Avenue, JZCP form joint financing venture

Avenue Capital Group and JZ Capital Partners have partnered on a €400 million joint venture that will provide short-term receivables financing for companies operating in Spain’s lower to mid-market, the firms announced in a statement Monday.

Toro Finance will specialise in providing growth financing to suppliers of major Spanish companies, according to the release. JZCP will invest €26 million through its European Micro Cap vehicle, which will give the firm a 50 percent stake in the company.

“Many of these medium sized companies are looking for PE support because they can’t find any other way to get financing,” JZCP senior partner Miguel Rueda told Private Debt Investor.

Avenue Capital had not responded to a request for comment at press time.

“Toro Finance will provide much needed relief for small- and medium-sized Spanish companies still struggling to obtain working capital financing,” said Richard Furst of Avenue in a statement.

European banks have scaled back their traditional lending operations in recent years because of regulation and a relatively weak economy. In Spain, many banks’ performance has suffered because of deteriorating asset values, a trend that is likely to continue.

In April, Moody’s released a report indicating that domestic operating conditions for Spanish banks will remain difficult because of recessionary economic conditions.

 “Spanish banks' access to market funding improved for the stronger banks in early 2013, but market access has not normalised yet and will likely continue to adversely affect banks' liquidity positions,” according to the report. “Spanish banks remain the largest borrowers in absolute terms from the European Central Bank, which reflects funding pressures, but also the low cost of these funds.”