GE Antares beefs up lower mid-market team

David Brackett, senior managing director of GE Antares, said the Chicago-based unit of General Electric Co had been moving up market simply by tracking its client base of sponsors, which have often raised much larger buyout funds and are doing larger deals.

While the middle market, companies with $30 million to $50 million in EBITDA, remains a fertile place for deals, GE Antares last year created a New Relationship Development (NRD) team to expand its lower mid-market lending practice.

“Our roots were in lending to companies of $10 million to $20 million in EBITDA,” Brackett said. “We wanted to re-emphasize that business.”

On this front, Eric Hansen has been named managing director and leader of New Relationship Development. He is a GE veteran and a founding member of GE Antares, with more than 20 years of sponsor finance deals under his belt and a resume that includes time at Heller Financial, which GE purchased in 2001.

Matt Pauley has joined GE Antares as senior vice president, West Coast NRD, after working at direct corporate lender GE Capital Corporate Finance.

The two executives are teaming up with Chip Cushman and Matt Cutri in New York City and Kevin Fitzgerald in Chicago.

So far, the NRD team has closed three lower mid-market deals in 2014 totaling $118 million.

Brackett said sponsors have been eying the lower middle market for more attractive purchase price multiples, which are often lower by 1x EBITDA or even up to 3x EBITDA compared to more crowded auctions in the middle market.

“Smaller companies are riskier,” Brackett said. “They’re more fragile. They can’t absorb shocks as easily. As a senior lender, we’re comfortable concentrating on it. We feel we have the team and the story and the depth of experience to do the right due diligence. We’ve seen just about every way you can lose money. We hope to be aware of the risks and look for the deals with a higher probably of success.”

To outflank the competition, GE Antares offers clients resources from its parent company such as industry expertise in energy, healthcare, aerospace and other sectors, plus CFO summits and partnerships with GE’s global research centers.

GE Antares is taking on other players such as Monroe Capital, Golub Capital, Madison Capital and business development company specialists such as Prospect Partners. Ares Management also has made moves into this area as well.

Outside of its refinancing and add-on deals, GE Antares’s pipeline has seen a 60 percent increase in new platform company deals so far in 2014, compared to the year-ago period. Platform deal volume is also up 20 percent versus the same period in 2012. Signs point to more volume on the horizon as the United States moves through only the middle innings of its economic recovery, Brackett said.