L Catterton launches into private credit

The private equity firm, which focuses on the consumer space, revealed its plans exclusively to PDI. Shahab Rashid has been hired from Adams Street Partners to spearhead the new business line.

L Catterton, the global consumer private equity firm, has launched a new private credit unit and hired Shahab Rashid as managing partner and co-head of private credit. Rashid was formerly a partner and co-founder of the private credit group at Adams Street Partners, having also had spells at Oaktree Capital Management and Salomon Smith Barney/Citigroup.

“Launching a private credit strategy is a natural extension of L Catterton’s proven model and will strengthen our position as the partner of choice for companies seeking flexible capital solutions,” said Scott Dahnke, global co-chief executive officer of the firm.

The strategy will focus on providing debt solutions to private equity-backed mid-market companies, initially in the US though with a view to possibly utilising its existing European presence in due course. Deals will target companies with an enterprise value of up to $1 billion and EBITDA in the range $15 million to $100 million. The firm will be launching a fund in due course, but no details are currently disclosed.

L Catterton was ranked 30th in this year’s iteration of the PEI 300, affiliate title Private Equity International’s ranking of private equity’s 300 largest fundraisers, and was until now “one of the largest private equity firms without a credit strategy”, according to Dahnke.

The firm is focused on the consumer sector, but with a broad approach that covers B2C, services and experiences accounting for around 40 percent of total US GDP, according to Dahnke. The firm, which has 17 offices around the world and six different investment strategies, typically completes around 25 to 30 equity investments globally per year.

Rashid told Private Debt Investor the firm would use debt both in support of its own private equity deals as well as those of third-party sponsors. “The firm will combine its own differentiated deal sourcing with the private credit team’s sponsor relationships to generate investment opportunities.” He added that while the firm would look to lead deals on the credit side with third parties, it would only take minority positions on an arm’s length basis in the firm’s own deals.

He added that the firm wanted to be a value-add partner to portfolio companies and sponsors and, as such, would operate across the capital structure. Initially focused on direct lending, Rashid said the firm is intending to grow a “diverse credit platform with multiple strategies” over time in both the US and Europe. Opportunistic and asset-based lending and mid-market CLOs were mentioned as possible growth areas.