The Last Word: Antares Capital

Having completed its sale to Canada Pension Plan Investment Board (CPPIB), Antares Capital is back out on the road making deals and rekindling some of its old relationships with sponsors, borrowers and other lenders. The firm recently re-established a unitranche loan partnership that it launched in 2014 with LStar Capital, a division of Dallas-based Lone Star Funds.

The Middle Market Growth Programme (MMGP), the Lone Star/Antares joint venture, was originally targeted at the smaller end of the deal spectrum. Ahead of the relaunch, Antares purchased the original portfolio, which pre-sale closed 11 deals with eight sponsors, from General Electric (GE). MMGP will continue to make unitranche loans to borrowers across the industry spectrum in North America. Outside of GE, the rekindled joint venture is expanding to include larger deals of up to $350 million.

Can you tell me about the background of the MMGP?
When Antares was a part of GE Capital, we had two unitranche programmes for our borrowers, the SSLP and the MMGP. The MMGP was a partnership between GE Capital and Lone Star Funds, and the SSLP was a joint venture between GE Capital and Ares Capital. In both cases, GE Antares was the primary GE business that supported borrowers with these programmes.

When Antares was sold to CPPIB, neither the SSLP nor the MMGP were part of the sale, so they stayed behind with GE. Since then, the team at Antares has been interested in finding a way to continue the MMGP as the one unitranche programme going forward.

At the end of December, Antares acquired the MMGP portfolio from GE and launched a new joint venture with LStar as our partner.

Why pick up this partnership and not SSLP?
Historically, we offered the SSLP for larger credits and the MMGP for smaller credits. I ran both programmes and decided, with Antares leadership and LStar, that it would be simpler and more effective to offer one programme for both small and large-cap borrowers.

Who holds the loans on balance sheet?
The loans are held in a separate legal structure that makes up the joint venture.

Is there any difference in your industry coverage?
Yes, today we’re excited to be back to supporting healthcare and franchise borrowers. Back at GE, healthcare and franchise originations were not a part of the Antares offering because they were housed in separate GE businesses. Now that Antares is no longer part of GE, we can originate these loans, and we plan to make both healthcare and franchise finance part of the MMGP portfolio.

What are the benefits of having both parties involved in MMGP?
A joint venture between Antares Capital and LStar, another business that has been very successful in private equity, makes the programme more powerful. We had great success with the prior MMGP programme with LStar as the JV partner, so the idea of continuing it, with a majority of the same people in place on both sides, is very logical and exciting. My goal is for MMGP to be a long-term programme. Together with LStar, we plan to underwrite risk in a prudent manner, grow the MMGP portfolio and commit more capital, as needed, to support large-and-small-cap private equity backed customers.