The Teachers’ Retirement System of Louisiana’s investment committee approved a $25 million commitment to Enhanced Capital Partners’ credit supported loan fund earlier this week, the retirement system’s director of private markets Maurice Coleman told Private Debt Investor.
“We have a relationship with the firm, but this is the first credit product of theirs we’ve invested in,” Coleman said.
Enhanced Credit Supported Loan Fund is targeting $200 million to provide debt to transitional stage companies in need of financing, according to a Hamilton Lane report provided by Louisiana Teachers’. Although the firm will not typically invest in distressed companies through the vehicle, portfolio companies will likely be considered “non-bankable” due to sector, stage, profitability or free cash flow constraints, according to the report.
The fund will invest between $4 million and $20 million per deal in 25 to 30 companies with enterprise values below $100 million. Typical coupon rates will range between 11 and 13 percent, with a closing fee of 2 to 3 percent, according to Hamilton Lane’s report. Maturities will be between three and four years with limited call protection.
Enhanced Capital has grossed an overall multiple of 1.1x and 10.4 percent internal rate of return through its previous credit finance programs and SBIC fund as of 31 December, according to the report.
“The combination of favorable terms, a differentiated investment strategy and prudent leverage should serve to strengthen the performance of the Fund,” Hamilton Lane wrote in its report.
Enhanced Capital Partners was founded by Andy Paul in 1999. The firm received an SBA license to raise SBIC fund in 2010, according to its website.
In October, Louisiana Teachers’ disclosed that it had committed $75 million to Babson Capital Management’s Tower Square Fund IV, which is targeting $1.6 billion for lower mid-market mezzanine investments. That commitment is contingent on Tower Square IV’s ability to raise at least $750 million, according to a Hamilton Lane document.