Apollo Investment Corp. has become the anchor equity investor in a loan vehicle managed by Madison Capital. The vehicle has acquired from Madison Capital a pool of senior secured loans to middle market companies in the U.S. that are valued at $250 million. The vehicle will have revolving secured financing provided by Wells Fargo Bank, National [...]

M&A is slowing and don’t expect any large $10 billion LBOs this year.

Such was the gist of a recent Morningstar report, “Making Sense of M&A Amid Market Turbulence.”

In it Morningstar is taking a much more sober view of the M&A market than it did earlier this year. Then, Morningstar was very upbeat about merger prospects and forecast the return of blockbuster deals. It also believed the credit markets were primed for increased takeover activity.

Madison Capital has named Jeffrey Day as a senior vice president in its capital markets team. Day worked previously as an executive director at JP Morgan Chase, where he focused on debt and equity capital raising for Chase Commercial Bank clients. Earlier in his career, Day was a Director at CapitalSource Finance.

Amalgamated Capital, the New York-based leveraged finance division of Amalgamated Bank, announced today that it served as co-lead arranger and syndication agent, alongside Madison Capital, for for $27 million in senior secured credit facilities to support the refinancing of CarePoint Partners, a portfolio company of the Chicago-based private equity firm Waud Capital Partners. The money enabled CarePoint, a [...]

I moderated a debt markets panel during last week’s Buyouts Texas, and was struck by a comment from Devon Russell, a senior managing director from Madison Capital Funding. He said that while mid-market lenders are slowly increasing their deal volume, they also are shutting out certain equity sponsors who have exhibited bad behavior over the past year.

Russell was specifically referring to situation where “everyone knows it’s over,” but the private equity firm nonetheless “stands in the [lenders’] way.” All of the other panelists bobbed their heads in agreement.

Madison Capital Funding, a subsidiary of New York Life Investments, has acquired a portfolio representing 40 different mid-market borrowers. The collective commitments total more than $141 million.  PRESS RELEASE Madison Capital Funding LLC (“Madison Capital”), a premier financing company focused on the needs of middle market private equity sponsors, has acquired a portfolio of investments representing [...]

Mid-market lender Madison Capital has laid off 7 employees, or 10% of its staff, Senior Managing Director Chris Williams confirmed to peHUB. The layoffs occurred yesterday on the heels of news that Dymas Capital, another Chicago-based middle market lender, had laid off 10 employees. Six deal pros remain at Dymas.

For its part, Madison Capital reduced its headcount to the the same level it had in fiscal 2007, Williams said. “Throughout 2008, we ramped up to meet the activity levels we were experiencing. The first quarter of 2008 was a record time for us. The deal flow has slowed down so we have taken ourselves back a level.” The firm now has 55 to 60 people.

Since BDCs rely on their stock for liquidity, it’s safe to say they’re in a world of hurt right now. We saw American Capital and Allied Capital post losses and either reduce or possibly eliminate their dividends last week, for example.

Today Fifth Street Finance, a lower middle market BDC that went public in June (one of the whopping two financial services IPOs this year), released its monthly shareholder update. I spoke with CEO Len Tannenbaum about fake term sheets, who’s really in business (he names names), nosebleed lending rates and what his firm will do when it runs out of money:

What do you mean by “fake term sheets”? Are lenders really trying that hard to keep up the appearance of being open for business?

Some of them have submitted term sheets that have no way or desire to be completed. They have no money to do it, so they’re trying to do it with such onerous terms, and not negotiating

In fact, the firm expects to close 10 to 15 deals in the fourth quarter. Christopher Williams, a founding partner at Madison Capital Funding, called to clarify that after I wrote some apparently ambiguous comments on middle market lending pullbacks.

So let it be known: Madison Capital has cash to spend. The firm has not narrowed down its deal criteria over the last few weeks, as I had written. The only change, Williams said, is that Madison Capital is pushing for the absolute latest financial performance numbers on companies. “The last thing we want to do is book a company that we haven’t

That’s because the middle market is simply not strong anymore, particularly on the lending side. Take GE Capital, which today revealed cracks on the wall:

G.E. said it was seeing rising delinquencies on its consumer and commercial finance business. It plans to set aside provisions for pretax losses of $6.6 billion this year, a sharp rise from 2007, and it expects losses to rise next year to $7.5 billion to $9 billion. (NY Times)

This supports yesterday’s story in The Deal, which reported GE Antares has suspended new financing until January (sub req):

Chicago-based GE Antares, which dominates the middle market, has walked away from commitments and even pulled staples, sources said.

It’s true that GE is, for the most part on the sidelines, a source told me, but the firm is still looking at deals. Same goes for Madison Capital, which is rumored to be closed for business. “They’re saying yes. Not often, but they’re still saying yes to conservatively levered loans with low loan to enterprise value and a lot of equity.”

“Not very often” is pretty damaging, when it’s the two largest mid-market lenders. In Q3 ’08, deal volume was down 22.2% from Q3 ’07, which was a post-credit crunch quarter itself. This week alone, peHUB tracked a mere 17 new deal announcements. Depending your size threshold for middle market, most of these deals barely even make the cut.

The middle market even was down at the start of this year, when a headline