Eldridge takes ownership of Maranon Capital

The lower mid-market lender will receive additional capital to increase its hold-size and the breadth of its origination capabilities.

Maranon Capital has sold a majority interest of its firm to Eldridge Industries – a move that will allow one of the seller’s co-founders and managing directors, Tom Gregory, to step back from the day-to-day operations of the firm.

In addition to the equity investment, Eldridge will provide additional capital to fund Maranon’s “ongoing strategic initiatives”, which will include the ability to underwrite larger transactions and upping its hold-size, which is now more than $100 million, said Ian Larkin, one of Maranon’s co-founders and managing directors.

Eldridge, which previously held a minority stake in Maranon, will buy its new shares from Gregory, who will transition to an advisory role, according to a statement released Monday.

In January 2015, Eldridge took a minority stake in Maranon, Larking told PDI. Eldridge supported the firm’s senior and mezzanine debt strategies through investing in a variety of vehicles including its CLOs and commingled mezzanine fund, Larkin explained.

“There has been significant growth at Maranon since Eldridge took its minority stake in 2015,” he explained. “That was a new chapter in Maranon’s history. Eldridge’s majority ownership is coming at a great time for us to be able to expand into additional market share. One of the keys to winning transactions today is a firm’s underwrite and hold capacity.”

Last year, Maranon completed its third mid-market collateralised loan obligation, a $625 million transaction, and also obtained its first SBIC licence – a program through the US Small Business Administration that lets an asset manager invest funds with a guarantee from the SBA.

“The macro market has been choppy for the past few months, but the middle market has been quite steady,” Larkin said. “Private equity sponsors seem to continue to want to transact on both the buy side and the sell side.”

Other asset management firms Elridge holds stakes in include CBAM Partners, a CLO manager, and Cain International, a real estate debt and equity manager. Eldridge also owns stakes in asset leasing and financing firms Stonebriar Commercial Finance, Elliott Bay Capital Trust, One Sky and Essential Properties.

The selling of minority stakes among financial firms to form partnerships designed to last for years has become mainstream over the past several years. Firms like Goldman Sachs, Blackstone and Neuberger Berman’s Dyal Capital Partners are all garnering significant portfolios of marquee firms, such as HPS Partners, TPG Sixth Street Partners, Clearlake Capital Group and Francisco Partners.

Outside the world of business development companies – in which the purchasing of advisory agreements and loan books is par for the course – selling majority stakes had been a rarer occurrence, though not completely unheard of. Orix USA, a subsidiary of Japanese financial firm Orix Corporation, purchased NXT Capital, a Chicago-based lower mid-market lender, in a deal that closed in August.