Stellus Capital Management is Launched

Stellus Capital Management, an independent investment firm, has announed its official launch and spin off from the D. E. Shaw group. The Stellus team will continue its current strategy of providing secured and unsecured loans to mid-market companies and private equity sponsors in a wide range of industries to support growth, leveraged buyouts and refinancings.

PRESS RELEASE

Today, Stellus Capital Management, LLC, (“Stellus”) an independent investment firm, announces its official launch and spin off from the D. E. Shaw group. As an independent firm, the Stellus team will continue its current strategies of providing secured and unsecured loans to middle market companies and private equity sponsors in a wide range of industries to support growth, leveraged buyouts and refinancings, as well as its current strategies of providing equity and equity-linked debt to the North American energy sector with a focus on the upstream oil and gas segment. Stellus expects to maintain an ongoing strategic relationship with the D. E. Shaw group, continue to provide investment advice relating to approximately $1.4 billion in assets, and raise and manage new funds.

“We believe the favorable supply-demand dynamics within the middle market provide attractive private credit investment opportunities”
“We are enthusiastic about the opportunity to be independent, and are grateful to the D. E. Shaw group and our investors for their continual support,” said Robert Ladd, Managing Partner and Chief Investment Officer at Stellus Capital Management. “We’re launching fully equipped with an established strategy, a talented veteran team, and solid experience generating cash flow for our investors.”

Most of our senior team members have worked together for more than 12 years, founding the Direct Capital unit at the D. E. Shaw group in 2004. Stellus has 15 investment professionals in four office locations, including its Houston headquarters, the New York area, San Francisco, and the Washington, D.C. area.

Over the past seven years, the Stellus team has overseen the investment of more than $5 billion of capital in 193 companies, developing deep expertise in select verticals, including energy, specialty finance, software, general industrial, defense, and government and business services. Stellus will continue to focus on investing in companies with $5 million to $50 million in EBITDA through a process that emphasizes structural flexibility, rapid turnarounds, straightforward negotiations and a proven ability to close.

“The Stellus Capital team has invested profitably together as part of the D. E. Shaw group’s Direct Capital unit, and we continue to believe it occupies a great niche in the middle market direct capital sector,” said Lou Salkind, a member of the Executive Committee of the D. E. Shaw group. “We wish Rob and his team much success and look forward to maintaining our strategic relationship with Stellus.”

Stellus provides flexible capital solutions at all levels of the capital structure, including: first lien, second lien, unitranche, mezzanine, and convertible debt and preferred and common equity. Capital solutions can range from $10 million to over $100 million for public and private entities seeking capital for various purposes, including: acquisitions, recapitalizations, growth opportunities, leveraged buyouts, rescue finance, distressed or turnaround situations, and bridge loans.

“We believe the favorable supply-demand dynamics within the middle market provide attractive private credit investment opportunities,” said Dean D’Angelo, Partner and Co-Head of Private Credit, Stellus Capital Management. “The significant dry powder at private equity firms along with maturing capital structures should drive demand for middle market debt.”

“We are also excited about the current trends and opportunities for investment within the energy industry,” said Todd Overbergen, Partner and Head of Energy, Stellus Capital Management. “We have a long history of providing flexible capital and being good partners in the energy industry, and we look forward to continuing this philosophy at Stellus Capital Management.”

About Stellus Capital Management

Stellus Capital Management is an independent investment firm that provides secured and unsecured loans to middle market companies and private equity sponsors as well as equity capital to North American energy companies. The Stellus team provides investment advice in respect of approximately $1.4 billion in assets from existing D. E. Shaw group portfolios, continuing work they begun as members of the D. E. Shaw group’s Direct Capital unit. Over the past seven years, the Stellus team has overseen the investment of approximately $5 billion of capital in 193 companies. Stellus’ credit business is focused on direct investing in companies with $5 million to $50 million in EBITDA. Stellus’ energy equity strategy is focused on providing equity and equity-linked capital to small and middle market energy companies. Stellus invests across a wide range of industries, and has deep expertise in select verticals such as energy, specialty finance, software, general industrial, defense, and government and business services. Stellus has 15 investment professionals in four office locations, including its Houston headquarters, the New York City area, San Francisco, and the Washington, D.C. area.