Bain Capital’s credit arm is backing a startup focused on asset-based loans to mid-sized companies, an area that could provide more opportunities for private investment firms as some US regional banks face pressure on deposits and pull back from lending.
(Bloomberg) — Bain Capital’s credit arm is backing a startup focused on asset-based loans to mid-sized companies, an area that could provide more opportunities for private investment firms as some US regional banks face pressure on deposits and pull back from lending.
Legacy Corporate Lending, based in Plano, Texas, will provide term loans and revolving credit lines backed by assets such as unpaid bills from customers, inventory, machinery, equipment, real estate, and intellectual property to companies in North America, it said in a statement.
These kinds of loans often appeal to companies that because of their credit profile may struggle to access more conventional financing.
Bain has historically focused its lending on companies that generate cash flow, said Michael Ewald, global head of Bain’s private credit group, in an interview.
But that space has grown more competitive in recent years. Backing an asset-based lender allows the firm to develop relationships with companies that can one day grow into users of more traditional direct loans, said Ewald.
“When we were looking at the market, we thought adding another arrow to the quiver of products we can offer made a lot of sense, so we’ve been looking at different opportunities for three to four years now,” Ewald said.
The firm considered buying an existing lender, but ultimately decided to back Legacy because it didn’t have an existing portfolio of loans that could have trouble assets, he said.
Legacy will be led by three executives, each with more than 25 years of experience in the commercial finance or ABL space.
Its chief executive officer is Clark Griffith, who spent most of his career at General Electric Co.’s GE Capital. Chief Operating Officer Lawrence Ridgway moved from Citizens Financial Group’s commercial banking division, where he served as a senior vice president.
Paul Martin, who has co-founded several ABL companies, is Legacy’s chief investment officer.
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