Palio winds up as team joins Chenavari

The three co-founders of private debt manager Palio Capital Partners have joined asset manager Chenavari Investment Managers after failing to launch an IPO of their maiden fund.

The trio of executives behind fledgling private debt firm Palio Capital Partners have joined an established rival after failing to raise sufficient capital either via a traditional fundraising or IPO.

Mike Henebery, Jerry Wilson and Darren Gibson have joined Chenavari as partners, the firm said in a statement, in order to expand its capabilities in UK mid-market lending.

The trio had been trying to raise as much as £250 million (€289 million; $376 million), initially via a £100 million fundraising, and latterly via a £150 million initial public offering.

The firm had bid for financing from the UK Government's Business Finance Partnership but failed to obtain a grant. It did however obtain a commitment from the European Investment Fund, taking it one third of the way towards its £100 million target.

Palio had also announced in October last year plans to list the vehicle on both the London and Channel Islands Stock Exchanges. Oriel Securities was to have run the offering.

Henebery, who comes from a private equity background having been a partner at Gresham Private Equity and an investment director at Montagu, commented in the statement: “We have searched exhaustively for the right way to launch Palio's SME lending model with the emphasis on maximising our financial firepower to support UK SMEs, particularly relatively higher growth, private equity-backed companies, where we believe the rewards for taking credit risk are attractive. Chenavari share
our vision for the potential to further develop a substantial business in this mid-market direct lending space.”

At Chenavari, the trio will offer senior and mezzanine loans to UK-based SMEs, “with unprecedented flexibility around cash flows”. Wilson, a former managing director at RBS, said: “Our model is designed to be collaborative with private equity investors, providing all the acquisition finance on a deal from a single source.”

The team will manage capital specifically allocated to UK mid-market direct lending by Chenavari. No capital from Palio will be carried over, as the firm had only secured commitments; no capital had been drawn down as no first close had been reached.