Trian Fund Management, the investment firm backed by Nelson Peltz, has filed to raise $300 million through the IPO of a business development corporation. Newly formed subsidiary Trian Capital Corporation will IPO as a closed-end, non-diversified investment company.
According to the prospectus, filed May 27, Trian Capital will invest in “leveraged companies” in the form of senior and junior secured loans, subordinated loans, bonds, mezzanine loans and direct equity investments.
The fund will be raised as a blind poll and include no legacy investments, which the firm named as a benefit. According to the prospectus, “We expect to benefit from having fresh capital at a point in the credit cycle when assets can be acquired at attractive risk-adjusted prices. As a result, we believe that our lack of exposure to legacy “problem credits” compared with other capital providers will give us a competitive advantage over other capital providers in terms of deploying capital and recruiting talent.”
Trimaran Capital Advisors is serving as a sub-adviser to the firm on the transaction. Nelson Peltz will act as the BDC’s chairman and Peter W. May will act as the firm’s Vice Chairman. Jay Bloom and Dean Kehler will act as the firm’s Co-Presidents and Co-Chief Investment Officers.
Merrill Lynch is the firm’s underwriter.
Trian is not the only firm seeking to capitalize on creditor dislocation in the middle market. Earlier this week peHUB reported that THL Partners had filed to raise the same amount through an IPO of its debt unit, THL Credit, as a BDC.
Like THL, Peltz will be entering the market during a time of consolidation for BDCs. As I wrote earlier this week:
Plummeting stock prices and mark-to-market accounting rules have diminished the firms’ collateral against lines of credit, which in turn, has diminished their ability to lend. Smaller shops like Patriot Capital and GSC Investment have announced plans to explore strategic alternatives. Meanwhile, American Capital faces a potential bankruptcy if it cannot negotiate a deal with lenders over a recent default on its debt.
View the entire filing here:
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