FirstLight Financial, an arranger of senior debt for mid-sized leveraged buyouts, has fired roughly one-third of its 65-person staff, peHUB has learned.
The less-than-one-year-old firm got caught flatfooted after building a business model that presumed a thriving market for loan syndication—a market that dried up after last summer’s the credit crunch. The layoffs span the entire spectrum of personnel, from managing directors to lower-level staff members.
A person close to FirstLight describes the layoffs as necessary “right-sizing” in light of the credit crunch gripping the entire financial sector. He adds that the move doesn’t mean the lights are going out for the firm. “It’s a good time to be a lender if you have the capital, and [FirstLight has] the capital,” he said. The firm is “open for business and still arranging and making” loans.
The Old Greenwich, Conn.-based firm officially started in April, backed by consumer-focused LBO shop Catterton Partners and Ares Capital Corp., the business development company managed by Los Angeles-based Ares Management.
Led by Ron Carapezzi, a former top finance executive at General Electric Co., FirstLight Financial constructed its business model largely on a foundation of collecting fees for arranging and managing the syndication of senior loans. The firm has kept on its balance sheet between 25 percent and 30 percent of the value of the loans it’s arranged, according to our source. The remainder was sold off to other investors in arranged deals.
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