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D E Shaw Group spin-off Stellus Capital Management launches,

Stellus Capital Management, a spin off from the D E Shaw Group, has launched as an independent investment 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 USD1.4 billion in assets, and raise and manage new funds.
“We believe the favourable 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,” says 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, DC area.

Over the past seven years, the Stellus team has overseen the investment of more than USD5 billion of capital in 193 companies, developing deep expertise in select verticals, including energy, specialty finance, software, general industrial, defence, and government and business services. Stellus will continue to focus on investing in companies with USD5 million to USD50 million in EBITDA through a process that emphasises 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,” says 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 USD10 million to over USD100 million for public and private entities seeking capital for various purposes, including: acquisitions, recapitalisations, growth opportunities, leveraged buyouts, rescue finance, distressed or turnaround situations, and bridge loans.

“We believe the favourable supply-demand dynamics within the middle market provide attractive private credit investment opportunities,” says 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,” says 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.”


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