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
- 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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