CEO
FrontWell Capital Partners
When Patrick Dalton and John Ho formed FrontWell Capital Partners, a private credit fund that delivers debt financing to companies in transition, they knew they could be successful because of the opportunity they saw in the marketplace. However, their own experiences and the trust they share has been just as important.
The tight connection between the two held exceptionally well during the first 10
“John was really my eyes and ears and hands around the business, so I could build a really strong relationship of trust and loyalty to the business,” Dalton says. “I’m always confident John will always do what’s best for the business.”
CFO
FrontWell Capital Partners
“[Patrick] sets a very high standard for everybody here. First by leading by example and holding not just himself but others accountable as well,” Ho says. “This is a reflection of his personality but also his experience at running successful firms in the past, and I truly believe this creates that partnership mentality.”
Of course, Dalton and Ho didn’t just launch FrontWell because of their impressive resumes and strong working relationship. Perhaps an even greater catalyst for the company’s launch was the opportunity the duo saw in the Canadian market.
In addition to the opportunity present in Canada, Dalton and Ho both thought that it made sense to enter the market due to the timing in the credit cycle, although their initial conversations occurred before the COVID-19 pandemic. Now, with some of the pandemic-era government assistance falling away, FrontWell expects to be there to provide working capital to companies looking to survive and grow in the economic wake of the ongoing pandemic.
Science and Art
FrontWell’s target borrower base is the lower end of the mid-range of the middle market. The company makes investments between $5 million and $50 million and Dalton says the firm’s sweet spot is somewhere between $10 million and $30 million. Dalton also says that FrontWell looks for borrowers in transition, whether that means those needing capital to fund rapid growth or those in distress.
“When we make an investment, we’re in it for the long haul through the life cycle of that investment,” Dalton says. “It really puts an onus on us to do a deep dive on due diligence and structuring and negotiating a transaction.”
“We don’t want to make a mistake here as we launch our business,” Dalton says. “We’ll be competitive; we have to be on pricing, but we’re not going to compromise credit.”
Being selective is not just reserved for evaluating deals. FrontWell currently has a full-time team of 12 employees and a three-person advisory board. Dalton and Ho are currently recruiting for four positions and expect to grow the firm to about 30 people by the middle of 2022.
In addition to remaining patient, FrontWell is making a concerted effort on the environmental, social and governance (ESG) front.
Speaking of investors, FrontWell launched with $350 million in seed capital from institutional investors, which, according to Dalton, has given it the working capital needed to build the business and its portfolio.
FrontWell officially opened in September of 2020, although it soft launched a few months before that. Now, roughly 12 months since its official unveiling, it is entering what Dalton calls “a bit of a relaunch,” as its staff is now primarily back in the office and working on building out relationships with potential clients, partners, referral sources and more.
“There’s been a handful of deals that we’ve really worked hard on. And sometimes we’ve had to let go at the last minute because the competition did something that we felt was not in the best long-term interests of the client and was not going to end up in a good resolution at the end,” Dalton says. “We have to be prepared to walk away.”
“Our plan for FrontWell is to deploy the capital that we currently have, judiciously raise other sources of financing and capital and, ultimately, within the next five years, there’s no reason for us not to be the leading middle-market ABL lender in Canada,” Ho says.
Phil Neuffer is managing editor of ABF Journal.
