Looks like non-sponsored deals, ex-SSG heritage, junior pieces on HoldCo and Pref but any additional commentary would be good. What kind of deals these folks doing? Any insight into the actual structures they have on deals? What about the types of MOIC/IRR’s does Hybrid Capital get?
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Based on the WSO Dataset, the GSAM Hybrid Capital group is known for its innovative approach to investments, often engaging in non-sponsored deals that leverage the expertise and heritage from the Special Situations Group (SSG). Here's a breakdown of what you need to know about their deal activities and structures:
Deal Types: The GSAM Hybrid Capital team typically focuses on junior pieces on holding companies (HoldCo) and preferred equity (Pref) investments. These investments are usually in the form of mezzanine debt or structured equity, which are less senior in the capital structure but offer higher yield potential due to their increased risk.
Deal Structures: While specific deal structures can vary widely based on the unique aspects of each investment, Hybrid Capital often employs creative structuring to align interests and optimize returns. This might include features like payment-in-kind (PIK) interest, equity kickers, or warrants that provide upside participation.
MOIC/IRR Expectations: The types of multiple on invested capital (MOIC) and internal rate of return (IRR) that GSAM Hybrid Capital targets can be quite aggressive, reflecting the higher risk and subordinated nature of their investments. While specific targets can vary, it's not uncommon for funds operating in this space to aim for IRRs in the mid-teens to low twenties, depending on the risk profile and market conditions.
Investment Philosophy: The group's approach is characterized by a deep dive into the operational and financial aspects of the target company, leveraging GS's extensive network and resources. This thorough due diligence process allows them to identify unique opportunities and negotiate deal terms that provide a strong risk-adjusted return.
In summary, the GSAM Hybrid Capital group focuses on complex, high-yield investment opportunities, employing sophisticated structures to achieve attractive returns. Their strategy is built on the foundation of GS's broad capabilities and the team's specific expertise in identifying and executing on unique deals in the market.
Sources: GSAM best groups?, Deal Structure For First Deals, AM vs HF: The Business of Our Business, GSAM Multi Asset Solutions, Goldman Sachs MBD vs. SSG vs. MSI
Do they hire mid-levels externally?
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