The private equity credit and fund restructuring team of institutional alternative asset manager Crestline Investors has closed four transactions committing a combined total of more than USD200 million in capital.
Crestline also assumed governance rights across another USD250 million of capital contributed or rolled by existing investors.
The group, first launched in October 2016, pursues niche financing opportunities in the private equity markets by providing bespoke capital solutions, including preferred equity and flexible debt structures, to mature private equity funds approaching the end of their structural lives.
Recently closed deals encompassed a broad range of industries, such as healthcare, financial services, energy, construction and building materials, technology, security, media, consumer and business services, and included a preferred equity investment into a 14-year–old private equity (PE) fund that has significant asset value remaining in its portfolio. This investment allowed the general partner (GP) to provide liquidity to a group of investors as well as recycle some of the new capital into the largest portfolio company to refinance out more expensive debt.
There was also another preferred equity investment into a new holding company that acquired the assets from two affiliated funds. This investment provided capital that was used to purchase existing limited partner (LP) interests as well as finance targeted follow-on investments into the remaining holdings.
The deals included Loans to several portfolio companies that were credit enhanced by a fund level guarantee. This facility enabled several portfolio companies to borrow capital to support growth initiatives accretive to the fund, plus a combined preferred equity and common equity investment into an acquisition vehicle that purchased a fund and its holdings out of receivership and simultaneously injected fresh capital into the largest portfolio company.
“These deals show that there is significant need for financing in the private equity markets, satisfying a range of liquidity requirements for both LPs and GPs,” says David Philipp, a managing director at Crestline and co-head of the PE credit & fund restructuring group. “Crestline is committed to being a leader in this growing area, which is a natural extension of our expertise in the broader credit and restructuring markets.”
Michael Rich has joined the PE credit team as a director. Rich was previously a director at LStar Capital, the credit affiliate of Lone Star Funds, a private equity firm. His previous roles include co-founder and principal at Three Seas Capital, portfolio manager at Highland Capital Management and vice president at Banc of America Securities.
Rich’s addition brings the size of the team to nine dedicated professionals, plus three operating partners, with diverse backgrounds in portfolio financing, private equity and hedge fund (HF) secondaries, direct secondaries, credit underwriting, fund restructurings, PE investing, co-GP engagements, workouts and valuations. Rich is the second senior-level hire following the addition of Amit Mahajan in October 2016, who co-leads the strategy with Philipp.
“There are many private equity funds out there whose portfolio companies require follow-on funding, but existing LPs are unable or unwilling to invest additional capital,” says Mahajan. “Previous solutions to this problem were either costly, slow or both, and we have been able to step in as an investor to provide one-stop debt or equity financing that can be customised to meet the needs of all parties.”
