New York, Los Angeles, San Francisco, Atlanta, Boston, and Dallas (www.monroecap.com).

Frontenac, the buyer of TPC and Jade, invests in lower middle-market businesses that operate primarily in the food, industrial, and services industries. The firm was founded in 1971 and is headquartered in Chicago (www.frontenac.com).

© 2018 Private Equity Professional | April 10, 2018

Monroe Capital has established an independent sponsor finance vertical to focus on providing both debt and equity financing for acquisitions, mergers, business combinations and recapitalizations initiated by independent sponsors.

In the last few years, Monroe has funded 12 transactions involving over $300 million of debt and equity capital to independent sponsors. The new group will be based in Chicago and will be led by managing directors Brad Bernstein, Chris Larson and Zia Uddin. Mr. Bernstein joined Monroe in 2017 from Chicago-based private equity firm SE Capital. Mr. Larson also joined Monroe in 2017 after 5 years at Willis Stein & Partners. Mr. Uddin has been with Monroe since 2007.

Monroe provides senior and junior debt and equity co-investments to middle market and lower middle market companies based in the US and Canada. The firm is led by Theodore Koenig, President and CEO; Michael Egan, EVP & Chief Credit Officer; and Thomas Aronson, Managing Director, Head of Originations. Monroe has approximately 90 professionals including 50 investment professionals averaging over 17 of direct investing experience.

The independent sponsor finance vertical will complement Monroe’s existing healthcare, technology, media, specialty finance, and retail and consumer products asset-based lending focused verticals.

Monroe has $5.2 billion of committed and managed capital under management. In 2017, the firm financed 77 direct lending investment transactions, involving over $2 billion of new capital. Monroe was founded in 2004 and is headquartered in Chicago with additional offices in New York, Los Angeles, San Francisco, Atlanta, Boston, and Dallas (www.monroecap.com).

© 2018 Private Equity Professional | January 30, 2018