Coolest creative hybrid capital / structured deals done?
Kicking forum off.
What are some of the coolest hybrid capital / equity oriented credit / rescue financing investments made in the past few years?
The COVID rescue financings for growth oriented businesses at depressed valuations were pretty cool - Charlesbank / Great Hill Partners converts into Wayfair (Charlesbank realized a 4.1x), Sixth Street / Silverlake convertibles bonds into Airbnb at a sub 10% LTV.
The rescue capital for Eventbrite with a brutal 110+ call protection during COVID was pretty cool as well.
In IPCo land, the airline loyalty program securitized vehicles and the Revlon BrandCo loans were creative as well.
Recently some converts with min returns have been done recently for Netskope, Arctic Wolf which are pretty interesting structures.
Hey Associate 2 in PE - Other, I think you deserve a response...heck, everyone does. We're listening, sorry about the delay ...my best guess at places on WSO that could help:
More suggestions...
Hope that helps.
Apollo's investment journey in Hertz spanned both equity and credit in various forms, very interesting.
Where do you find detail on the deals you mention in your post?
Public filings / disclosures since almost all were public companies. United released a cool deck on their Mileage Plus financing.
There is a good King and Spaulding report on Revlon and there is a publicly available Charlesbank presentation to Rhode Island which walks through Wayfair.
Newer deals are from press releases.
you mind posting the link to the charlesbank one / others?
Thanks!
We had a first time fund come to us after they fell short on LP commitments to purchase a company they had under LOI. We structured a loan to a Hold-co secured by the funds entire equity stake in the business, the loan was dropped down to the asset-co as equity which allowed the acquisition to close.
We ended up taking a big chunk of the equity and have a mid-teens coupon on the note. Company is performing very well and were tracking to a mid 40s IRR.
Took a chunk of equity because the bridge didn't happen or as part of the original?
Part of the original. We knew the sponsor was so far in the green we could squeeze
If I was an LP I would be livid at the GP for taking that deal.
Thats the lps fault for not committing the capital in time
who are the most active players in this space recently?
We funded a rescue deal by putting capital into a new UnSub that took a royalty interest on assets from the ParentCo. Unlike JCrew this was a consensual deal with the existing lender and we took a 2nd on the ParentCo assets as well, but because we had a heavy amortization schedule our loan came out out ahead of the existing lender. There was a nuance to the assets we financed where you really couldn't sell them so long as we held the royalty lien which created an incentive to take us out anyway. This was a 2Y, 25% IRR trade.
Funded a non-sponsor acquisition that was effectively asking for 100% financing so we took 25% penny warrants in addition to 1L credit priced at 15% with aggressive cash flow sweeps. Because it was a larger check we had a bank turn it into a separable CUSIP unit deal with a small club, so after close you could freely trade the bond and warrant pieces. We sold the bond at a gain and road the equity for free to an exit event a year and a half later. ~2x MOIC trade.
Just a couple examples. Have had more interesting structures that never made it to closing for one reason or another.
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