Metric starts from scratch

Metric Capital Partners has put together a high-powered team from the private equity world to try and tap into credit opportunities in the European mid-market. By Oliver Smiddy

It’s been a busy first year for Metric Capital Partners. The private debt fund manager, launched by former UBS and Towerbrook executive John Sinik in 2011, has hit a first close for its maiden fund, agreed three deals, and is poised to sign three more.

The fact that its executives have barely stood still since the firm opened its doors last year illustrates just how fast-paced this market is becoming.

“The macro dislocation in Europe is creating an opportunity to inject flexible capital into healthy mid-sized companies, in a way which can deliver outsized returns – despite the strong downside protection approach we apply to every transaction,” explained Metric partner and co-founder Giovanni Miele.

That dislocation saw MCP invest in LM Funerals in March when Duke Street Capital acquired the UK-based business (the buyout firm’s first deal since switching to a deal-by-deal funding model).

In September, MCP completed two further investments, in childcare provider Kedleston UK and in hotel group TVHG. Both deals involved bespoke credit instruments structured to provide the security of debt, with return characteristics more commonly associated with equity. The same could be said of the firm’s business model.

“Although our investments tend to be through credit instruments, we are very focused on creating upside potential through equity exposure which is typically stapled to our investments,” Miele explains. “We also put a lot of focus on the development and governance of our portfolio companies; we typically have board representation on each of our investments.

“Management teams and shareholders we partner with typically see us as a valid alternative to the traditional private equity model – as we provide not only flexible capital, but also experience and expertise in a way that better optimises everyone’s objectives,” he says.

In tandem with dealmaking, MCP’s team has also been busy raising its inaugural fund, which has a target of €300 million. Miele declined to comment on the fundraising, but sources say that it held a first close in March on about €100 million.
The firm’s “approach to fundamental credit analysis and due diligence” was cited by one investor in the new fund as the key reasons behind its decision to commit. The Metric team also has extensive relationships throughout the sponsor and intermediary communities, the LP said.

This is, perhaps, the key ingredient: the Metric team is drawn from across the private equity and intermediary communities. Sinik, for example, was a managing director at Towerbrook Capital Partners between 2008 and 2011, and previously worked as global head of leveraged finance at UBS. John Connolly, former global chairman and UK chief executive of accountancy group Deloitte, is chairman of the firm, while Peter Cornell, former managing director and head of investor relations at buyout firm Terra Firma Capital Partners (and before that chief executive of law firm Clifford Chance) is a partner and head of investor relations.

Then there’s ex-UBS and Barclays Capital executive Miele, who joined as a partner and head of origination. Two principals, David Scheurl (formerly of Deutsche Bank and MatlinPatterson) and Ilkka Rantanen (ex-UBS and Amanda Capital), round out the team. In what remains a relationship-based business, backgrounds like those are worth their weight in gold.