Enhanced Capital Announces Final Closing of Enhanced Credit Supported Loan Fund

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Dec 02, 2014, 08:05 ET

NEW YORK, Dec. 2, 2014 /PRNewswire/ -- Enhanced Capital Group announced today the final closing of their Enhanced Credit Supported Loan Fund (ECSLF). The fund raised $105 million in LP investments and has the ability to utilize another $50 million in bank leverage. ECSLF has completed ten financings within the last eleven months.

Through its Arch Note product, ECSLF solves equity needs of financial sponsor-backed portfolio companies with non-dilutive debt. Arch Notes are one to five year loans to portfolio companies backstopped by an unsecured fund guarantee from a financial sponsor (PE fund, VC fund or family office). The Arch Note utilizes the extra credit support to provide "off market" debt financing for these portfolio companies. Because of the fund guarantee, ECSLF can lend to companies at below-mezzanine rates (without warrants or any equity upside) in situations that would typically require equity-like returns. Arch Notes typically range from $5 million to $20 million, with the ability to lend up to $50 million through a co-investment pool.

Sponsors use the Arch Note to: obtain non-dilutive debt capital in situations where other lenders would not provide debt (negative EBITDA, challenging industries, new technology risk, high existing leverage), unlock the value of older funds that are at or beyond their investment period, bridge to an exit, reduce the equity required to make a new or add-on acquisition, or free up undrawn capital pledged to a bank. Arch Notes may be structured as first lien, second lien, unsecured, or holdco loans.

"We structure our deals to solve equity problems with debt solutions in an effort to maximize a fund's returns," said Douglas A. Cruikshank, Managing Partner for ECSLF. "This gives financial sponsors an attractive alternative to finance growth or pivots in lieu of using equity. Our approach allows sponsors to leverage their portfolio value, instead of undrawn capital commitments, to support their companies. Because we focus on the value of the financial sponsor's portfolio, rather than the standalone credit quality of a single borrower, we can close transactions quickly and with a high degree of certainty, without the need to perform costly quality of earnings analyses."

About Enhanced Capital
Enhanced Capital, headquartered in New York City, is a diversified private investment firm focused on established small and mid-sized companies overlooked by traditional sources of capital. Founded in 1999, Enhanced Capital's funds finance businesses across its targeted investment, asset management and tax credit finance platforms. For more information, visit www.enhancedcapital.com.

This is intended for marketplace communication purposes only and is neither an offer to sell nor a solicitation of any offer to buy any securities, investment product or investment advisory services. This is not an offering or the solicitation of an offer to purchase an interest in a fund.

Media Contact:
Nick Pandiscio on behalf of Enhanced Capital
[email protected]
(646) 820-3830

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SOURCE Enhanced Capital