New Moon: Inside Encina Business Credit’s Recapitalization and Transformation

Although the news attracted plenty of eyeballs when it broke, for Eclipse Business Capital (we’ll be calling it by its new name throughout this article for clarity’s sake), this was the next step in a long-term plan.

“It takes a bit of time to execute a transaction like this, but we started the process earlier this year with a target completion date during the summer, which is exactly what happened,” Battaglia says, noting that the transaction officially closed the week after the July 4th holiday in the U.S.

In addition to wanting to wait for the perfect market conditions, Eclipse Business Capital had to team up with the type of funding source that would provide it with the permanent capital it needed. Through the recapitalization with Barings, Eclipse Business Capital has expanded its capital base by at least $100 million.

Speaking of that name change, its genesis is more a matter of function than description or creative ingenuity. As Battaglia says, the name was selected via group decision, with the primary objective of keeping the EBC initials. That will come in handy as the firm rebrands itself, with much of that ancillary work, including UCC filings and a website redesign, still on its to-do list.

Flexible Capital

“It really strengthens our balance sheet. We have equitized a lot of what was sub-debt and this has given us a lot more strength and girth to continue to grow the platform,” Battaglia says, noting that Barings is playing a large role in helping Eclipse Business Capital maintain continuity. “They’re really leaving us to do what we do, which they view as a very strong platform, which is why they had made the investment they did. And it’s a real vote of confidence for the team here.”

New Horizons

“We’re also looking at potentially expanding our product offering as well. A lot of transactions that we see now require this, although our ability to provide entire solutions has been restricted by our capital structure,” Battaglia says. “I think as we continue to grow and potentially have a little bit broader product offering, it may help in providing more of a holistic solution to some of the prospects and companies we deal with, but today it’s pretty much business as usual.”

“[In today’s economic environment, lenders need to be] very cautious to keep an eye on portfolios and inventory levels within their borrowers. Is some of this market frenzy really going to be sustainable and how do we expect borrowers will react?” Battaglia says. “It could create some stress that we haven’t seen for a while in the markets.”

“It’s really just rounding out the things we’ve been doing for a while. We’ve been on a process to continue to automate and make our day-to-day operational tasks more efficient and we’re continuing to do that,” Battaglia says. “Longer term, it’s just expanding the product offering as well as deal sizes. I do anticipate that we will also partner with several of our competitors that we’ve partnered with in the past and with whom we have a lot of confidence.”