Tennenbaum Capital eyeing product growth – exclusive

The California mid-market credit firm is considering product expansion with the backing of its new stakeholder CNO Financial.

Tennenbaum Capital Partners (TCP), which is coming up to its 20th anniversary and recently found a new minority stakeholder in CNO Financial, is eyeing product expansion. The Los Angeles-headquartered firm, which primarily manages mid-market direct lending and special situations strategies, is looking at a number of growth options, including mid-market CLOs, as well as lending to earlier-stage businesses. TCP has also done some work in Europe and is considering broadening its geographic coverage.

The firm’s management declined to comment on fundraising around new products.

“In the last several years there has been a significant increase in institutional interest in our investment strategies, as the opportunities have expanded due to the constraints on banks and other traditional lenders,” said Howard Levkowitz, co-founder of TCP. The firm was already thinking about growth and looking for a partner. The new minority stake from CNO Financial will help the firm achieve its expansion plans, Levkowitz explained.

The size of the stake wasn’t disclosed, though Tennenbaum said it’s a non-controlling interest, where insurer CNO won’t be involved in the day-to-day activities of TCP, but will continuously invest in its existing and future funds and strategies.

“We would like to create more products leveraging our existing platform, in synergistic areas, and potentially in new geographies. That requires capital, focus and prudent growth of the organisation,” said Michael Leitner, managing partner at TCP. “Bringing in a strategic partner allows us to bring more resources toward the enterprise growth objective,” he continued.

The firm hasn’t made specific decisions around the product areas. Leitner said the firm has a venture debt platform that could be expanded into a dedicated early-stage lending business. While TCP has done some deals in Europe, it could foresee opening an office there or having a dedicated team focused on the region in the future.

Tennenbaum Capital was founded in 1996 by Levkowitz, Mark Holdsworth and Michael Tennenbaum. The firm’s ninth special situations fund closed on $730 million at the end of last year. TCP also runs a separate direct lending fund series and its publicly traded BDC, the Tennenbaum Capital Corporation (TCPC). The firm has $6 billion in assets under management. TCP opened a New York office in 2012 and a San Francisco office in 2014.