Alteri Investors, the retail-focused joint-venture between Apollo Global Management and the former management team of restructuring specialist GA Europe, has executed its first direct lending deal. The structure of the three year secured financing for clothing retailer Austin Reed Group is complex, Alteri’s chief executive, Gavin George told PDI.
The firm declined to reveal the size of the loan but George confirmed that it was under Alteri’s typical £20 million ($31 million; €27.6 million) lending upper limit (though the firm can invest more with the support of Apollo).
The deal was sourced via the former GA Europe team’s long-standing relationship with the borrower and Wells Fargo, the other secured lender with a relationship with the borrower, said George.
Austin Reed announced that it would close up to 31 stores following a company voluntary arrangement, a form of corporate debt restructuring in January this year. Creditors, primarily landlords, agreed to the plan, according to reports.
Alteri is aiming to build a long-term sustainable direct lending platform targeting the retail sector, said George. Asked whether corporates were wary of borrowing from a lender that also has a clear mandate for investing in distressed ‘loan-to-own’ opportunities, George said that the firm would not have a future as a lender if it approached credit-lending in the same way as distressed investing.
The first direct lending fund is a three-year investment, three-year realisation vehicle through which George anticipates Alteri will execute between five and ten deals. On the basis of that experience, Alteri will assess the scale of the opportunity and launch a second vehicle to fit the market. George added that it was unlikely that Alteri would seek any third-party investors to support the second fund as Apollo already offers the necessary scale.
“We’re very pleased to partner with Alteri on this new round of financing, which has been completed swiftly and efficiently. With an improved funding structure in place and following our restructuring earlier this year, the business now has a solid platform to deliver the next phase of development as we seek to further enhance our multi-channel offer,” said the borrower’s chief executive, Nick Hollingworth.
London-based Alteri focuses on direct lending, stressed and distressed investing across the capital structure and providing advisory services, all within the European retail sector. It launched in November 2014 as a joint-venture between funds managed by Apollo and the former GA Europe management team.