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Deerpath approaches each investment as an opportunity to establish long term relationships with private equity sponsors, management teams and entrepreneurs. We leverage our extensive investment experience to offer flexible financing solutions to fit the needs of each company with competitive terms and structures.
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Deerpath was founded in 2007 by a team of experienced principals to pursue senior debt investments in lower-middle market companies. Since inception, Deerpath has completed over 350 investments, deploying over $3 billion of invested capital across a broad range of industries, investxxfment products and transaction types.
With offices in New York, Boston, Chicago, Fort Lauderdale and Los Angeles, Deerpath has direct origination and execution capabilities throughout the United States and Canada.
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Deerpath's competitive advantages as a financing partner include the following:
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Disciplined Investment Approach
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Vast origination network sourcing 1700+ deals per year
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Initial due diligence and deal screening involves the investment committee, creating greater certainty of completion
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Strong and Consistent Track Record
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Strong risk-adjusted returns since inception with consistent cash yield, low volatility and emphasis on capital preservation
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Deal Partnership
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Collaborative approach to deal structuring with importance placed on experience of equity sponsor and operating needs of underlying companies
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Competitive Edge
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Experience and skill structuring and executing complex transactions
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Competitive pricing and ability to create flexible structures
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Nimble organizational structure allowing for speed of execution
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Highly Experienced Team
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Strong origination, credit, execution and portfolio management skills
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Experience investing through various market conditions and credit cycles
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Deerpath typically seeks to invest between $15 million to $50 million in companies with the following characteristics:
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Revenue of $10 million to $200 million
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EBITDA of $3 million to $15 million
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Established operating history
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Financial sponsor-backed and/or owner-operated
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Strong recurring revenue and/or high visibility into future cash flow generation
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Deerpath's investment professionals bring significant expertise investing across a broad range of industries, investment products and transaction types.
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INVESTMENT PRODUCTS
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First Lien Senior Secured Loans
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Senior Stretch Loans
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Unitranche Loans
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Minority Equity
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Revolvers
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TRANSACTION TYPES
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Change of Control
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Growth Capital
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Debt Refinancing
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Acquisition Financing
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Recapitalizations
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INDUSTRY TYPES
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Technology
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Healthcare
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Business Services
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Consumer / Retail
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Distribution
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Niche Manufacturing
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Energy Services
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Financial Services
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Telecommunication / Media
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GARY C. WENDT
Chairman of Management Committee
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Mr. Wendt was a senior executive of GE Capital from 1975 to 1998, including serving as Chairman and Chief Executive Officer of GE Capital from 1986 to 1998 and as President and Chief Executive Officer of GE Credit Corporation from 1984 to 1986. He subsequently led the restructuring of Conseco, Inc. as Chairman and Chief Executive Officer from 2000 to 2002. Mr. Wendt is a graduate of Harvard Business School and the University of Wisconsin.
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Ft. Lauderdale, FL |
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JAMES H. KIRBY
President & Management Committee Member
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Mr. Kirby was previously a Managing Director and Portfolio Manager in credit investing at Dune Capital Management, LP and its predecessor fund at Soros Fund Management LLC from 2004-2006. He was a Managing Director in private equity investing at Madison Dearborn Partners where he was part of the communications industry investment team from 1996 to 2003. Mr. Kirby is a graduate of Harvard Business School and Princeton University.
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New York, NY |
(646) 786-1022 |
JKirby@deerpathcapital.com |
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JOHN B. FITZGIBBONS
Management Committee Member
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Mr. Fitzgibbons is the Founder and Managing Member of J Fitzgibbons LLC and the Founder of Basin Holdings. He is the Founder of Integra Group, an oilfield services company that is listed on the London Stock Exchange. He previously was the Founder and Chief Executive Officer of Khanty Mansiysk Oil Corporation from 1993 to 2003. Mr. Fitzgibbons is a graduate of Harvard University.
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New York, NY |
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TAS HASAN
Investment Committee Member
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Mr. Hasan is a Partner and a Member of the Investment Committee at Deerpath and leads the Investment Team. He joined Deerpath in 2007 and has 21 years of industry experience. He previously was an investment professional on credit investment teams at Dune Capital and GSC Group. He began his career in investment banking at RBC Capital Markets. Mr. Hasan is a graduate of Ithaca College (B.S.).
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New York, NY |
(646) 786-1018 |
THasan@deerpathcapital.com |
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ORIN PORT
Managing Director Head of Sponsor Coverage
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Mr. Port is a Managing Director at Deerpath and leads the firm's business development activities. He joined Deerpath in 2012 and has 34 years of industry experience. He previously worked in wealth management, investment banking and leveraged finance at Comerica, Wells Fargo, Morgan Stanley-Smith Barney, Prudential Securities and JP Morgan. Mr. Port is a graduate of PACE University (M.B.A.) and the Binghamton University School of Management (B.S.).
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New York, NY/ Ft. Lauderdale, FL |
(954) 703-6041 |
OPort@deerpathcapital.com |
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REED VAN GORDEN
Managing Director Head of Origination
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Mr. Van Gorden is a Managing Director on the Investment Team and his primary responsibilities include structuring, underwriting and executing new investments. He joined Deerpath in 2015 and has 21 years of industry experience. He previously worked in leveraged finance and private equity at Golub Capital, Abingworth Management and JP Morgan. Mr. Van Gorden is a graduate of the Wharton School of the University of Pennsylvania (M.B.A.) and Northwestern University (B.A.). He is a Chartered Financial Analyst (CFA).
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Chicago, IL |
(312) 257-3180 |
RVanGorden@deerpathcapital.com |
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ALLEN AMERI
Managing Director Origination
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Mr. Ameri is a Managing Director on the Investment Team. His primary responsibilities include originating, structuring, underwriting and executing new investments. He joined Deerpath in 2018 and has 19 years of industry experience. He previously worked in credit investing, leveraged finance, investment banking and management consulting at Frontier Impact Capital, East West Bank, Houlihan Lokey and Booz Allen Hamilton. Mr. Ameri is a graduate of the Stern School of Business at New York University (M.B.A.) and James Madison University (B.A.).
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Los Angeles, CA |
(310) 752-4955 |
AAmeri@deerpathcapital.com |
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MARCUS BADGER
Managing Director Direct Lending
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Mr. Badger is a Managing Director on the Investment Team and his primary responsibilities include structuring, underwriting and executing new investments. He joined Deerpath in 2015 and has 21 years of industry experience. He previously spent the majority of his career originating, executing, and managing direct private equity investments at Raymond James Capital, Frontenac Company, and H.I.G. Capital. Mr. Badger is a graduate of the Kellogg School of Management at Northwestern University (M.B.A.) and the University of Michigan (B.B.A.).
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Ft. Lauderdale, FL |
(954) 703-6724 |
MBadger@deerpathcapital.com |
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NATALIE GARCIA
Managing Director Head of Underwriting
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Ms. Garcia is a Managing Director on the Investment Team and the Head of Underwriting. Her primary responsibilities include structuring, underwriting and executing new investments. She joined Deerpath in 2015 and has 18 years of industry experience. She previously worked in private equity, investment banking and credit risk management at Palladium Equity Partners, Macquarie Capital Partners and JP Morgan. Ms. Garcia is a graduate of the Wharton School of the University of Pennsylvania (M.B.A.) and Georgetown University (B.A.).
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Ft. Lauderdale, FL |
(954) 703-6505 |
NGarcia@deerpathcapital.com |
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MAURICIO REYES
Managing Director Head of Restructuring
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Mr. Reyes is a Managing Director on the Investment Team and the Head of Restructuring. His current responsibilities include managing the distressed portfolio, including all financial restructurings and operational turnarounds. He has ample investment experience underwriting, structuring and executing new transactions. He joined Deerpath in 2014 and has 23 years of industry experience. He previously worked in credit investing and leverage finance at Normandy Hill Capital, Dresdner Kleinwort and JP Morgan. Mr. Reyes is a graduate of the Kellogg School of Management at Northwestern University (M.B.A.) and the University of Miami (B.B.A).
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Ft. Lauderdale, FL |
(954) 703-6510 |
MReyes@deerpathcapital.com |
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MICHAEL CONTRERAS
Managing Director Origination
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Mr. Contreras is a Managing Director on the Investment Team and his primary responsibilities include originating, structuring, underwriting and executing new investments. He joined Deerpath in 2018 and has 13 years of industry experience. He previously worked in special situations credit investing, mezzanine finance and investment banking at Hunting Dog Capital, GoldPoint Partners and UBS. Mr. Contreras is a graduate of the Warrington College of Business at the University of Florida (M.S. and B.S.).
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Boston, MA |
(617) 702-8550 |
MContreras@deerpathcapital.com |
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AARON MARKOS
Director Origination
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Mr. Markos is a Director on the Investment Team and his primary responsibilities include structuring, underwriting and executing new investments. He joined Deerpath in 2021 and has 27 years of industry experience. He previously worked in investment banking, leveraged finance and commercial banking at Star Mountain Capital, First Midwest Bank, Fifth Third Bank, LaSalle Bank (now Bank of America) and he received his formal credit training at American National Bank and Trust Company of Chicago (now JP Morgan Chase). Mr. Markos is a graduate of the Mendoza College Business of the University of Notre Dame (M.B.A.) and Roosevelt University (B.S.B.A.).
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Chicago, IL |
(312) 257-3240 |
AMarkos@deerpathcapital.com |
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ANUJ AGGARWAL
Associate Director Origination
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Mr. Aggarwal is an Associate Director on the Investment Team and his primary responsibilities include structuring and executing new investments. He joined Deerpath in 2021 and has over 11 years of industry experience. He previously worked in leveraged finance, mezzanine finance and investment banking at Golub Capital, Maranon Capital and BMO Capital Markets. Mr. Aggarwal is a graduate of University of Illinois at Urbana-Champaign (B.A.).
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Chicago, IL |
(312) 257-3166 |
AAggarwal@deerpathcapital.com |
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PATRICK KANE
Associate Director Direct Lending
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Mr. Kane is an Associate Director at Deerpath and a member of the Investment Team. He joined Deerpath in 2015 and has 11 years of industry experience. He previously worked in investment banking at Verit Advisors LC. Mr. Kane is a graduate of the University of Chicago (B.A.).
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Chicago, IL |
(312) 257-3181 |
PKane@deerpathcapital.com |
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KONSTANTIN KATSMAN
Associate Director Direct Lending
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Mr. Katsman is an Associate Director at Deerpath and a member of the Investment Team. He joined Deerpath in 2014 and has 11 years of industry experience. He previously worked in investment banking and public accounting at KeyBanc Capital Markets and PricewaterhouseCoopers (PwC). Mr. Katsman is a graduate of the Fisher College of Business at The Ohio State University (B.S.B.A).
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Los Angeles, CA |
(310) 752-4945 |
KKatsman@deerpathcapital.com |
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ALEX MORRISON
Vice President Direct Lending
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Mr. Morrison is a Vice President and a member of the Investment Team. He joined Deerpath in 2018 and has 7 years of industry experience. He previously worked in investment banking at Duff & Phelps. Mr. Morrison is a graduate of The Ohio State University (B.S.).
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Chicago, IL |
(312) 257-3189 |
AMorrison@deerpathcapital.com |
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ROBERT CALLAGHAN
Vice President Capital Markets
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Mr. Callaghan is a Vice President on the Investment Team and his primary responsibilities include capital markets and direct lending syndication efforts. He joined Deerpath in 2021 and has 9 years of industry experience. He previously worked in investment banking at J.P. Morgan. Mr. Callaghan is a graduate of Villanova University (B.S.).
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Ft. Lauderdale, FL |
(954) 703-6501 |
RCallaghan@deerpathcapital.com |
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ANTONELLA NAPOLITANO
Managing Director Investor Relations
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Ms. Napolitano is a Managing Director on the Investor Relations Team and her primary responsibilities include investor relations activity, fundraising efforts and ongoing business development projects. She joined Deerpath in 2016 and has 19 years of industry experience. She previously worked as a Director and Private Equity and Hedge Fund Product Specialist for Credit Suisse's Private Banking Division, and prior was Vice President with the firm's Asset Management Division. She began her career at Credit Suisse as an Analyst in the Investment Banking Division. Antonella is a graduate of Georgetown University (Finance and International Business).
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New York, NY |
(646) 786-1019 |
ANapolitano@deerpathcapital.com |
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ROBERT VAN EYCK
Director Investor Relations
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Mr. Van Eyck is a Director on the Investor Relations Team. His primary responsibilities include fundraising efforts and ongoing business development. Robert joined Deerpath in 2019 and has 13 years of industry experience. Robert previously worked as an Associate Director in the Institutional Investment Solution group at Russell Investments. While at Russell, Robert focused on building relationships with corporations, public pensions, and non-profit organizations throughout the Midwest and along the East Coast. Prior to Russell, Robert was an Assistant Vice President at Northern Trust in their Hedge Fund Services division where he focused on sales and relationship management. Robert began his career as an Analyst at JP Morgan Investment Banking. Robert is a graduate of Bryant University (B.A.). Mr. Van Eyck is a CAIA charterholder.
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New York, NY |
(646) 786-1021 |
RVanEyck@deerpathcapital.com |
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BEN DALY
Director Investor Relations
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Mr. Daly is a Director on the Investor Relations Team. Ben is primarily focused on sales and marketing activities across Australia and New Zealand working with sophisticated institutional, family office and high net worth individual investors. Ben joined Deerpath in April 2022 and has 16 years of industry experience. Ben has previously held senior roles with Perpetual, T Rowe Price and Goldman Sachs as well as working as an Investment Specialist with boutique listed Infrastructure manager, RARE now Clearbridge Investments. Ben also enjoyed an 8 year professional rugby career in Australia, the UK and Europe prior to re-entering financial services. Ben holds a Masters in Commerce from the University of Sydney, a Bachelor of Economics from the University of Queensland and is a CAIA charterholder.
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+61 439 438 582 |
BDaly@deerpathcapital.com |
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TANIA KUTNER
Associate Director Investor Relations
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Ms Kutner is an Associate Director on the Investor Relations Team based in London. Her primary responsibility is business development and investor communication within Europe. Tania joined Deerpath in 2021 and has 8 years of industry experience. Tania previously worked as an Associate Director at a Aerius Associates, a London based placement agent. Whilst at Aerius, Tania worked within distribution, focusing on building relationships across broad range of institutional investors, as well as project management and GP origination. Prior to Aerius Associates, Tania was an Associate at BNP Paribas in their Financing and Advisory team where she covered strategic clients across all product lines. Tania began her career as an Analyst at Lloyds Banking Group, in the Leveraged Finance team. Tania is a graduate of the University of Birmingham (B.Eng).
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London, UK |
+44 738 557 9035 |
TKutner@deerpathcapital.com |
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MICHAEL BARAN
Vice President Investor Relations
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Mr. Baran is a Vice President on the Investor Relations Team, focused on existing and prospective investor communication. Mike joined Deerpath in 2021 and has 8 years of industry experience. Mike previously worked at Invesco as a Director of Institutional Sales where he supported Invesco’s institutional sales and service efforts by developing a deep understanding of client priorities to provide investment-related services across both the public and private markets. Prior to Invesco, Mike worked at Alliance Bernstein as a Regional Consultant where he provided investment recommendations to RIAs, Wirehouses and large Financial Advisory Teams. Mike earned BA degrees in economics and environmental studies at Amherst College. There, he was a captain of the men’s ice hockey team. After graduation, he pursued a professional ice hockey career for two seasons with the Alaska Aces and the Las Vegas Wranglers of the ECHL.
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California |
(310) 752-4953 |
MBaran@deerpathcapital.com |
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BRAD COUTURE
Vice President Investor Relations
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Mr. Couture is a Vice President on the Investor Relations team focused on fundraising and distribution. Brad joined Deerpath in 2021 and has 10 years of industry experience. He previously worked in the business development group at Wellington Management. Before that, he worked at Liberty Mutual in their institutional sales group. Mr. Couture is a graduate of Northeastern University (M.B.A.) and Gettysburg College (B.A.).
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Boston, MA |
(617) 702-8955 |
BCouture@deerpathcapital.com |
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LINDSEY FRANCESCHELLI
Vice President Investor Relations
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Ms. Franceschelli is a Vice President on the Investor Relations Team, focused on fundraising efforts and ongoing business development. Lindsey joined Deerpath in 2021 and has 8 years of industry experience. Lindsey previously worked on the fundraising team at Angelo Gordon & Co, focused on building relationships with a broad range of institutional investors. Prior to Angelo Gordon, Lindsey worked at JPMorgan Asset Management where she was on the Institutional Sales Team focused on fundraising and building tailored portfolios across both public and private markets for institutional investors. Prior to that, Lindsey was a part of the Managed Solutions Group in the JPMorgan Private Bank where she represented internally managed solutions to the Private Bank's Clients and Sales Team, globally. Lindsey is a graduate of St. Francis College (B.S.). Ms. Franceschelli is a CFA® charterholder and a Member of both CFA® Institute and CFA® Society Chicago.
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Chicago, IL |
(312) 257-3164 |
LFranceschelli@deerpathcapital.com |
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ANISH BAHL
Chief Financial Officer
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Mr. Bahl is the Chief Financial Officer and the Chief Compliance Officer of Deerpath, which he joined in 2007. He oversees internal finance, operations activities and the compliance program. Mr. Bahl previously was a Controller and Operations Manager of Digital Century, an investment management firm. He was a Senior Associate with PricewaterhouseCoopers, LLP responsible for planning and executing audit engagements for investment management clients, and was with the investment management client practice of audit firm McGladrey and Pullen LLP. Mr. Bahl is a graduate of Queens College of the City University of New York (B.A. in Accounting & Information Systems).
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New York, NY |
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DEREK DUBOIS
Managing Director Treasury
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Mr. Dubois is a Managing Director on the Treasury Team at Deerpath, and manages the external debt financings for the Deerpath Capital funds. He joined Deerpath in 2015 and has 22 years of industry experience. He previously worked in the asset management and treasury and loan operations areas of Newstar Financial and Bank of America/Fleet Bank. Mr. Dubois is a graduate of the University of Massachusetts (M.B.A.) and Bentley University (B.S.).
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Boston, MA |
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TOMASZ MILEWSKI
Managing Director Head of Portfolio Reporting & Analytics
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Mr. Milewski is a Managing Director on the Portfolio Reporting and Analytics Team. He joined Deerpath in 2021 and has 20 years of industry experience. He previously worked within loan syndications, leveraged finance, distressed debt and commercial banking at Bank of Montreal, Bank of America and JP Morgan Chase. Mr. Milewski is a graduate of University of Illinois Urbana-Champaign (B.A.).
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Chicago, IL |
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ALEX BOURDONY
Director Accounting
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Mr. Bourdony is the Director of Accounting at Deerpath. He joined the team in 2021 and has over 8 years of industry experience. His primary responsibilities include overseeing the operations team responsible for the fund accounting and financial reporting for the funds. Mr. Bourdony previously was a technical accounting consultant, both independently and with RSM, focused on the financial services and lending industry. He was a Loans and Deposits Accounting Director of Santander Bank, Controller of Salus Capital, and part of several controller teams at Bank of America. Mr. Bourdony is a graduate of Providence College (B.S. Accounting) and a CPA.
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Boston, MA |
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MICHAEL DAVIS
Director Finance
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Mr. Davis is the Director of Finance at Deerpath. He joined the team in 2012 and has 20 years of industry experience. His primary responsibilities include overseeing the operations team responsible for the fund accounting, financial reporting and loan administration for the funds. Mr. Davis also is the lead on Deerpath funds annual audits. His previous work experience was in fund accounting and operations at John W. Henry & Co. and Franklin Templeton Investments. He is a graduate of Florida State University (B.S. Finance).
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Ft. Lauderdale, FL |
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BRIAN FORDE
Director of Operations
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Mr. Forde is the Director of Operations at Deerpath. He joined Deerpath in 2022 and has over 24 years of industry experience. Prior to Deerpath Mr. Forde spent the 15 years working for First Eagle Alternative Credit and its predecessor NewStar Financial Inc. where he ran the operations and compliance for the firm. He started his career working for State Street Bank and Investors Bank and Trust in various roles. Mr. Forde is a graduate of Salem State University (B.S.).
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Boston, MA |
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CARLOS FIGUEROA
Vice President Loan Administration
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Mr. Figueroa is a Vice President on the Finance and Operations Team. He joined Deerpath in 2016 and has 19 years of industry experience. He previously worked as VP of Fund Administration at a private Investment Management firm in Puerto Rico and as a Fund Accountant at UBS Trust Company of PR. Mr. Figueroa is a graduate of the University of Puerto Rico (B.B.A in Finance).
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Ft. Lauderdale, FL |
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STEPHEN JOHNS
Vice President Treasury
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Mr. Johns is a Vice President in the Finance and Operations Team. He joined Deerpath in 2014 and has 11 years of industry experience. He previously worked in the asset management area of The Bank of New York Mellon. Mr. Johns is a graduate of the University of Pittsburgh (B.S.B.A.).
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Ft. Lauderdale, FL |
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NICK ROSS
Vice President Portfolio Reporting & Analytics
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Mr. Ross is a Vice President at Deerpath and is a member of the Portfolio Reporting and Analytics Team. He joined Deerpath in 2017 and has 9 years of industry experience. He previously worked in corporate ratings and portfolio management at Fitch Ratings and MUFG. Mr. Ross is a graduate of the University of Chicago (B.A.).
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Chicago, IL |
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JOSH WYDRA
Vice President Treasury
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Mr. Wydra is a Vice President on the Treasury Team. He joined Deerpath in 2015 and has 9 years of industry experience. He previously worked in investment and operations consulting at Boston Portfolio Advisors, Inc. Mr. Wydra is a graduate of Kennesaw State University (B.B.A.).
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Ft. Lauderdale, FL |
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Deerpath's mission is to be a leading middle-market direct lending firm with a differentiated focus on minimizing credit losses while maintaining compelling and consistent yields and building valuable long-term relationships with our investors, borrowers, equity sponsors, financial intermediaries and management teams
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Diversity
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We strive to maintain a well-rounded and inclusive workplace of talented individuals
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Entrepreneurship
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We encourage innovation within the firm at all levels, allowing us to continually evolve as we grow
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Excellence
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We desire to be best in class and attract top talent who are self-motivated, experienced and results oriented
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Respect
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We reward teamwork and treating others both within and outside the firm with respect
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Partnership
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We build and sustain long-term relationships within the industry and with our investor community
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Accountability
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We take responsibility for our actions and deliver on commitments to borrowers, partners, and investors
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Teamwork
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We collaborate within and across functional lines to achieve our mission
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Honesty
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We believe integrity and reputation within the market and the investment community is of the utmost importance
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Assessing the impact of Environmental, Social and Governance ("ESG") matters within our portfolio is an essential part of our long-term investment strategy.
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Assessing the impact of Environmental, Social and Governance ("ESG") matters within our portfolio is an essential part of our long-term investment strategy.
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In 2016, we developed and implemented an official ESG policy, thereby making a public commitment to formally incorporating the consideration of Sustainability Risks into our decision making process
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In 2017, we became a signatory to the United Nations Principles for Responsible Investment (UNPRI). As such, we have committed to adopt and implement UNPRI's 6 core principles. As a signatory, Deerpath is required to report annually on our ESG related activities and work together with other signatories to enhance our effectiveness in implementing the principles.
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We continue to network, collaborate and learn from our industry peers, sponsor partners, investors and sustainability industry experts on how we can continue to enhance our internal policies and procedures.
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For more information about Deerpath's commitment to responsible investing, please contact DPIR@deerpathcapital.com.
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For more information about UNRPI, please visit www.unpri.org.
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Deerpath Capital beats target with record $1.1bn close
May 14, 2021
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MM CLO market set to follow BSL issuance frenzy
April 28, 2021
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Deerpath Capital Closes $360 Million Collateralized Loan Obligation Transaction
April 22, 2021
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(NY) Paycheck Protection Program 2.0 set to boost private credit market
January 14, 2021
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NEWS ARCHIVE
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Q1 Update - Deerpath Activity in Review
April 30, 2020
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Q4 Update - Deerpath Activity in Review
January 8, 2020
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Q3 Update - Deerpath Activity in Review
October 16, 2019
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Q2 Update - Deerpath Activity in Review
July 9, 2019
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Q1 Update - Deerpath Activity in Review
April 4, 2019
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Q4 Update - Deerpath Activity in Review
January 4, 2019
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Q3 Update - Deerpath Activity in Review
October 3, 2018
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Q2 Update - Deerpath Activity in Review
July 16, 2018
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Q1 Update - Deerpath Activity in Review
April 10, 2018
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Q4 Update - Deerpath Activity in Review
January 9, 2018
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Q3 Update - Deerpath Activity in Review
October 17, 2017
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Q2 Update - Deerpath Activity in Review
July 20, 2017
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Q1 Update - Deerpath Activity in Review
May 2, 2017
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PALLADIN CONSUMER RETAIL PARTNERS INVESTS IN DECOWRAPS, DEERPATH CAPITAL MANAGEMENT PROVIDES DEBT FINANCING
August 24, 2020
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DEERPATH CAPITAL SUPPORTS GROWTH ACQUISITION PLAN FOR SOUTHERN DENTAL ALLIANCE
March 2, 2017
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DEERPATH CAPITAL SUPPORTS FOUR ACQUISITIONS FOR TOGETHERWORK HOLDINGS, LLC
March 2, 2017
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DEERPATH CAPITAL SUPPORTS REFINANCING AND GROWTH PLAN FOR THE SHADE STORE
February 8, 2017
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DEERPATH CAPITAL SUPPORTS RECAPITALIZATION OF CASTLEWOOD TREATMENT CENTERS
January 5, 2017
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DEERPATH CAPITAL SUPPORTS RECAPITALIZATION OF INSURANCE TECHNOLOGIES, LLC
December 15, 2016
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Deerpath Extends Direct Lending Mindset and Fan Club
August 26, 2021
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(NY) Private equity sponsors expected to help borrowers ride out deadly Delta variant
August 9, 2021
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Deerpath Capital beats target with record $1.1bn close
May 14, 2021
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MM CLO market set to follow BSL issuance frenzy
April 28, 2021
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Deerpath Capital Closes $360 Million Collateralized Loan Obligation Transaction
April 22, 2021
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(NY) Paycheck Protection Program 2.0 set to boost private credit market
January 14, 2021
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The future of private credit
December 18, 2020
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Private Credit to Small Borrowers Booms With Less Competition
September 3, 2020
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HOW WILL THE CORONAVIRUS CHANGE THE MARKET?
May 1, 2020
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Deerpath Capital Closes Second CLO Transaction
April 14, 2020
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DIRECT LENDERS MULL CONCESSIONS TO BORROWERS IN FIRST MAJOR TEST
March 27, 2020
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LOWER MIDDLE MARKET STRATEGIES FLOURISH AMID PRIVATE CREDIT BOON
March 3, 2020
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BDO'S ANNUAL PRIVATE EQUITY OUTLOOK SURVEY
December 17, 2019
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PRIVATE DEBT: TOO BIG TO IGNORE
August 11, 2019
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PALLADIN CONSUMER RETAIL PARTNERS INVESTS IN DECOWRAPS, DEERPATH CAPITAL MANAGEMENT PROVIDES DEBT FINANCING
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August 24, 2020
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Investment Provides Capital and Support for Growth
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New York, NY — Decowraps received an investment from Palladin Consumer Retail Partners. Deerpath Capital Management LP provided financing for the transaction, which will help expand the business. The financing package includes an unfunded acquisition line and a revolving credit facility to support future growth.
Decowraps, based in Florida, manufactures packaging for fresh cut flowers and potted plants. The company operates design, production and distribution facilities in Colombia, The Netherlands, Ecuador, Kenya and China.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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DEERPATH CAPITAL SUPPORTS FOUR ACQUISITIONS FOR TOGETHERWORK HOLDINGS, LLC
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March 2, 2017
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New York, NY — Deerpath Capital Management, LP today announced it acted as sole lead arranger and administrative agent on the funding of a senior credit facility to support four acquisitions by Togetherwork Holdings LLC, a portfolio company managed by Aquiline Capital Partners, LLC.
Togetherwork is an emerging leader in payment processing software for groups and organizations of all kinds. Building on the foundation of Omega Financial, LLC, Togetherwork aims to acquire software companies in adjacent verticals, creating a family of companies that provide similar technology and services to broader organizations such as sports leagues, summer camps and cultural and educational institutions.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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DEERPATH CAPITAL SUPPORTS GROWTH ACQUISITION PLAN FOR SOUTHERN DENTAL ALLIANCE
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March 2, 2017
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New York, NY — Deerpath Capital Management, LP acted as lead arranger and administrative agent on the funding of a senior credit facility to support the growth acquisition plan for Southern Dental Alliance ("SDA"), a portfolio company of Source Capital, LLC. Deerpath has helped finance five of SDA's most recent add-on acquisitions since August 2016.
Southern Dental Alliance is a multi-specialty dental service organization in the Southeast catering to pediatric and adult patients. Headquartered in Atlanta, Georgia, the Company operates 32 clinics across seven primary brands in Georgia, South Carolina and Tennessee.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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DEERPATH CAPITAL SUPPORTS REFINANCING AND GROWTH PLAN FOR THE SHADE STORE
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February 8, 2017
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New York, NY — Deerpath Capital Management, LP today announced it acted as sole lead arranger and administrative agent on the funding of a senior credit facility to support the refinancing and growth plan for The Shade Store, a portfolio company of Great Hill Partners.
The Shade Store is a leading direct-to-consumer provider of custom window treatments, offering shades, blinds, drapery, and other window treatment products and services online and through its 47 branded showrooms. Since its founding, The Shade Store has developed a national brand synonymous with quality, value and service.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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DEERPATH CAPITAL SUPPORTS RECAPITALIZATION OF CASTLEWOOD TREATMENT CENTERS
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January 5, 2017
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Chicago, Illinois — Deerpath Capital Management, LP today announced it acted as sole lead arranger and administrative agent on the funding of a senior credit facility to support the recapitalization of Castlewood Treatment Centers by The Riverside Company.
Castlewood is a leading provider of inpatient and outpatient treatment services for patients suffering from eating disorders and other co-occurring disorders such as anxiety, trauma, chemical dependency, and depression. The Company provides residential treatment, partial hospitalization, and intensive outpatient treatment.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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DEERPATH CAPITAL SUPPORTS RECAPITALIZATION OF INSURANCE TECHNOLOGIES, LLC
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December 15, 2016
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Chicago, Illinois — Deerpath Capital Management, LP today announced it acted as sole lead arranger and administrative agent on the funding of a senior credit facility to support the recapitalization of Insurance Technologies, LLC, a portfolio company of Moelis Capital Partners, which is co-advised by NexPhase Capital.
Insurance Technologies provides sales and regulatory automation solutions to the insurance and financial services industries. The Company's products, ForeSight® (sales illustration) and FireLight® (electronic applications), supply carriers and distributors with sales tools needed to streamline and accelerate the sales process.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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(NY) Private equity sponsors expected to help borrowers ride out deadly Delta variant
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August 9, 2021
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Private equity firms' willingness to provide capital to medium-sized companies helped borrowers thrive through the Covid-19 pandemic and may now help them stay afloat through volatility created by the contagious Delta variant.
Between March and September of last year, alternative lenders, including business development companies (BDC), worked with sponsors to shore up their investments. Private credit firms made loan amendments, and private equity investors put additional capital into middle market businesses.
"Sponsors injected a tremendous amount of capital into the companies, more than we anticipated," Chelsea Richardson, a Fitch Ratings BDC analyst, said. "Some BDCs were willing to do amendments for the right companies if the sponsor wasn't putting in money. But largely, amendments were done with sponsor injections."
The Delta variant has shaken the stock market and prompted new mask mandates that could impact consumer behavior. It delayed corporate plans to return to the office and could put the economic recovery at risk if Americans pull back on consumption in a meaningful way.
Middle market businesses of different sizes received private equity capital through investors such as Golub Capital and Deerpath Capital Management, which funnel money to both the upper and lower parts of the middle market, respectively.
Portfolio companies of Golub Capital BDC received more than US$700m of additional support from private equity firms, Gregory Robbins, a senior managing director at Golub, said on a December earnings call, according to a transcript.
Deerpath saw the private equity owner of a pediatric dental care provider put in two separate equity investments, according to an investor presentation.
In June 2020, the sponsor invested US$10m of equity, which equated to 39% of the company's senior debt. Later, the sponsor returned with an additional US$4.5m in equity to fund growth.
Lower leverage levels can provide a strong rationale for private equity firms to infuse additional equity into a business, according to Antonella Napolitano, Deerpath's head of business development.
"When the senior leverage is low, the junior capital (typically the equity from the sponsor) is quite significant, providing a plentiful financial incentive for the sponsor to continue to support their already significant equity investment when a problem arises," she said in an email. "What adds to this incentive is when the lender sets in place lots of rights and protections that can be used early on when a problem arises."
DEADLY STRAIN
The new Delta variant of Covid-19, more contagious than the original virus, could present middle market companies with some additional challenges.
"With the Delta variant, that does increase the potential that we could see some more amendment activity if it further extends the amount of time that these businesses need to get up to pre-pandemic levels," Richardson said.
Suppose further problems arise because of the new strain. In that case there will still likely be capital available to see the business through the volatility, at least for some time, Rachel Ehrlich Albanese, a partner and vice-chair of DLA Piper's restructuring group said.
This year "has been eerily quiet on the restructuring side. It is because there's just so much money in the market that companies with significant problems, both operational and financial, can still get capital. I don't see the Delta variant at this point reining in the market exuberance," she said.
Secular trends make the glut of liquidity unlikely to end soon. Investors will continue to search for yield, a phenomenon that catalyzed the growth of private debt and private equity.
"I'm not seeing a driver for the pullback in interest in the private debt market," Jamie Knox, chair of DLA Piper's New York finance practice group, said. "If interest rates are hiked up, and you can park your money in Treasury bonds for a significant return, that's a different story. But I don't see that happening."
(Andrew Hedlund; +1 646 223 5558, andrew.hedlund@refinitiv.com, Twitter: @andrewhedlund, @LPCLoans)
About Deerpath Capital
Deerpath Capital Management, LP is a leading provider of senior debt financing to US lower-middle-market companies. Since inception, Deerpath has completed 300+ investments, deploying $2.2bn across a broad range of investment products and transaction types. Visit www.deerpathcapital.com to learn more.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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Deerpath Extends Direct Lending Mindset and Fan Club
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August 26, 2021
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Deerpath Capital Management has successfully filled the lending void left by banks in recent years by creating a safe, market-neutral strategy for global institutional investors, according to Managing Director Reed Van Gorden.
Specifically, Deerpath provides customized cash flow based on senior debt financing to lower middle- market companies across a wide range of industries, filling the space left by reluctant bankers.
Even before the global financial crisis 13 years ago, banks were often reluctant to lend money directly to firms found in Deerpath's purview.
That crisis sucked even more air out of that space. Further, over the subsequent recovery, Dodd-Frank, Basel III, and the updated U.S. guidance on leveraged lending all helped direct banks to the larger businesses, contributing to the neglect of the mid-market.
Some of this was likely unintended by the drafters of the relevant documents. Dodd-Frank, for example, included the Volcker rule, which limited banks' exposures to equity positions in private equity and hedge funds. Banks could still lend to those funds so long as there were no equity features to the debt instrument. But the rule limited the flexibility of banks in this area and created an enhanced opportunity for non-bank lenders to increase their capital offerings to the PE funds.
Direct lending, Van Gorden emphasized, is a very demanding business. "Players that have longevity in the market have a competitive advantage."
Founded in 2007 by Gary Wendt, James Kirby, and John Fitzgibbons, Deerpath has offices in New York (the headquarters), Chicago, Fort Lauderdale, Houston, Boston, and California. Its investment products include first lien senior secured loans, revolvers, stretch senior, unitranche loans, and some equity positions.
Van Gorden said that the "lower middle market" may be understood as "the range of roughly $5 to $20 million in EBIDTA, or between $50 and $100 million in enterprise value."
Why the gap? "Banks are not set up to underwrite deals that come through their regional teams, regional teams focus on ABL deals that conform to a borrowing base," Van Gorden said. "I can get on the phone with the Investment Committee same day in order to approve a deal."
It is precisely this ability to get the necessary information, on a ground-up micro level, or the reliability of its lenders, that allows Deerpath to produce market neutral returns: that is, returns that are not dependent on where a macro-economy is in the business cycle.
Deerpath's portfolio industries include communications, energy and natural resources, healthcare, and manufacturing. The three principals and co-founders (Wendt, Kirby, Fitzgibbons) came together because they realized, as Van Gorden explained, that "there was a great opportunity within the lower middle market to offer safe loans that would produce superior returns for investors."
Tas Hasan, partner and chief operating officer of Deerpath, expressed his view that European institutions are interested not only because of the resilience and growth of the asset class as a whole but because they see the U.S. market as the most mature in direct lending.
"If you want to be a real investor in direct lending you have to have an allocation in the U.S.," Hasan said.
On May 12, Deerpath announced the closing of its Fund 5, which at $1.1 billion was Deerpath's largest fundraising in Europe and Asia thus far. It gained more than 50 new limited partners from around the globe.
The institutions that invested were, in this order: pensions (both public and private), insurers, and asset managers.
A lot of the large pension funds, insurers, and asset management firms that have large allocations in fixed income are eyeing new strategies. In turn they are ripe for the opportunity Deerpath offers – better quality companies that are the top of the capital structure and higher yields, in comparison with bonds, and the bottom of that structure.
About Deerpath Capital
Deerpath Capital Management, LP is a leading provider of senior debt financing to US lower-middle-market companies. Since inception, Deerpath has completed 300+ investments, deploying $2.2bn across a broad range of investment products and transaction types. Visit www.deerpathcapital.com to learn more.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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Deerpath Capital beats target with record $1.1bn close
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May 14, 2021
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US-based fund manager Deerpath Capital Management said in a statement that it held a final close on its Fund 5 with a record $1.1 billion, exceeding its target by $100 million. Like its predecessor funds, Fund 5 pursues first-lien, senior debt financing to lower-mid-market companies with enterprise values of $50 million to $100 million.
The firm said the fund, which was launched in August 2019, received commitments from more than 50 limited partners including pensions, insurance companies, asset managers, family offices and endowments. Investors hailed mostly from North America, Europe and Asia, with the fund seeing its largest fundraise in Europe and Asia to date. According to Private Debt Investor's database, investors included City of Philadelphia Board of Pensions & Retirement, Dallas Fort Worth International Airport, Montana Board of Investments and Santa Barbara County Employees' Retirement System.
With leverage, Deerpath raised more than $2 billion in capital to be deployed, with the firm already committing some 75 percent of the fund's capital to what it characterised as a large pool of portfolio companies that are diversified by industry, geography and sponsor. The fund said it emphasises investments in "high-quality, private equity sponsor-backed companies with longevity and proven profitability in their respective markets and highly cash generative business models".
Deerpath said the fund is targeting net returns of 5 to 8 percent unlevered and 10 to 15 percent levered. Fees are 1 percent on deployed assets for all vehicles, with a carry of 10 percent for unlevered and 15 percent for levered vehicles.
Tas Hasan, partner and chief operating officer, said the fund was oversubscribed despite a challenging environment due to covid 19, and that the firm was pleased to see increased interest from new investors globally as well as sustained support from existing investors. He said the firm had "steadfastly maintained" the investment thesis it began implementing nearly 14 years ago of "prioritising safety in all economic climates to protect against the unexpected".
Deerpath, with $2.6 billion of assets under management, was founded in 2007 by Gary Wendt, James Kirby and John Fitzgibbons.
About Deerpath Capital
Deerpath Capital Management, LP is a leading provider of senior debt financing to US lower-middle-market companies. Since inception, Deerpath has completed 300+ investments, deploying $2.2bn across a broad range of investment products and transaction types. Visit www.deerpathcapital.com to learn more.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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Deerpath Capital Closes $360 Million Collateralized Loan Obligation Transaction
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April 22, 2021
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NEW YORK, April 22, 2021 - Today, Deerpath Capital Management, LP announced the closing of Deerpath CLO 2021-1, a $360 million collateralized loan obligation (CLO). This CLO represents the third CLO issued by Deerpath since 2018 and brings the firm’s total CLO assets under management to approximately $805 million. Deerpath CLO 2021-1 is secured by a portfolio of primarily directly originated, senior secured loans to middle market private equity-backed companies.
Deerpath sold securities rated from AAA through BBB- to third-party investors, including insurance companies, pension funds, banks and asset managers. Deerpath managed funds purchased 100 percent of the subordinated notes issued by the CLO. The Fund has a three-year reinvestment period. GreensLedge Capital Markets LLC served as Lead Placement Agent, Structuring Agent and Bookrunner. Raymond James served as Co-Placement Agent.
Derek Dubois, Managing Director and Treasurer said, “Our third middle market CLO allows us to continue to shift loan assets into more sturdy financing while enhancing our levered returns for investors without creating undue risk. Deerpath’s conservative credit culture, consistent performance, track record through COVID and excellent history of avoiding credit losses resonated very strongly with investors, attracting both reups and new investor capital. We were pleased by the continued excellence in service and execution provided by the Greensledge Capital Markets and Raymond James teams."
Founded in 2007, Deerpath Capital Management, LP is a leading provider of customized, cash-flow based senior debt financing to lower-middle market companies across diverse industries.
About Deerpath Capital
Deerpath Capital Management, LP is a leading provider of senior debt financing to US lower-middle-market companies. Since inception, Deerpath has completed 300+ investments, deploying $2.2bn across a broad range of investment products and transaction types. Visit www.deerpathcapital.com to learn more.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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MM CLO market set to follow BSL issuance frenzy
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April 28, 2021
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Deerpath is thrilled to see Derek Dubois featured in this article about Middle Market CLOs issuance growth. Referencing Deerpath Capital Management, LP's most recent CLO deal, in the piece Derek noted that the space looks attractive for its "relative good value, with triple-A spreads 50bp-60p wider compared to BSL. We prevailed at 165bp for Triple-As."
Read full article here.
About Deerpath CapitalDeerpath Capital Management, LP is a leading provider of senior debt financing to US lower-middle-market companies. Since inception, Deerpath has completed 300+ investments, deploying $2.2bn across a broad range of investment products and transaction types. Visit www.deerpathcapital.com to learn more.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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(NY) Paycheck Protection Program 2.0 set to boost private credit market
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January 14, 2021
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The government’s US$284bn Paycheck Protection Program (PPP) reopened this week and is expected to aid struggling small and middle market businesses, as well as have wider reverberations across the private credit market.
Many non-bank lenders and business development companies (BDCs) accessed funding for their portfolio companies in the first round of the PPP in March. Many lower middle market lenders are likely to tap into the funds again.
BDCs such as Saratoga Investment Corp, Fidus Investment Corp, and Gladstone Capital Corp reported in their first-quarter earnings report in May that they obtained funding from the program. One of them -- Whitehorse Finance, a specialist non-sponsored lender -- secured US$50m in funding for 14 of its companies.
"It helps that there is more liquidity for small and middle market-sized businesses. It relieves a lot of stress. One of the biggest benefactors of these loans is the equity owner, who is relieved from having to put in further equity and dilute their holding," said Reed Van Gorden, a managing director at Deerpath Capital Management, a direct lending firm.
First-time borrowers can obtain loans up to US$10m if they employ less than 500 people.
Companies returning to the PPP are restricted to loans totaling no more than two and half times payroll with amounts capped at US$2m. The companies must have a maximum workforce of 300 people and can demonstrate a 25% decline in revenue in one quarter of 2020 compared with the same period in 2019.
Loans are forgiven if a company uses 60% of its loan to cover payroll and employees are not made redundant. The loans have a five-year maturity (two years if issued before June), are unsecured, and carry a 1% interest.
The Small Business Administration’s (SBA) affiliation rules mean that many sponsored-backed companies cannot enter the program, precluding many private credit firms that target this market. However, the wider private credit market is still expected to benefit from the program as the extra liquidity provides stability across all financial markets.
"PPP stimulus was a very successful program. Companies that accessed funds as a precautionary measure were able to keep their workforce and avoid any restructurings," said Matt Harvey, head of direct lending at investment firm PGIM Private Capital.
Against the background of the PPP launch, a combination of monetary and fiscal policies last year also helped to create a healthy lending environment for middle market companies, said Harvey.
"The additional liquidity created a more patient and accommodative environment across equity and credit markets. Valuations improved, and there was a normalization of the cost of capital, with rates now returning to pre-Covid levels," Harvey said.
US President Donald Trump signed into law the Consolidated Appropriations Act in December, renewing the PPP policy launched in March as a way to provide relief in the short-term for small businesses hit by the coronavirus pandemic.
The traditional banking sector predominantly administers the PPP. Until its closure in August, US$525bn of PPP loans were made to small and middle market businesses, according to the US Treasury.
While non-bank lenders are eligible to participate in the PPP, many have not. The average size of a PPP loan was US$100,000, SBA figures show, significantly below the amounts lower middle market target.
For instance, Fidus targets companies with a minimum of US$10m in revenue. Saratoga said its minimum is US$8m in revenue. Gladstone Capital’s requirements is slightly higher, with a US$20m revenue requirement.
BDC Newtek Small Business Finance is one exception to the non-bank lending market and has again signed up to participate in the second round. The BDC provided US$1.19bn in loans under the PPP last year.
Some believe that the PPP would benefit from greater participation from private credit lenders.
"After the launch of the PPP in March, the money just flew out the door," said Suzie Saxman, partner at law firm Seyfarth. "I think it would be fabulous if some non-bank lenders did try to become qualified. They have access to a different segment of the market."
About Deerpath Capital
Deerpath Capital Management, LP is a leading provider of senior debt financing to US lower-middle-market companies. Since inception, Deerpath has completed 300+ investments, deploying $2.2bn across a broad range of investment products and transaction types. Visit www.deerpathcapital.com to learn more.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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The future of private credit
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December 18, 2020
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As part of the fifth annual LPGP Connect Private Debt Fundraising Conference, Richard Phillips, Director of Private Debt at the Aztec Group, moderated a virtual discussion on the future of private credit. Richard was joined by Sandro Näf of Capital Four Management, Antonella Napolitano from Deerpath Capital Management, Ross Morrow from DunPort Capital Management and Ewan Macaulay of MetLife Investment Management.
Moderator, Richard Phillips (RP): The focus of our discussion is the future of private credit, but can you share your reflections on 2020?
Sandro Näf (SN): March was particularly tough. First, we had to work our way through the portfolio to see what was affected most. Then, we needed to consider how our LPs would want us to behave before moving forward with the investments we had. This meant working closely with portfolio companies, introduced new covenants and business plans that would hit different key performance measures in the light of COVID. It was about striking the right balance between being supportive for companies while doing what our LPs would want us to do.
Antonella Napolitano (AN): Valuations took an enormous hit across the board in Q1, and deal flow plummeted for the better part of Q2. On the LP front, investors took a pause on allocating, and focused on existing portfolios. We saw an immense pick-up around August and September, and in the US, a lot of lending firms had their best September and October deal volumes ever.
Ross Morrow (RM): We had experienced our two busiest quarters in Q4 2019 and Q1 2020, then everything came to a shuddering halt in Q2 of this year. But towards the end of Q3, we began seeing investors willing to reassess or consider new risk. Patience, forbearance and a focus on liquidity was the name of the game for the last six months.
Ewan Macauley (EM): This has been a real-life stress test for all of our portfolios. We have definitely seen a return of clients looking to deploy capital, and also in terms of issuers looking to tap liquidity. One of the benefits of our asset class is that it should perform well compared to other types of debt, or other financial instruments, during a downturn. We’re not out of the woods yet, but it’s been encouraging to see this being borne out.
RP: What challenges, in terms of valuations, do you see coming next year?
SN: The true test of any private debt manager is dealing with those inevitable, difficult situations, and in protecting and recovering value via active management. This means valuations need to be considered through to the lens of a fund’s ability to follow their money, as well as to be able to hold an asset for an extended period where necessary.
RM: We won’t shy away from the fact that some assets may be underperforming relative to their underwriting case. Being transparent, and communicating with your LPs in a clear manner, is important, but you should also be able to explain how you plan to deal with a particular challenged asset. When speaking with our LPs, we have a very clear policy of how we will value our positions and the steps we are prepared to take, regardless of the market backdrop.
EM: Valuations are important, but people need to view things through a long-term lens. This is an illiquid asset class, and all the protections we put into our investments are designed to allow us to ride through the peaks and troughs seen during economic cycles. We remind clients not to get overly fixated on month-on-month movements, and that usually the best approach is to look at the asset over the long term.
AN: We typically get each portfolio company revalued independently once a year, but we revalued our book during COVID because we thought investors needed an independent view of the entire portfolio in light of the unprecedented environment. Valuations declined about 5%, but since then, we have seen writeups each quarter as businesses recover from shutdowns and regain pre-COVID profitability levels, as we continue to receive interest and principle on all of these loans and also as market-required yields stabilise.
SN: These are good opportunities to be transparent about processes and show LPs how we work with third parties to issue valuations. Of course, LPs are grateful when we can add colour to the valuations and explain what’s going on, not just throwing numbers at them.
RP: Are there benefits to having a sponsor in certain transactions, particularly given the liquidity stress of the past six months?
AN: I would say 90% plus of our deals are sponsor-backed. When sponsors put a substantial amount of equity into the deal, the sponsor acts like an airbag cushioning you against an accident. The sponsor has an economic incentive to protect their investment and support companies, because they have a lot at stake. If we didn’t have sponsors in place, we would be doing more restructurings these days.
RP: What are you sensing when it comes to future allocations of capital. Will there be deployment opportunities?
RM: You hate to refer to the pandemic as an opportunity, but its impact will clearly create opportunities for private debt participants, particularly in Europe. I think there will be managers that, over the course of 2021, will reap the benefits of how they responded to the pandemic this year. The “proof is in the pudding” as they say, and I think LPs appreciate how private debt as an asset class has gotten through this first great test.
EM: We felt allocations would probably be quiet for the rest of the year, but we have seen a noticeable uptick in interest over the last six to eight weeks. People are realising that private debt has been holding up well, and have a bit more confidence now than they had back in the spring or the summer. It definitely seems to be going in the right direction.
RP: Will there be a shift in borrowing undertaken as a result of COVID, maybe even contrasting with how the global financial crisis impacted markets back in 2008?
SN: I’m proud the market has done so well through this test period. In contrast, bank solvency mechanisms are still based on centuries-old thinking, lending within a structure that forces you to raise money at the worst possible moment! None of that applies to private debt. Not one single LP came to us in March and said they wanted their money back. More importantly, we can show LPs how we managed the situation with companies during some very challenging times.
RM: Most borrowers and sponsors have had a relatively positive experience that will give further confidence to market participants that this structure works. But for borrowers, working capital still needs to be funded, and bank appetite has just about disappeared. Can private debt lenders step in and provide some form of working capital solution for companies? I think that question is yet to be answered.
RP: What are your thoughts on how EBITDA (earnings before interest, taxes, depreciation and amortisation) is going to be assessed in the coming 12 months?
RM: Pressure has been building on covenants generally in recent years. Lenders are always very focused on cash flow but particularly in the last 12 months. There will be more scrutiny on definitions like EBITDA, as well as covenants more generally, to make sure that they are fit for purpose. Personally, I think definitions will begin to tighten up somewhat in favour of Lenders, but time will tell.
AN: We have always been very careful on EBITDA add-backs generally, and there has been something of a trend for sponsors to try to get approval to add-back even forgivable covid-related government loans as income. That’s not a true company cashflow line item that a company should get credit for, so that’s something we’re continuing to monitor.
RP: Can we finish with your expectations for 2021?
AN: Everything is going to be scrutinised more closely now, particularly with companies that suffered even a mild COVID impact. We now require 13-week cash flow forecasts from companies, because we need to estimate any future imminent liquidity needs that weren’t part of our initial investment thesis. Potential new shutdowns and renewed social distancing across the U.S. coupled with no movement on additional fiscal stimulus, makes the near-term economic environment quite uncertain. This is why it’s important to invest in a strategy designed to provide protection when uncertainty is high. The direct lending asset class is here to stay. Every survey suggests LPs are either sticking with their same allocation or increasing.
SN: We now have a thriving private debt market that uses debt as a capital instrument for companies to thrive under private ownership. These are not weak companies; they are businesses empowered by capital structures that incentivise management and employees. So, investors will want more of this, and companies will want to use it more as a capital instrument. Things will only go one way from here.
RM: I echo the positivity of the panel, but we shouldn’t underestimate the levels of government support that still needs to wash its way through the system. Also, we’ve seen a huge amount of flow and volume into so-called ‘COVID-proof’ businesses. These are interesting companies, but none of them are isolated from all the other normal business risks that come with day-to-day transactions.
EM: We are still cautious, but so far, the asset class has stood up really well to this real-life stress test. Some clients have viewed private credit as just a bit of yield pick-up compared to what is available in the public markets. The value of true downside protection - in the form of covenants - has now been proven in real-time, which will give LPs more belief in the benefits of private credit in future.
To watch the roundtable, please click here
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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Private Credit to Small Borrowers Booms With Less Competition
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September 3, 2020
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In the $850 billion private debt market, it's the jumbo deals that tend to get the most attention. But the smaller transactions, to mid-size businesses that employ a large swath of Americans, make up most of the activity in the asset class.
Looking ahead at the remainder of 2020, the lower middle-market -- broadly classified as financing to borrowers with less than $50 million in annual earnings -- is likely to see a rise in activity, though far off the highs seen in earlier years due to the pandemic. Here, lenders that focus on smaller borrowers, weigh in on the dynamics they're seeing, including higher yields and less competition.
Tas Hasan, partner at Deerpath Capital Management, which typically invests between $15 million and $50 million per deal:
"Our strategy has always been to do a larger volume of the same size transaction versus growing by doing a small number of larger deals in a very competitive space up-market. While there's been a lot of growth in terms of players in the lower-middle market segment, you are not competing with 90 other lenders to do one $100 million loan."
Brett Hickey, chief executive officer and founder of Star Mountain Capital, which makes investments ranging from $5 million to $50 million:
"We've been very active, across two primary camps of investing: one is helping existing portfolio companies acquire challenged competitors as well as helping structure, negotiate, finance and integrate multiple other strategic add-on acquisitions, in addition to investing debt and equity capital into new platform companies. I would say covenants and pricing for the non-sponsored lower middle market have remained strong -- typically these business owners don't want high amounts of leverage and they don't mind giving protective covenants."
Marc Cole, CEO of SG Credit Partners, which provides loans of about $1 million to $10 million:
"The economics have largely been sector driven. In software, where we're highly active, we are seeing it be more competitive than pre-Covid lending. In broad based industries, within an asset-based lending umbrella, then we're seeing more conservative terms across rates, collateral coverage and lending covenants that is a significant tightening over the pre-Covid credit bubble."
Charlie Perer, head of originations at SG Credit, which provides loans of about $1 million to $10 million:
"We're absolutely seeing a period of banks tightening. We're busy for a few reasons: PPP has worn out, companies have to find a way of financing their working capital and borrowers in the lower end of the middle market aren't really able to access private equity capital."
Albert Periu, CEO and founder of San Francisco-based lower-middle market lender Neptune Financial Inc. (NepFin):
"One thing that we're seeing more and more of is lenders partnering on deals. Lenders are reserving capital for loan losses, or they're being more conservative and they want to diversify their risk. The uncertainty is still there, but we're also seeing processes that we didn't expect to be as competitive as they were. Overall, though, we're still seeing spreads 50 to 100 basis points higher than before Covid."
About Deerpath Capital
Deerpath Capital Management, LP is a leading provider of senior debt financing to US lower-middle-market companies. Since inception, Deerpath has completed 400+ investments, deploying $3.3bn across a broad range of investment products and transaction types. Visit www.deerpathcapital.com to learn more.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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HOW WILL THE CORONAVIRUS CHANGE THE MARKET?
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May 1, 2020
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Over the past year or so, the leveraged loan market has taken quite a beating in the press. There was good reason for this. On the whole, this market had a very risky investment philosophy: stretch on credit risk in pursuit of higher yield. As competition intensified in the direct lending market - particularly in the larger company space with loans of $50 million and upwards - and as yields declined, lenders in the leveraged loan market have had a more laissez-faire attitude when it came to upholding high credit standards.
As direct lending continued to flourish following the global financial crisis, corporate lenders began to loosen their investment discipline in order to win new deals and maintain robust deployment numbers amid increased head-to-head competition from direct lending. Lenders started to provide surplus leverage to large borrowers, further fueled by aggressive addbacks. They also began to eliminate financial covenants and set up very borrower-friendly structures. Some of these structures left lenders unprotected from collateral transfer and open to certain 'accordion' features, which gave borrowers the power to draw more debt from the lenders in future without additional consent.
Up until covid-19 placed an abrupt halt to daily life and shuttered businesses around the world, the direct lending environment was unquestionably borrower-friendly. Many lenders saw leverage levels swell to 6x or more and loan-to-value ratios increase to 60 percent and beyond. As a result, cash interest coverage ratios declined. Risk mitigating mechanisms, typically synonymous with an investment in a first lien loan in the US, were disregarded. Most of these loans lacked a full package of quarterly financial covenants, which are key in the measurement of, and timely reaction to, company performance and used to be standard for first lien paper. When there are no covenants in place, the lender is unable to take any action until the company defaults on its interest payments. By the time that happens, the company and the lenders are both in trouble.
Lending to performing companies was designed to be an asset class that provided predictable and stable yields with built-in safety protections to furnish steady returns during market booms and ensure capital preservation during market declines. Moreover, when a bubble is building, mitigating downside risk should be paramount. But downside risk protection against even a moderate recession was not a priority for many lenders. Worse, covid-19 arrived without warning and wreaked havoc on the markets. This year, we have seen wild and unprecedented swings in the public equity and fixed-income markets.
With the first quarter now behind us, what can we expect to see in the private lending market in terms of existing portfolio valuations, covenant breaches and recovery rates? What will new dealflow look like in terms of leverage levels and pricing?
Valuation decline
Private equity firms and lenders alike will see a decline in valuations for Q1 and probably for Q2. This will be especially so for those exposed to sectors hit hard by the pandemic (such as airlines, hospitality and energy) and, to a somewhat lesser degree, businesses in the US that have been mandated by state governments to temporarily close (location-based product or service companies). If the result of covid-19 winds up being a full-blown recession in the US, then many more businesses will be affected.
Lenders that aggressively levered up their borrowers' balance sheets and created covenant-lite structures in the pre-covid deal environment will no doubt see payment defaults spike, losses pile up and recovery rates fall at higher rates than those that lent at much more conservative levels.
Also hard-hit will be those lenders that had a high percentage of non-sponsored transactions. In those cases, it will be the lenders (and not the equity sponsors, as will be the case in sponsored transactions) that will need to provide all the rescue financing and take on the burden of ensuring companies are able to withstand this period of pain.
One area we believe will continue to thrive is the lower mid-market (loan sizes just below $50 million). These corporate borrowers are large enough to have sufficiently strong underlying characteristics to be a safe credit risk, and have credit ratings on a par with or perhaps better than those at the higher end of the mid-market due to lower leverage levels. The level of safety one would have otherwise assumed when investing in a large company has been diminished by the high level of risk created through aggressive leverage levels, no covenants and limited rights when the company underperforms. This has made the very large loan a very risky one.
The lower mid-market had less competition before covid-19, and lenders in this space had more rights than those in the core mid-market. As such, lower mid-market lenders were able to maintain lower leverage levels (3-4x compared with 5.5x or more in the core mid-market), lower loan-to-value ratios (40 percent versus 60 percent or more) and keep EBITDA addbacks at bay. Lenders in this space are also able to manage loans actively by requiring board observer seats, monthly and quarterly financial statements, quarterly compliance certificates and annual independent audits. Superior visibility into borrower performance coupled with control of the loan voting rights allows the lender to exercise its rights early on in order to firmly address problems before they result in payment defaults or loss of principal. Many of these characteristics have been unavailable in the larger loan market.
Although no lender will be left unscathed by the pandemic, those that will persevere are the ones that have insisted on three things: low leverage levels to withstand a steep decline in earnings; partnerships with private equity firms that are willing to support companies by infusing additional equity capital; and abundant lender rights that did not recede during the benign economic environment of the last few years.
As this downturn plays out, we will be left with a direct lending landscape of few players as managers with overleveraged portfolios fall away due to performance and liquidity issues as they manage broken portfolios.
One significant impact of covid-19 will be a change in the direct lending market that will mirror the years following the global financial crisis, when credit was strained and therefore extremely expensive once it had been procured. This will create attractive opportunities for direct lenders in the US.
Lenders that created a portfolio full of loans to good-quality businesses at responsible levels of leverage with private equity sponsors and full covenant protections will not be hindered by severe illiquidity resulting from distressed portfolios that were built over the last few "boom" years. Instead, they will be able to deploy dry powder in a disrupted market that will be very attractive for lenders.
As quality businesses look for loans in a credit-strained market, lenders will demand higher pricing and added protections. We will also see covenants and other protections coming as lenders once again become more stringent on structures and terms.
Antonella Napolitano is managing director and head of investor relations and business development at Deerpath Capital, a US-based provider of cashflow-based senior debt financing to lower mid-market companies.
About Deerpath Capital
Deerpath Capital Management, LP is a leading provider of senior debt financing to US lower-middle-market companies. Since inception, Deerpath has completed 400+ investments, deploying $3.3bn across a broad range of investment products and transaction types. Visit www.deerpathcapital.com to learn more.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
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Deerpath Capital Closes Second CLO Transaction
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April 14, 2020
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New York, NY /PRNewswire/ — Deerpath Capital Management, LP announced the closing of Deerpath CLO 2020-1, a $325 million collateralized loan obligation (CLO). This CLO represents the second CLO issued by Deerpath in the last 16 months and brings the company's total CLO assets under management to approximately $635 million. Deerpath CLO 2020-1 will primarily invest in leveraged loans to middle market private equity-backed companies.
The Fund has a three-year reinvestment period and a collateral pool comprised of a diversified portfolio of senior secured loans. Deerpath sold securities rated from AAA through BBB-. Deerpath managed funds purchased 100 percent of the subordinated notes issued by the CLO. GreensLedge Capital Markets LLC served as Lead Placement Agent, Structuring Agent and Bookrunner. Raymond James served as Co-Placement Agent.
Derek Dubois, Managing Director and Treasurer said, "Our second middle market CLO demonstrates our continued success in the capital markets. This transaction gives our fund investors access to sturdy, conservatively structured leverage at attractive pricing. We continue to broaden and diversify our investor base by introducing new institutional investors to our direct lending platform and welcomed the participation of repeat investors from our previous CLO offering. We were very pleased by the quality of execution from the Greensledge Capital Markets and Raymond James teams and the level of support we received from the investment community through challenging market conditions."
About Deerpath Capital
Deerpath Capital Management, LP is a leading provider of senior debt financing to US lower-middle-market companies. Since inception, Deerpath has completed 400+ investments, deploying $3.3bn across a broad range of investment products and transaction types. Visit www.deerpathcapital.com to learn more.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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LOWER MIDDLE MARKET STRATEGIES FLOURISH AMID PRIVATE CREDIT BOON
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March 3, 2020
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New York, NY (LPC) - Lending to companies with just a few million dollars in earnings is gaining greater interest from investors seeking higher yields and better protections as the private credit market grows increasingly segmented and sophisticated.
Firms are looking to raise funds to target companies in the lower middle market, or companies with an Ebitda of less than US$15m, including Deerpath Capital Management, which wants to raise US$1bn for its lower middle market fund, and PineBridge Investments, which announced it has US$596m to invest. At the same time, Main Street Capital Corp said it is continuing to seek opportunities in this segment.
Lower middle market loans have less leverage and come with higher interest rates to reflect the heightened risk and limited liquidity of smaller businesses compared with those in the core middle market.
Direct lenders have flourished in the last decade by tapping into the core middle market, or companies with US$15m to US$50 in Ebitda. It's an area that some banks have been hesitant to lend to, allowing these financing providers to offer private equity sponsors extra leverage and flexibility at a premium.
But the growing size and sophistication of funds, as well as heightened competition, have weakened terms for loans made to companies with larger earnings.
Private credit firms attempting to win deals in this segment have increasingly come to accept lower spreads. In the fourth quarter of 2019, interest rates on unitranche loans, which are an indicator of the pricing pressure in the middle market, hit a historic low of 578bp, according to data from Refintiv LPC.
Unitranches combine both senior and junior debt into a single tranche and are traditionally provided by non-bank lenders across the segment.
To deploy capital more efficiently, private credit firms have had to look at the upper and lower ends of the space.
SLIDING SCALES
The lower middle market is a haven for many smaller direct lenders and investors seeking better documentation terms. With competition less intense, many of these loans can offer better lender protections.
"There are stricter underwriting standards in the lower middle market – the level of competition is a key factor, and you see less of it in this space," said Tas Hasan, partner at Deerpath.
Lower middle market deals, for instance, distinguish themselves from the upper segments because they still include a fixed-charge coverage ratio and capital expenditure limit.
In deals with companies that have an Ebitda of less than US$15m, 33% of transactions have a fixed-charge coverage ratio and capital expenditure limit, according to a report from law firm Proskauer. But higher-up, these protections become less frequent.
In deals involving companies recording an Ebitda of US$30m or above there are no capital expenditure restrictions, Proskauer data shows.
"Deals involving companies with an average Ebitda of a US$10m-US$15m all have the leveraged covenant, fixed-charge coverage, and Capex restrictions," said Tom Hall, managing director and co-head of private credit at asset manager Capital Dynamics.
"After that, it becomes a sliding scale, and lenders become comfortable with just a leverage covenant, and that gets looser at the upper end of the middle market. As companies grow above US$30m-plus cash flow, the market has decided that covenants have become less important," he added.
BUILD AND GROW
The lower middle market is not as penetrated by private equity sponsors as the core middle market, hence why banks continue to flourish in a segment where borrowers seek lower leverage and are more comfortable with lower pricing.
For some financial sponsors, however, buying into the lower middle market can be part of a long-term plan to expand a business aggressively through add-on acquisitions.
These cases work for private credit firms, which are keen to offer higher pricing in exchange for the flexibility desired by sponsors and are happy to deploy capital into a growing business through delayed-draw term facilities. rivate credit firms also need the extra yield compared with banks to compensate for the higher capital costs.
"Private equity funds embarking on systematic growth through acquisitions is a great strategy for a private credit fund," Hasan said. "We're happy to support bolt-ons and to fund acquisitions.
"For private credit funds at the lower end of the market, investing further capital into a single company can heighten the risk for funds, which are much smaller than core middle market funds.
Saratoga Investment Corp, a lower middle market lender, had investments in ice rental company Easy Ice and inventory management software company Censis, and added to its position over multiple years. This raised concentration issues for the firm – though it reported exiting both positions in its recent earnings call in January. Saratoga could not be reached comment.
Michael Grisius, chief investment officer at Saratoga, said in the firm's January earnings call that it wants to remain focused on the lower middle market.
"We have concentration limits related to industries and portfolio company position size as it's important to maintain diversity – taking an outsized position can negatively impact the portfolio down the line," Hasan said.
But the smaller nature of the companies can mean they are a riskier proposition with alternative capital solutions limited; and they are more vulnerable to broader macro-economic factors.
"If you have a US$10m Ebitda company and that loses US$1.5m in Ebitda, then that can be scary," said Ted Swimmer, head of corporate finance and capital markets at Citizens Bank.
About Deerpath Capital
Deerpath Capital Management, LP is a leading provider of senior debt financing to US lower-middle-market companies. Since inception, Deerpath has completed 400+ investments, deploying $3.3bn across a broad range of investment products and transaction types. Visit www.deerpathcapital.com to learn more.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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DIRECT LENDERS MULL CONCESSIONS TO BORROWERS IN FIRST MAJOR TEST
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March 27, 2020
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Direct lenders around the world are talking with borrowers about easing interest payments, waiving penalties and relaxing covenants as they assess the growing damage to their portfolios caused by the coronavirus pandemic.
The discussions are occurring as the global turmoil seeps into the $812 billion private market. The crisis is one of the first major tests for the asset class, which has grown from about $200 billion before the 2008 financial crash -- buoyed by investors including pension funds, insurers and family offices.
The current upheaval is triggering a torrent of revolver draw requests, and forcing direct lenders to decide just how flexible they can be on already existing credit facilities.
"We're having some high-level conversations about making some temporary allowances," like relaxing interest payments or waiving covenants, said Antonella Napolitano, global head of investor relations at middle-market lender Deerpath Capital Management."We will evaluate these on a case-by-case basis. We are a reasonable lender, but at the end of the day we need to protect investor capital."
Globally, there is some $339 billion of middle-market debt outstanding to the most virus-sensitive sectors, including autos, airlines, drugs and textiles, according to UBS Group AG strategists.
Discussing Options
In North America, at least a dozen direct lenders are considering or have agreed to specific concessions such as switching to alternatives to cash for interest payments or relaxing pre-payment penalties, according to people familiar with the matter. Some who work primarily with private equity-backed companies are resisting making any changes like considering relaxing payments or waiving future covenants unless the firm's sponsors put in more capital or provide fund guarantees, said the people, who aren't authorized to speak publicly.
Toronto-based Bridging Finance has already granted a request from at least one borrower to switch to payment-in-kind interest, according to founder David Sharpe.
"We are open to working with our borrowers and looking at accruing interest if required to get through this period," Sharpe said. "We are non-distressed lenders."
The requests are even filtering down to those who provide financing to small corporate borrowers, like lower-middle market lender JB Capital.
"For anybody that's taking a hard line, whether it's a mortgage company or a private credit line, not giving some degree of flexibility, there's probably a special place in hell for those guys," JB Capital founder Jeremy Hill said.
Ares, Tikehau
In Europe, similar requests from borrowers facing liquidity crunches are flooding in.
Ares Management, the $149 billion alternative asset manager, is "working with our U.S. and Europe portfolio companies, and their sponsor owners, to determine how we can be supportive with their liquidity needs to keep their businesses operating," said Michael Dennis and Blair Jacobson, co-heads of European credit at the firm, in an emailed statement.
As of this week, French alternative investment firm Tikehau Capital has been asked for waivers by two companies heavily impacted by local lockdowns, the firm's head of private debt Cecile Mayer-Levi said.
"Zero revenues is something unheard of and difficult to cope with," Mayer-Levi said."Depending on the situation we'll be supportive, and play our role as a stakeholder alongside shareholders."
About Deerpath Capital
Deerpath Capital Management, LP is a leading provider of senior debt financing to US lower-middle-market companies. Since inception, Deerpath has completed 400+ investments, deploying $3.3bn across a broad range of investment products and transaction types. Visit www.deerpathcapital.com to learn more.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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BDO'S ANNUAL PRIVATE EQUITY OUTLOOK SURVEY
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December 17, 2019
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Every month, we will feature an active member of the ACG New York community in a brief interview. Reflecting industry insight and personal perspective, this feature will introduce industry leaders and offer advice on the tools you need to succeed in the ever-changing middle market.
1. Quick basics- role/firm/focus/how long have you been an ACG member?
I am a Managing Director and Co-Head of our Origination team at Deerpath Capital, a leading provider of customized, cash flow-based senior debt financing to lower middle market companies across diverse industries. Deerpath is headquartered in New York, with offices in Los Angeles, Boston, Ft. Lauderdale, and Chicago. Deerpath invests between $15 million to $50 million in companies that are typically financial sponsor-backed and/or owner-operated, with revenues of $10 million to $200 million. As a senior investment professional leading national origination for the firm, I'm the primary point-person with our private equity and investment bank relationships nationwide. I have been an ACG member since 2012.
2. What do you think are the biggest obstacles in the middle market today?
I think one of the biggest concerns in the middle market is the sheer influx of new capital that has flooded the market over the last several years. This has resulted from an increased number of participants entering the U.S. direct lending market as well as existing participants raising substantially larger funds. This crowed playing field has resulted in all-time high company valuations. The challenge now is how to separate ourselves from the pack and remain differentiated in terms of our products and offerings.
3. How has ACG helped you in your career?
Being a member of ACG has been extremely valuable for me and my firm. ACG has enabled me to develop new relationships and re-engage with old relationships which is a pivotal part of my role at Deerpath. It's really allowed me to develop a large network of both professional contacts and friends, so that I can continue to leverage each ACG member's business skills and services. ACG has provided a platform for me to engage with a spectrum of industry leaders across private equity, banking, consulting, etc., which has helped me grow my business and be successful in my career. Events held by ACG New York and across the country have allowed me to enhance Deerpath's presence in not only the local market here but across the country as well. ACG is one of my most important resources in developing networking contacts, which I find invaluable at this stage.
4. Can you tell us about your greatest success story/ proudest achievement?
I'm very fortunate to be able to work with a group of experienced, intelligent and collegial professionals at my current firm. Professionally, one of my most rewarding successes and achievements has been the opportunity that I've been given to build our origination platform nationwide at Deerpath—building something that we feel is sustainable and will provide long-term opportunities for our firm. So, outside of one particular investment financing opportunity, it's really is the ability to grow our origination and sourcing platform, and to have Deerpath in conversations within the lower middle market on a consistent basis.
5. What changes do you foresee happening in the middle market in the next 3-5 years?
It's very difficult to predict the next five days, never mind the next five years. Historically, there have always been pullbacks, some deeper than others. I think the middle market is here to stay but there will likely be a correction when the next recessionary period hits. That is why we are building a portfolio with ample downside protections in place to be able to withstand economic headwinds.
I think private equity and private debt will remain a valuable resource for corporate growth and development over time. Further, I believe the creative aspect in structuring deals will be contingent on the ongoing availability of capital and ample sources of opportunities in the market. I believe that having the capital available for financing and investing in the lower middle market will continue. The middle market is the life blood of the U.S.
About Deerpath Capital
Deerpath Capital Management, LP is a leading provider of senior debt financing to US lower-middle-market companies. Since inception, Deerpath has completed 400+ investments, deploying $3.3bn across a broad range of investment products and transaction types. Visit www.deerpathcapital.com to learn more.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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PRIVATE DEBT: TOO BIG TO IGNORE
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August 11, 2019
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Antonella Napolitano, head of investor relations at Deerpath Capital, and Gabriella Kindert, member of the supervisory board at Mizuho Europe, join OMFIF's Julia Demidova. They discuss the growing investor appetite for private debt, as well as the increasing importance of environmental, social and governance principles.
About Deerpath Capital
Deerpath Capital Management, LP is a leading provider of senior debt financing to US lower-middle-market companies. Since inception, Deerpath has completed 400+ investments, deploying $3.3bn across a broad range of investment products and transaction types. Visit www.deerpathcapital.com to learn more.
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FOR BUSINESS DEVELOPMENT INQUIRIES
ORIN PORT
Managing Director - Origination
(954) 703-6041
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FOR INVESTOR AND CORPORATE RELATIONS INQUIRIES
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Q1 Update - Deerpath Activity in Review
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April 30, 2020
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Deerpath Capital Management, LP acted as Co-Lender in the funding of a senior credit facility to support a national provider of staffing services to the healthcare and biopharmaceutical industries
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support an IT managed services provider
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support acquisition financing for a provider of answering and virtual receptionist services, with proprietary technologies
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support acquisition financing for a provider of rail inspection, maintenance and construction services
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Q4 Update - Deerpath Activity in Review
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January 8, 2020
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support the refinancing of a provider of marketing services to the global legal community
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support the sponsor buyout of an IT managed services provider offering comprehensive, cloud-based IT solutions
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Deerpath Capital Management, LP acted as Lender in the funding of a senior credit facility to support the refinancing and growth plan of a provider of high security mechanical and electronic locks for highly sensitive environments
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Deerpath Capital Management, LP acted as a lender in the funding of a senior credit facility to support an incremental funding for an offshore acquisition by a manufacturer of liquid level gauges
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Deerpath Capital Management, LP acted as Lead Arranger & Administrative Agent in the funding of a senior credit facility to support acquisition financing for a sponsor-managed provider of HVAC retrofit and repair services to the commercial and education market
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Q3 Update - Deerpath Activity in Review
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October 16, 2019
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support acquisition financing for a provider of revenue cycle management for health systems.
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support acquisition financing for a marketer and distributor of temperature and pressure instrumentation to OEMs, distributors, and end users.
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Deerpath Capital Management, LP acted as Lender in the funding of a senior credit facility to support the refinancing and growth plan of a distributor of retirement-oriented investment products.
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Deerpath Capital Management, LP acted as Lead Arranger & Administrative Agent in the funding of a senior credit facility to support the acquisition financing of a franchise of personal fitness locations executing three territorial growth initiatives.
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support an incremental funding for a multi-unit primary care practice group acquiring a complimentary practice.
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Q2 Update - Deerpath Activity in Review
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July 9, 2019
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support the sponsor buyout of a franchise of personal fitness locations executing territorial acquisition and growth initiatives.
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support the sponsor buyout of a provider of customer-centric utility market intelligence, strategic guidance and tactical advice to U.S. and Canadian utilities.
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support the sponsor buyout of a provider of commercial accounts receivable management for blue chip customers.
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Deerpath Capital Management, LP acted as Lead Arranger & Administrative Agent in the funding of a senior credit facility to support the sponsor buyout of a behavioral health provider focused on adolescents and young adults.
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Deerpath Capital Management, LP acted as Lender in the funding of a senior credit facility to support the refinancing and acquisition of a provider of non-destructive testing, compliance, safety inspection and training.
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Q1 Update - Deerpath Activity in Review
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April 4, 2019
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Health Care Providers & Services
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Deerpath Capital Management, LP acted as Lead Arranger & Administrative Agent in the funding of a senior credit facility to support the refinancing and growth plan of a sponsor-managed leading specialty referral veterinary and pet emergency hospital.
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Recreational Outdoor Products
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support the sponsor buyout of a provider of branded recreational outdoor products for personal care, survival, and first aid.
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Building Automation Services
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Deerpath Capital Management, LP acted as Lender in the funding of a senior credit facility to support acquisition financing for a provider of building automation services focused on energy efficiency solutions.
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support the recapitalization and merger of two providers of chimney and hearth repair and replacement products.
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Commercial Services & Supplies
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Deerpath Capital Management, LP acted as Lender in the funding of a senior credit facility to support acquisition financing for a sponsor- managed provider of fire protection and suppression, security, communications, and electrical solutions.
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Commercial Services & Supplies
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Deerpath Capital Management, LP acted as Lead Arranger & Administrative Agent in the funding of a senior credit facility to support acquisition financing for a sponsor-managed provider of mechanical HVAC retrofit and repair services. Our luxury escort ladies can visit your New York City hotel or home where you can spend quality time alone with the NY elite escorts ladies of your choice.
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Q4 Update - Deerpath Activity in Review
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January 4, 2019
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Deerpath Capital Management, LP acted as Administrative Agent & Joint Lead Arranger in the funding of a senior credit facility to support the sponsor buyout of a radiation oncology management and cancer center development company.
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support the recapitalization of a provider of outsourced revenue collection services to hospitals and large physician groups.
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support the sponsor buyout of a provider of enterprise and mobile application software technology and development services.
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support the sponsor buyout of a West Coast-based pediatric dental and orthodontic services platform.
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Deerpath Capital Management, LP acted as Sole Lead Arranger & Administrative Agent in the funding of a senior credit facility to support the recapitalization of a provider of integrated eye care services across nine locations.
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Q3 Update - Deerpath Activity in Review
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October 3, 2018
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Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to support the recapitalization of a provider of recoverable shipping rack logistics management services to nursery retailers and growers.
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Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to support the refinancing and growth plan of a casual live entertainment and restaurant concept in the Southeast.
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Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to support the sponsor buyout of a provider of dental care to skilled nursing facility patients across the U.S.
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Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to support the sponsor buyout of an early childhood education and enrichment provider in the Northeast.
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Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to support the recapitalization of an operator of men's health clinics, with 11 clinics across eight states.
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Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to support the sponsor buyout of a multi-unit primary care practice group focused on treating the Medicare population.
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Q2 Update - Deerpath Activity in Review
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July 16, 2018
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Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to support the recapitalization and merger of two test preparation providers by a Midwest-based sponsor.
The Company is a premier provider of live classroom and asynchronous online courses, tutoring, and preparation materials for admission tests related to various post-undergraduate programs including law school and medical school.
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Deerpath Capital Management, LP acted as lead arranger and administrative agent on the incremental funding of a senior credit facility for a portfolio company managed by a Midwest-based sponsor.
The Company is one of the largest end-to-end pallet management services providers in the United States.
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Deerpath Capital Management, LP participated in the funding of a senior credit facility to support the recapitalization of a provider of physical therapy services by a Northeast-based Sponsor.
The Company is an operator of physical therapy locations which provide a complete continuum of care along a wide range of physical therapy, chiropractic and acupunctural services, backed with effective administrative reporting.
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Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to support the recapitalization of an environmental remediation Company by a Midwest-based Sponsor.
The Company is a provider of asbestos abatement, lead paint abatement, air duct and HVAC systems cleaning, mold remediation, and biological services to its customers.
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Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to support the recapitalization of a manufacturer of liquid level gauges and fuel sensors.
The Company is a leading manufacturer of liquid level gauges and fuel sensors for application in equipment of various types across the entire commercial & industrial segment.
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Q1 Update - Deerpath Activity in Review
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April 10, 2018
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December, 2017 — Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to support the recapitalization of a heating, ventilation, and air conditioning (HVAC) services provider by a Midwest-based sponsor.
The Company provides a full spectrum of mechanical HVAC retrofit and repair services primarily to the education, municipal, and hospital end markets in the Southwest.
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February, 2018 — Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to support the recapitalization of an acute brain injury rehabilitation provider by a Midwest-based sponsor.
The Company a leading provider of post-acute acquired brain injury rehabilitation services in the Mid-Atlantic, operating 35 facilities. The Company provides neurorehabilitation, neurobehavioral treatment, and supported living services in homes, apartments, and outpatient facilities.
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February, 2018 — Deerpath Capital Management, LP acted as a participant in the funding of a senior credit facility to support the recapitalization of an operator of private schools by a Northeast-based sponsor.
The Operator is a for-profit, private school company that manages Pre-K to 8th grade schools in US metropolitan markets. The Company operates 34 schools across 14 metro markets in nine states and has completed 15 acquisitions since inception.
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March, 2018 — Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to support the acquisition of a Software as a Service (SaaS) provider by a West Coast-based sponsor.
The Company provides mission-critical dealership management system software for the specialty vehicle market, including RV, marine, heavy duty truck, and emergency vehicles. Founded in 1984, the Company serves over 350 customers across North America.
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Q4 Update - Deerpath Activity in Review
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January 9, 2018
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October, 2017 — Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to support the recapitalization of an urgent care and primary care provider by a Midwest-based sponsor.
The Company is a leading regional provider of urgent care, primary care, and related services in the Northeast. The Company operates 18 locations, treating over 500 patients per day and over 180,000 patients annually.
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October, 2017 — Deerpath Capital Management, LP acted as participant in the funding of a senior credit facility to support the recapitalization of a provider of residential home services and restoration services by a Midwest-based sponsor.
The Company is a leading regional provider of specialty home renovation services for residential homeowners, including replacement windows, roofing, vinyl siding, attic insulation, and gutter guards. The Company has seven locations across the Midwest and provides delivery, installation and quality inspection services.
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October, 2017 — Deerpath Capital Management, LP acted as participant in the funding of a senior credit facility to support the recapitalization of a substance abuse treatment provider by a Northeast-based sponsor.
The Company is a national provider of chemical dependence and addiction treatment services with operations in California, Florida, and Maryland. The Company has nine treatment facilities that provide a range of therapies, including detox, inpatient rehab, residential, partial hospitalization and outpatient services.
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November, 2017 — Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to a portfolio company managed by a Midwest-based sponsor, to support its acquisition of a California-based provider of last-mile logistics solutions.
The Company is a leading provider of third-party logistics last-mile delivery solutions, providing routed delivery services, last-mile delivery, less-than-truckload and other delivery solutions. The Company is a regional market leader in the Midwest.
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November, 2017 — Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to a portfolio company managed by a Midwest-based sponsor, to support its acquisition of a provider of safety and security software solutions.
The Company is a leading provider of incident reporting and tracking software to law enforcement, education, healthcare, and corporate customers nationwide. The Company provides a SaaS-based software solution.
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November, 2017 — Deerpath Capital Management, LP acted as sole lead arranger and administrative agent in the funding of a senior credit facility to a portfolio company managed by a Northeast-based sponsor, to support its acquisition of a destination services provider.
The Company is a leading destination services provider, supporting relocation management companies by providing destination services, property management, valuation services, and intercultural training. The Company serves large, blue-chip customers worldwide.
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Q3 Update - Deerpath Activity in Review
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October 17, 2017
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July, 2017 — Deerpath Capital Management, LP acted as sole lead arranger and administrative agent on the funding of a senior credit facility to support the refinancing of a portfolio company of a Midwest-based sponsor.
The Company is a leading branded marketer and distributor of temperature and pressure instrumentation, including gauges, thermometers, controls, instruments, and accessories. The Company sells its products to distributors, OEMs, and end users in the transportation, fluid power, and oil & gas end markets.
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July, 2017 — Deerpath Capital Management, LP acted as sole lead arranger and administrative agent on the funding of a senior credit facility to a portfolio company managed by a Northeast-based sponsor.
The Company is a leading specialized out-of-home ("OOH") advertising business that helps advertisers build one-to-one relationships with millions of consumers
nationwide during their daily lives in unexpected places.
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August, 2017 — Deerpath Capital Management, LP acted as lead arranger and administrative agent on the funding of a senior credit facility to support the recapitalization for a portfolio company managed by a Northeast-based sponsor.
The Company is a dental services organization providing business support services to affiliated dental practices in micropolitan areas across the Southeastern U.S. The company operates over 30 practices across Georgia, Tennessee and South Carolina.
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August, 2017 — Deerpath Capital Management, LP acted as lead arranger and administrative agent on the funding of a senior credit facility to a portfolio company managed by a Midwest-based sponsor, to support its acquisition of an industry leader in quality pallet manufacturing and recycling.
Founded in 1989, the Company is a leading provider of recycled pallets and pallet management services, with operations in Texas, Oklahoma, California and Arizona. The Company provides recycling and repair services, facilitating the re-use of previously used wood pallets and helping companies across the supply chain capture value from an otherwise wasted asset.
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Q2 Update - Deerpath Activity in Review
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July 20, 2017
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May, 2017 — Deerpath Capital Management, LP announced it acted as sole lead arranger and administrative agent on the funding of a senior credit facility for a refinancing and dividend recap for a portfolio company of a Northeast-based sponsor.
The Company is a collection of e-commerce businesses specializing in envelopes, folders and complimentary products for businesses, organizations and consumers. The brands have category killer domain names that drive brand recognition and credibility within their categories.
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June, 2017 — Deerpath Capital Management, LP announced it acted as sole lead arranger and administrative agent on the funding of a senior credit facility to support two acquisitions for a portfolio company managed by a Northeast-based sponsor.
The Company is an emerging leader in payment processing software for groups and organizations of all kinds. The Company aims to acquire software companies in adjacent verticals, creating a family of companies that provide similar technology and services to broader organizations such as sports leagues, summer camps and university organizations.
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June, 2017 — Deerpath Capital Management, LP announced it acted as sole lead arranger and administrative agent on the funding of a senior credit facility to support the merger of a portfolio company of a Midwest-based sponsor.
The combined company provides outsourced billing and collection services and software to hospitals and physician groups across the U.S.
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Q1 Update - Deerpath Activity in Review
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May 2, 2017
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January, 2017 — Deerpath Capital Management, LP acted as sole lead arranger and administrative agent on the funding of a senior credit facility to Dynamic Dental Partners, a portfolio company managed by Huron Capital Partners, to support its acquisition of Dental Partners, LLC.
Dynamic Dental Partners is a dental service organization providing administrative and operational support to 52 dental practices (combined) across Florida, Tennessee, Arizona, Virginia, Kentucky, and Georgia. The dental practices supported by the Company provide a broad range of reoccurring general dentistry services overlaid with specialty services including prosthodontics, endodontics and orthodontics.
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January, 2017 — Deerpath Capital Management, LP acted as sole lead arranger and administrative agent on the funding of a senior credit facility to support the refinancing and growth plan for The Shade Store, a portfolio company of Great Hill Partners.
The Shade Store is a leading direct-to-consumer provider of custom window treatments, offering shades, blinds, drapery, and other window treatment products and services online and through its 47 branded showrooms. Since its founding, The Shade Store has developed a national brand synonymous with quality, value and service.
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February, 2017 — Deerpath Capital Management, LP acted as sole lead arranger and administrative agent on the funding of a senior credit facility and equity co-investment to Competitive Edge Software, LLC, a portfolio company managed by The Riverside Company, to support its acquisition of Information Technologies, LLC.
The Company is a leading provider of incident reporting and tracking software to education, healthcare, corporate, and law enforcement organizations nationwide. The Company acquired a provider of incident reporting software focused on the law enforcement market.
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March, 2017 — Deerpath Capital Management, LP acted as lead arranger and administrative agent on the funding of a senior credit facility to support the growth acquisition plan for Southern Dental Alliance ("SDA"), a portfolio company of Source Capital, LLC. Deerpath has helped finance five of SDA's most recent add-on acquisitions since August 2016.
Southern Dental Alliance is a multi-specialty dental service organization in the Southeast catering to pediatric and adult patients. Headquartered in Atlanta, Georgia, the Company operates 32 clinics across seven primary brands in Georgia, South Carolina and Tennessee.
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OFFICE LOCATIONS
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New York
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405 Lexington Avenue
53rd Floor
New York, NY 10174
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Boston
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45 School Street
Suite 304
Boston, MA 02108
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Chicago
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190 S. LaSalle Street
Suite 1900
Chicago, IL 60603
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Fort Lauderdale
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1800 S.E. 10th Avenue
Suite 220
Fort Lauderdale, FL 33316
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Los Angeles
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2500 Broadway
Suite F-125
Santa Monica, CA 90404
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