Fifth Street Finance Corp. said on Thursday that it has closed its $114 million acquisition of Healthcare Finance Group, LLC. Also, Dan Chapa, who previously served as HFG’s president replaces HFG’s former CEO and founding member, Isaac Soleimani. For the transaction, Keefe, Bruyette & Woods and UBS Investment Bank acted as financial advisors to HFG while Greenhill & Co. acted as financial advisor to Fifth Street. HFG is a specialty lender providing asset-based lending and term loan products to the healthcare industry.
WHITE PLAINS, N.Y., June 13, 2013 – Fifth Street Finance Corp. (NASDAQ:FSC) (\\\”Fifth Street\\\”) today announced that it has successfully closed its portfolio company acquisition of Healthcare Finance Group, LLC (\\\”HFG\\\”). Fifth Street invested $114 million to effect the acquisition, financing the purchase with available liquidity, including operating cash and borrowings under Fifth Street’s existing credit facilities. Fifth Street expects the acquisition to be immediately accretive to net investment income. An asset-based and cash flow term loan lending specialist, HFG has long-standing expertise in the healthcare industry. Since inception, HFG has financed in excess of $21 billion in receivables.
HFG’s sophisticated and highly scalable operating platform includes an internally-developed technology system that facilitates daily credit monitoring and insight into customer performance. The proprietary system is highly adaptable, with additional capabilities that can be leveraged as the platform continues to expand. With over 20 years of healthcare finance or related industry experience, HFG’s senior management team will provide continuing leadership under the direction of the company’s new Chief Executive Officer, Dan Chapa. Mr. Chapa, who previously served as HFG’s President, as well as a member of its Board of Directors and Credit Committee, replaces HFG’s former Chief Executive Officer and founding member, Isaac Soleimani. The senior management team will also have a meaningful ownership stake as part of the transaction.
“We believe this strategic investment will reinforce Fifth Street and HFG’s respective healthcare expertise,” noted Leonard M. Tannenbaum, Fifth Street’s Chief Executive Officer, adding, “We expect that this acquisition will provide extraordinary opportunities for platform growth – especially as we assist HFG in exploring alternative applications for its proprietary collateral and loan performance technology.”
“As we seek to accelerate HFG’s growth going forward, we could not ask for a better suited partner than Fifth Street. As a Fifth Street portfolio company, HFG is uniquely positioned to become the premier middle-market healthcare lender in the U.S.,” said Dan Chapa, adding, “We are grateful for all of Mr. Soleimani’s contributions and wish him good luck with his future endeavors.”
For the transaction, Keefe, Bruyette & Woods, Inc. and UBS Investment Bank acted as financial advisors and Kaye Scholer LLP served as legal advisor to HFG. Greenhill & Co. acted as financial advisor and Proskauer Rose LLP served as legal advisor to Fifth Street.