Canadian investment bank FirePower Capital has launched an asset management arm that will provide debt financing to lower mid-market Canadian businesses.
The FirePower Private Capital Division, a specialist 'Gap Debt' lender, aims to assist lower mid-market Canadian businesses searching for capital to continue to grow.
"Canadian entrepreneurs just do not get their due in this country," says FirePower's founder and chief executive officer Ilan Jacobson. "Quite simply, businesses here do not have access to what their US counterparts do in terms of next-stage, growth financing, which is stifling innovation and giving Canadian entrepreneurs a bad rap."
With backing from FirePower principals, outside investors and a partnership with a US-based private investment firm, the new division has access to over CAD100 million in capital to be applied primarily for loan sizes between CAD0.5 million to CAD5 million.
Having overseen more than CAD300 million in transactions across a variety of sectors and industries, FirePower recognised the need for a different approach that allows companies access to additional financing in ways that account for their enterprise value and what their prospects are.
"In the lower-mid market, lenders generally are not capable of providing the same level of service and due diligence that they provide for larger transactions, as it’s not economically viable," says Jared Kalish, co-founder and head of Firepower Private Capital Division. "As a result, smaller transactions are often assessed using a 'check-the-box' approach, which relies on tangible assets rather than focusing on cash flow and enterprise value."
"With our background, expertise, and technology, we will be literally filling the gap in providing financing options to the lower mid-market, hence the term Gap Debt," adds Jacobson. "There is a strong need in this country for businesses that don't necessarily have tangible assets but do have strong cash flow and enterprise value and solid growth prospects to be able to get financing to grow and innovate. We plan to fill that gap."
