European Loan Origination

Direct lending to European small and mid-market companies

We have spent decades developing relationships across Europe

Established Relationships

Check out an Example Loan Profile

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Established Relationships
Example Loan Profile

Loan Origination Strategy

Our European loan origination strategy focuses on senior secured EUR denominated loans to small and mid-market European companies.  We seek to leverage the robust networks of our team, and our network of advisors, industry contacts and existing relationships to source highly attractive opportunities on a proprietary basis.

Targets stable yields on a risk adjusted basis

Senior secured EUR / GBP denominated loans
(and second lien up to 20%)
(across separate currency funds)

No more than 25% exposure per borrower
(ex-5.5 year ramp up period)

We focus on companies with EBITDA between €1 million and €60 million which we believe is a much less crowded space, where loan documentation and covenants remain robust and there is a reasonable liquidity premium.

Stakeholders with whom we have relationships

The team have spent decades developing relationships across Europe:

Banks

Large Banks and Smaller, Regional Banks

Deal Flow Drivers

  • Banks have always had long-standing relationships with their corporate clients. Every corporate has a relationship bank.
  • Since the financial collapse in 2009, banks have come under continued regulatory scrutiny which has affected their ability to lend in quantum.
  • Although funds have made significant inroads in Europe, banks remain the primary source of capital for mid-market and SME corporates.
  • Funds and financial institutions are increasingly cooperating with banks. Several noted and formalised partnerships are well recognised.

Advisor’s Approach

  • Relationships with regional and national banks across Europe
  • Relationships with pan-European banks

Investment Opportunities

  • LBOs
  • Growth financings
  • Acquisition financings
  • Refinancings

Corporates

Deal Flow Drivers

  • Corporate borrowers targeted directly through our network of accountants and corporate advisors.
  • Utilise networks such as the ACG and SME forums to reach corporates across Europe who seek alternative or additional sources of capital.
  • Reverse enquiry.

Advisor’s Approach

  • Work with local advisors across Europe
  • Leverage prior success in each respective region

Investment Opportunities

  • LBOs
  • Growth financings
  • Acquisition financings
  • Refinancings

PE Sponsors

Mid-Market Private Equity Sponsors

Deal Flow Drivers

  • Sponsors are increasingly looking to alternative sources of funding as banks have reduced balance sheet capacity.
  • Speed and efficiency is deliverable from funds where banks have been suffering due to implementing regulation.
  • Ability of funds to lend longer duration non-amortising facilities.

Advisor’s Approach

  • Revisit all prior PE relationships for portfolio expansion opportunities and refinancing

Investment Opportunities

  • LBOs
  • Growth financings
  • Acquisition financings
  • Refinancings

Advisors

Mid-Market Debt Advisors

Deal Flow Drivers

  • Debt advisors are now a permanent feature of the European corporate debt
    landscape, assisting both corporate and PE clients alike.
  • They have become a key feature of the European debt market and good
    relationships with the key advisors can lead to significant deal flow.

Advisor’s Approach

  • Access local, regional and pan-European advisory network to identify suitable investments for investors

Investment Opportunities

  • LBOs
  • Growth financings
  • Acquisition financings
  • Refinancings

Example Loan Profile

Company Description

Heart is the Italian leader in the manufacturing and rental of portable waste management products

Opportunity

A secondary LBO financing through long term international sponsor relationship for attractive niche market leader in Italy

Key Terms
  • EURIBOR (0% floor) plus 6.25%
  • 2.75% Arrangement Fee
  • Financial covenants, maximum net leverage, maximum capex, and DSCR
Investment Thesis
  • Dominant market position in portable waste management products rental market in Italy with unparalleled geographic reach through its unique dealer network;
  • Resilient business model with largely variable cost structure resulting in reasonable cash flow generation during downturns;
  • Proven management team which weathered financial/construction crisis;
  • Substantial equity cushion at close translating into moderate financial leverage and low LTV;
  • Attractive returns on a relative value basis vs. similarly leveraged credits offering significant premium over flow Italian leveraged loans currently yielding in the 3.5-4.0% area.
Differentiated Approach
  • Opportunity to position Foxford as key private debt provider in Italy and to become financing partner for the sponsor’s new fund
  • Positioned to benefit from follow-on financing through accordion feature and right of first refusal for follow up financing.