The quest for coast-to-coast asset-based lending shops has created an intensely competitive “frontier” in the lending environment. Charlie Perer examines this trend and concludes that hiring the right business development officer must be a top priority to succeed.
Asset-based lending can be an attractive business, but not every organization is built for it. Charlie Perer of SG Credit Partners outlines why some community banks were quick to seek ABL out and just as quick to exit the space.
SG Credit Partners hired John Todd (JT) as a managing director in Chicago. Todd previously worked for Alostar Capital Finance, CapitalSource, JPMorgan Chase and Wells Fargo Foothill.
An increasing number of commercial banks are creating ABL divisions. Yet, as Charlie Perer muses, these divisions are still playing second fiddle to C&I and not receiving referrals from their C&I colleagues, even when ABL might be a more appropriate product and not utilizing it will cause a client to exit. He explains that breaking down the silos between divisions will serve customers more effectively and keep them as clients.
SOFAs originated in the non-bank ABL sector as a way for independent firms to differentiate themselves from bigger banks. But, as Charlie Perer writes, with more and more bank-ABLS embracing SOFAs, it is the large institutional lenders that have been crowned the SOFA kings
Super G Capital spun out its cash flow, technology and special situations lending division to create a pure-play, lower middle market specialty finance company, SG Credit Partners.
A virus of acquisitions has enabled national and super-regional banks to bulk up over the last decade. Their smaller cousins — community banks — are often dismissed as warehouses for customer deposits and little more. Charlie Perer points out that when community banks acquire some some specialty lending platforms and pair them with deep hometown relationships, they can rival the big boys.
The simplicity and speed required to put together a unitranche facility has made it a popular option for borrowers and lenders. However, the façade of the split-lien solution is beginning to crack as first and second lien lenders find themselves in a tug of war over intangibles. Charlie Perer explores the ways lien fighting is imploding a once beautiful friendship.
The soaring stock market has resulted in a frothy ABL market with competition at an all-time high and liquidations, outside of retail, at a low. Appraisals from the Big Four firms have held up. Charlie Perer looks into his crystal ball to envision the ABL scenario when the next recession hits.
With too much capital chasing too few transactions, the middle market is ripe for change. Charlie Perer predicts an explosion of debt options for non-sponsor backed companies over the next 10 years. He notes that as non-banker lenders offer customers more service and flexibility, banks will respond by consolidating.