Mezzanine Finance May 18, 2018 Dan Hemiadan, CFA, Partner, GMB - - PowerPoint PPT Presentation
A G E N D A A Day in the Life: Mezzanine Finance May 18, 2018 Dan Hemiadan, CFA, Partner, GMB Mezzanine Capital Stephen Hann, CFA, Vice President, Spell Capital Partners 1 A G E N D A 1 Introductions 2 Background & Career Path 3
A G E N D A
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May 18, 2018 Dan Hemiadan, CFA, Partner, GMB Mezzanine Capital Stephen Hann, CFA, Vice President, Spell Capital Partners
1 Introductions 2 Background & Career Path 3 Firm Overview 4 What is Mezzanine Finance? 5 Responsibilities 6 Skill Set 7 Q & A A G E N D A
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BACKGROUND & CAREER PATH
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Dan Hemiadan, CFA Stephen Hann, CFA Education Education ▪ BS, St. Cloud State University, Finance ▪ CFA Charterholder ▪ BA, Hillsdale College, Economics ▪ CFA Charterholder Work History Work History ▪ GMB Mezzanine Capital ▪ Churchill Capital ▪ U.S. Bank Leveraged Finance ▪ Spell Capital Partners ▪ Black River / Proterra ▪ U.S. Bank Capital Markets ▪ Wells Fargo Global Banking
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Dan Hemiadan, CFA Stephen Hann, CFA GMB Mezzanine Capital Spell Capital Partners ▪ Mezzanine fund manager ▪ Based in Minneapolis, MN ▪ 10 employees ▪ SBIC investment program ▪ Currently investing Fund III ▪ 90 investments since 2005 ▪ Active portfolio: 30+ investments ▪ Investment size: $5 – 25 million ▪ Private equity and mezzanine fund manager ▪ Based in Minneapolis MN ▪ 12 employees ▪ SBIC investment program ▪ ~$600.0 million AUM ▪ Currently investing Fund II ▪ 31 investments since 2013 ▪ Active portfolio: 26 investments ▪ Investment size: $4 – 12 million
FIRM OVERVIEW
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Funding % of Capitalization Multiple of Cash Flows Target IRR Source of Repayment Providers
Senior Debt 30.0% - 40.0% 2.0x – 3.0x 6.0% - 8.0% Cash Flow, Liquidation of Assets Banks, Commercial Finance Co’s Mezzanine 10.0% - 15.0% 3.0x – 4.0x 17.0% - 19.0% Cash Flow, Senior Debt Refinancing, Sale of Company Mezzanine Firms Equity 40.0% - 50.0% 6.0x – 8.0x 21.0% - 25.0% Sale of Company Private Equity Firms WHAT IS MEZZANINE FINANCE?
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Concentrated portfolio (5-7 investments) High-risk, high-reward Capital gains Longer time horizon – realizations after 5-6 years Diversified portfolio (10+ investments) Lower volatility Current income Shorter time horizon / “j-curve” – realizations as early as 2-3 years
WHAT IS MEZZANINE FINANCE?
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▪ Origination 1. Financial sponsor network 2. Investment banks 3. Commercial banks 4. Other mezzanine providers 5. Personal networks 6. Other….? ▪ Execution 1. Due diligence 2. Financial modeling 3. Credit Underwriting 4. Investment committee 5. Documentation RESPONSIBILITIES ▪ Portfolio Management 1. Performance vs. projections 2. Liquidity 3. Cushion to covenants 4. Valuations ▪ Regulatory Compliance 1. Reporting 2. Legal filings ▪ Fundraising 1. Marketing 2. LP meetings
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10.High ethical standards
SKILL SET
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DOFU 2-2018 432062