Ex-Credit Suisse BDC CIOs to start new venture: exclusive

The two men, who helped lead the Swiss bank's BDC, are hoping to bring their entire team along as they look for a home for their direct lending business.

Jens Ernberg and Tom Hall, two former executives at Credit Suisse Park View, the Swiss bank’s old business development company, plan on starting a new private debt practice.

The new venture will be a direct lending business, and the two men are currently looking for a partner institution, sources familiar with the situation told Private Debt Investor. Some examples one source gave include: a family office that would seed the operation, a private equity firm looking to add a credit side or an existing credit platform interested in launching the strategy.

The men have no preference for the profile of a partner institution. They are also trying to keep the team they had at Credit Suisse intact, which comprises Michael Smith, Dhaval Kapadia, Matt Wachtell and Eric Lee.

Ernberg and Hall declined to comment.

The new firm would target lower mid-market firms, which translated to businesses generating $10 million to $40 million in EBITDA. The firm would be “agnostic”, one source said with respect to pursuing deals involving a private equity sponsor.

The new practice would not target one specific industry in which it would invest but would likely stay away from real estate and sectors based on commodities.

The BDC’s most recent quarterly report filed with the US Securities and Exchange Commission regulatory agency for the three months ending 30 June showed that healthcare investments were one-fifth of the portfolio, the single largest industry. Companies in the high tech and business services spaces also comprised a large part of the platform’s portfolio, at 14 percent and 13.53 percent, respectively.

At slightly more than 6 percent, two commodity heavy industries, the oil and gas and metals and mining businesses, made up a tiny part of the BDC’s portfolio. This shows a year-on-year drop from Q2 2015, when oil and gas investments made up 7.06 percent of the portfolio, while that figure for metals and mining stood at 4.31 percent, according to regulatory filings.

Ernberg and Hall where co-chief investment officers at CS Park View before the BDC was sold to Cion Investment Corporation, which is managed by Icon Investments and sub-advised by Apollo Global Management. Cion agreed to pay $276.8 million in a transaction that was disclosed on 30 September in a SEC filing. The men didn’t seek employment from Cion, a source told PDI.

A representative from Cion declined to comment.

Credit Suisse put its BDC on the block over the summer, with the deadline for initial bids in July. The investment bank’s own financial institutions group represented the BDC in the sale. CS Park View lived a short life at Credit Suisse. The SEC declared the BDC effective in April 2015

As of 30 June, according to its most recent quarterly report, CS Park View had net assets of $206.24 million and a net asset value per share, an important BDC metric, of $8.79. Those figures are year-on-year declines from $234.92 million and $10.09, respectively.