We established the Mezzanine Finance strategy in 2001 to capitalize on our skills in credit analysis, private equity and workouts. We seek high current return and long-term capital appreciation, emphasizing fundamental credit analysis with a bias toward risk control. We focus on middle-market transactions which are sourced from the group's extensive relationships in the private equity community.
"We target middle market companies with enterprise values between $150 million and $750 million, which are either too small to access the public markets or too large for most other mezzanine funds," says Bill Casperson, co-portfolio manager. "We believe the general lack of widely available financing sources in this part of the market represents a competitive advantage for our funds, where we target mezzanine investments for leveraged buyouts, recapitalizations, acquisitions and corporate growth," he adds. Co-portfolio manager Raj Makam notes that the team "looks for companies with a strong relative market position and well-developed business strategy, in addition to sustainable cash flows and a proven management team."
The key elements of our approach include working with experienced management teams and strong equity sponsors, conducting thorough due diligence for every transaction, avoiding overpriced transactions, targeting conservative deal structures, participating in company governance (through board seats or observer rights) and actively monitoring investments to stay ahead of potential credit issues.