Antares Capital and Bain Capital Credit on Friday unveiled a joint venture to provide unitranche loans of up to $350 million to middle-market companies.
Called Antares Bain Capital Complete Financing Solution, the venture will offer first-lien unitranche loans to companies with $10 million to $75 million of EBITDA, executives said.
The joint venture replaces Antares’s prior unitranche product, the Middle Market Growth Program. ABCS has acquired 14 companies previously owned by Middle Market Growth Program, said Tim Lyne, an Antares senior managing director. He declined to disclose which companies were part of ABCS.
Two middle-market powerhouses will back ABCS, helping it compete against rivals in the unitranche space, including Golub Capital and Ares. Antares, with $19 billion in capital under management and administration, is the biggest middle-market lender, closing 117 deals during the first half of 2017. Bain Capital Credit, meanwhile, has more than $35 billion in AUM, including about $7 billion in private credit. Over the summer, Bain closed its first BDC on $1.26 billion in commitments.
Antares and Bain Capital Credit have completed lots of deals together in the past few years, Lyne said. “We’re thrilled. … We developed a lot of mutual respect for each other’s credit and diligence processes,” he said.
Private equity sponsors will be excited by ABCS’s capabilities in the middle market, said Michael Ewald, a Bain Capital managing director. ABCS’s unitranche loans do not require agency meetings or a syndication process.
As such, ABCS can provide “speed and certainty and scale” to buyout shops seeking to preempt an auction process or just looking to close a deal quickly, Ewald said. “We do think there is a need and desire for that in the marketplace,” he said.
The executives declined to disclose whether either firm would have a controlling stake in ABCS. They also did not disclose any financial terms of the venture. Antares and Bain both committed significant dollars to ABCS, Lyne said. “We are totally aligned,” he said. “Antares and Bain are basically playing in the same position. It’s pretty evenly split.”
ABCS is Antares’s latest unitranche joint venture. GE Capital and Lone Star Funds originally launched MMGP in 2014 as a joint venture. The venture ended when Canada Pension Plan Investment Board acquired Antares from GE in 2015 for $12 billion. Antares and Lone Star relaunched MMGP in January 2016.
In May, Lone Star pulled out of MMGP without disclosing a reason for withdrawing from the program, Buyouts reported. The MMGP had 16 borrowers, totaling nearly $2 billion in assets, the story said. MMGP deals included Littlejohn & Co’s buy of Tidel in March, Calera Capital’s acquisition of Evans Network of Cos in February and, in December 2016, FFL Partners’ buy of Crisis Prevention Institute.
Lone Star exited the joint venture because it wasn’t happy with the way the venture worked, Buyouts said. In MMGP, Lone Star owned the junior interest, while Antares had the senior interest, the story said. The loans were structured so that if one went bad, Lone Star was responsible for all the losses until its capital was wiped out. The junior interest had a higher yield if the portfolio performed satisfactorily, the story said.
There is no distinction between Bain and Antares in ABCS, Ewald said. “We’re in the same place together,” he said.
Lone Star could not be reached for comment.
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