The two founders of Kayne Anderson Capital Advisor’s mid-market investment arm have formed their own firm, the latest in a series of new mid-market firms popping up in the private credit space.
Edward Cerny and David Petrucco, alongside their former Blackstone colleague, Mark Gudis, announced on Tuesday the founding of Backcast Partners management, a firm that will focus on investing in companies with $10 million to $50 million of EBITDA. It will finance both sponsored and non-sponsored businesses and provide financing for acquisitions, buyouts and recapitalisations, among other lending scenarios.
Cerny, Petrucco and Gudis are managing partners. Gudis, who was most recently at GateHouse Capital Management, according to his LinkedIn account, will oversee transaction sourcing, the announcement said. All three men formerly worked at Blackstone.
Damon Ng and William Tomai are also inaugural personnel, according to the firm’s website. Ng will act as Backcast’s controller, and Tomai holds the titles of chief financial officer, chief operating officer and chief compliance officer while also serving as the head of human resources. The two men occupy similar roles at Centre Partners, a mid-market private equity firm.
“Our market has always been defined by personal relationships, which take years, if not decades, to develop and are at the heart of successful and differentiated transaction sourcing,” Gudis said in the statement. “We have found that being fortunate enough to possess the kind of relationships that Ed, Dave and I have maintained over the last 25 years makes a real difference in investment outcomes.”
Cerny and Petrucco told Private Debt Investor they ventured off on their own to build something that is truly theirs in a space that both have been involved in for two decades.
“When you build something at a large asset manager, it’s not yours,” Petrucco said.
Backcast struck an agreement with Centre Partners, a mid-market private equity firm, where the new mid-market lender will rely on Centre for the infrastructure needed to run a firm, such as legal, compliance, human resources and information technology.
Petrucco said Backcast – with more than 50 operating partners – has more resources for non-sponsored transactions than previous firms where they had worked.
In 2008, Cerny and Petrucco founded Kayne Anderson’s mid-market credit platform and launched their debut fund the following year, a $600 million mezzanine fund that surpassed its $500 million target. In the years that followed, Kayne Anderson closed two senior credit funds, the first a $350 million vehicle in 2013 and the second a $1.1 billion pool of capital in 2015, followed by a $450 million subordinated debt fund in 2014.
Private credit and mid-market lending continue to grow as 2016 draws to a close. New businesses that cropped up this year include Owl Rock Capital, a business development company that has raised $1.7 billion in equity, and The Riverside Company, which tapped former NewStar Financial founding partner David Dobies to run its private debt arm and in October closed its first credit fund at $50 million.
Editor's note: This story has been updated to include Petrucco's and Cerny's comments.