Investment Analyst - Prudential Private Capital (PPC) FT 2021

The role is underwriting and performing credit analysis on mostly mid-sized private debt deals. From my understanding deal teams are usually pretty lean so you get good experience early on. Also, depending on your geographic preference will determine what industry you are focused on. For example, I know Dallas is energy, New York is corporate finance, and Newark is infrastructure. So depending on where you are placed will determine what type of deals you work on. I think it’s a really good starting position if you’re interested in private placements.

Also, for those who are confused Prudential Private Capital was rebranded a few years ago and used to be known as Prudential Capital Group.

Interview Prep - RB2000 & GoldMen's Sacks  & @rogerthat317" , @nontargetscum" - I can send lev fin/direct lending interview prep materials for next time- hit me up (market updates, primers, exercises, whatever)

here's what I wrote in the Bain Credit Interview thread https://www.wallstreetoasis.com/forums/bain-capital-credit-sa-first-rou…

Interview Prep

1) Read loan market updates (weekly/Q) - LCDcomps.com / LevFin Insights (LFI)

2) Loan products (RC/TLA/1L TLB/2L TL/Unitranche) - get comfortable distinguishing btw lender/investor, general characteristics

• -Revolver/Term Loan A (banks, less leverage, covenants, 5yr tenor, pricing is lower, amort on TLA)
• -Term Loan B: 1st Lien TLB / 2nd lien TLB / Unitranche (institutional investors, more lev, possibly cov-lite, higher pricing, 1% amort - 1L/2L - no amort, etc.)

3) Direct Lending vs. Broadly Syndicated - Execution Strategy - know the diff considerations from borrower perspective

• certainty of funds, speed of execution, albeit at a higher price/fees most likely, deal w/ 1 lender vs. a group of lenders, etc.) - read Direct Lending primer

4) Underwriting Fees & Flex - LBO: RC / 1L TLB / 2L TL. Typical fees and flex, normal market:

• RC/1L 2.25% (125 bps flex)
• 2L 2.75% (150 bps flex)
• Privately placed 2L 0.25% to 0.50% UW Fee (priv placed much more common today)

5) Credit Risks & Mitigants (Credit Strengths & Weaknesses) – familiarize yourself

• -Ratings Reports – basically summarize this for you (create login – Moody’s and S&P – get free access to “Rating Action” reports)
• Example:  eResearch Technologies (B/B3 CFR)
• Revolver $200 / 1st Lien TLB $1,155 /   Priv Placed 2L TL  $395
• EBITDA $210
• Leverage 5.5x/7.4x

Credit Strengths (Moody’s)

• 1) significant  customer concentration (albeit across a number of different clinical trials) – could also be considered a weakness (customer concentration)
• 2) strong market position in the niche electronic based clinical outcome assessment market,
• 3) solid growth prospects driven by favorable industry fundamentals,
• 4) solid EBITA margins
• 5) high revenue visibility provided by contract backlog.
• 6) meaningful growth in the backlog in the last 6m indicates that the company has largely overcome the operating challenges
• 7) revenue growth coupled with cost saving initiatives will drive earning expansion
•  a) Moody's projects will reduce Debt/EBITDA to <7.0x in 2020

Credit Weaknesses (Moody’s)

• 1) very high financial leverage - PF Moody's Adj. Debt/EBITDA:  7.9x
• 2) elevated financial risk associated with private equity ownership evidenced by aggressively high initial debt levels following the proposed LBO
• 3) aggressive track record of growth through debt-funded acquisitions.
• 4) significant  customer concentration (albeit across a number of different clinical trials)
• 5) risk that larger better capitalized companies could choose to pursue developing their own electronic clinical outcome assessments.
• 6) recent revenue declines related to integration of the 4 recent acquisitions, to extend into early 2020.

Helpful links to comments I wrote on OID, All-in-yield calc, UW fees and flex, Term Loan A vs. Term Loan B. Hit me up if u want - happy to send materials / docs / primers, etc.

https://www.wallstreetoasis.com/forums/tla-vs-tlb-maturity-and-leverage#comment-2071053

https://www.wallstreetoasis.com/forums/oid-in-leveraged-loans