Hercules Capital entered the commercial finance sector through its strategic acquisition of all of the outstanding equity of Gibraltar Business Capital.
Gibraltar will be held as a portfolio company of Hercules, but will continue to operate under the same brand name as an independent senior secured asset-based lender to select small and mid-market businesses. Gibraltar and all its existing employees will remain at its headquarters in suburban Chicago.
Gibraltar was formed in 2010 when Scott Winicour led the management buyout of Gibraltar Financial Corporation (a commercial finance company that dated back to 1951), whereupon the company changed its name to Gibraltar Business Capital. The company is comprised of professionals with decades of expertise in the asset-based lending and factoring industries who have underwritten more than $325 million in total credit facilities to more than 170 borrowers since the company’s inception. Growth has been powered by lenders including Wells Fargo Capital Finance, which was the underwriter of a $75 million senior facility for Gibraltar in 2017. This month, Wells Fargo extended its senior secured loan for two years with an accordion option, increasing Gibraltar’s line of credit to $100 million.
Hercules anticipates its investment in Gibraltar to generate a cash yield of approximately 10.0% to 14.0% and to be immediately accretive to investment income in 2018.
“Our acquisition of Gibraltar, Hercules’ second strategic completed acquisition, represents a unique opportunity to invest in one of the leading established asset-based lenders in the country,” said Manuel A. Henriquez, founder, chairman and CEO of Hercules. “We believe our investment in Gibraltar, as a portfolio company, will give us the ability to access systems utilized in managing ABL loans and to potentially expand the types of financing options available to our current and future clients.”
Winicour remarked, “This is an important transition for Gibraltar as the investment by Hercules, coupled with our credit line, provides us with deep access to capital to empower our growth and amplifies our commitment to deliver value-added lending services to businesses, which have been the hallmark of our success.”
Hercules Capital is a specialty finance company focused on providing senior secured venture growth loans to high-growth, innovative venture capital-backed companies in a variety of technology, life sciences and sustainable and renewable technology industries.
