Direct Lending

Direct lending is an avenue for companies like yours to access capital as an alternative to the syndicated loans or senior floating-rate capital traditionally provided by banks. Direct lending loans are provided by “non-bank” lenders, such as institutional investors.

Direct lending loans are primarily first lien, senior secured floating-rate loans, but can also be second lien, revolvers, or accordion/delayed-draw facilities. They have flexible amortisation profiles and final maturities that usually range from 5 to 6 years.

The direct lending market has become a permanent source of capital for borrowers. It is largely a leveraged buyout-driven, sponsor-led market, but relies on private placement-style credit and terms underwriting.

Our lenders target the middle market, which is typically defined as companies with EBITDA of $10 to $50 million. Our regional office network enables companies to access growth capital globally, across the U.S., Canada, UK, and Europe.

Direct Lending Investment focus

  • Middle-market companies with attractive growth prospects and positive cashflow
  • Typically, EBITDA of $10 – $50 million
  • Generalist industry focus with an emphasis on business services, consumer products and services, distribution and logistics, food and beverage, energy, packaging, chemicals, and niche manufacturing companies
  • Management teams and owners with an economic stake in the company’s success

Typical uses for Direct Lending

  • Recapitalisations/dividend recapitalisations
  • Growth Capital
  • Acquisitions
  • Shareholder buyouts
  • Generational transfers
  • Non-sponsored management buyouts
  • Sponsored leveraged buyouts
  • Cross-border financing’s

Direct Lending Typical size

  • $25 million – $400 million
Direct Lending Issuer benefits
  • Ability to do multi-currency, cross-border transactions
  • Flexible prepayment terms
  • Relationship-focused capital provider
Direct Lending Structural characteristics
  • Floating rate
  • Revolvers, accordions, and/or delayed-draw term loans
  • 1%-10% yearly amortisation with an excess cashflow sweep
  • Typical maturities of 5-6 years

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    Direct Lending February 5, 2020