Exclusive: Hayfin recapitalises business

The management and team at the London-headquartered direct lender have increased their stake in the business.

Shareholders in direct lender Hayfin Capital Management, which manages €6 billion in assets, have recapitalised the business, PDI can reveal. The firm’s investors formally agreed on the process this morning (Monday 18) and a memo was sent to limited partners after, notifying them of the development.

Hayfin has returned capital to its institutional investors, as part of a wider reshuffle of the firm's ownership structure. The private debt manager has sold a €705 million portfolio of owned assets to existing shareholder, The Future Fund, Australia’s sovereign wealth fund, to facilitate the process.

As a result of the sale, the management and team of Hayfin will have a greater stake in the business, providing increased alignment between manager and limited partners invested in its credit funds. The firm will also transition into a manager of third party funds solely, PDI understands.

Founding shareholder of Hayfin, private equity firm TowerBrook Capital Partners, and co-investors, the Public Sector Pension Investment Board (PSP Investments), The Ontario Municipal Employees Retirement System (OMERS) and The Future Fund, will all see their equity stakes in Hayfin diluted and reduced pro-rata. None are seeking an investor to buy their remaining stakes, PDI understands.

Hayfin will continue to manage the assets sold to The Future Fund, alongside its other third party funds and separate accounts. The London-headquartered firm will continue to expand its direct lending platform across Europe, PDI understands.

Hayfin and The Future Fund were not available for comment at time of publication. TowerBrook declined to comment.

The recapitalisation of Hayfin follows months of speculation on the future of firm, after it emerged in July 2014 that TowerBrook was seeking an exit. The sale was well-signposted to limited partners in the preceding months and the monetisation of TowerBrook’s investment was expected given the typical three to five year exit horizon of private equity firms. US investment firm Guggenheim Partners and rival lender Ares Management were both mooted as potential buyers. The sale was dropped at the end of 2014 however, after the transaction was deemed overly complicated to complete, as previously reported by PDI.

Shareholders TowerBrook and Canadian pension funds PSP Investments and OMERS contributed $700 million of permanent capital to Hayfin when it was established in 2009. A number of former Goldman Sachs executives were brought on to set up the firm, including chief executive Tim Flynn (pictured), former partner at the bank and co-head of its European leveraged finance and acquisition business. He was also a member of Goldman Sachs’ firm-wide capital committee, according to Hayfin’s website. Alongside Flynn on Hayfin's management committee is Andrew McCullagh, head of origination. Prior to joining Hayfin, he spent nine years at Merrill Lynch. Mark Tognolini is chief operating officer at Hayfin and the third member of Hayfin's management committee. Previously he was a vice president at Goldman Sachs.

Since its founding, Hayfin has extended loans to more than 200 mainly mid-market companies in Europe across mid-market credit, special situations, maritime finance, syndicated debt and alternative credit, and has offices in Amsterdam, Frankfurt, Madrid, New York and Paris.