TPG Specialty Lending upped its loan originations – especially on service-sector portfolio companies – during the third quarter, a difficult time for mid-market lenders, firm executives said on Tuesday’s earnings call.
The business development company, owned by the Fort Worth, Texas-based asset manager TPG Capital, showed a gross origination total for the quarter of $318.1 million. This compares to $184.8 million for the third quarter of 2015 and $199.7 million for the second quarter of this year.
Bo Stanley, president at TPG Specialty Lending, said on the earnings call: “The middle-market loan environment during the third quarter remained challenging for capital providers like ourselves amid tightening credit spreads, more issuer-friendly terms and elevated capital inflows.”
The six new investments bumped the firm’s credit portfolio to loans to 52 companies. At the end of the third quarter, loans made ranged from $10 million to $250 million with an average size of $33 million, while first-lien senior debt comprises 94 percent of portfolio, according to the firm’s the third-quarter earnings presentation.
“The investments in this quarter [fit] our late cycle-minded approach consisting entirely of first-lien positions in primarily business service-oriented companies that shared defensive traits, including strong recurring revenues, robust industry fundamentals and attractive asset level returns on invested capital,” Stanley added on Tuesday’s call.
The weighted average of total yield for the credit portfolio this quarter hit 10.3 percent, slightly down from 10.5 percent at the end of Q3 2015. The weighted average interest rate on the portfolio reached 9.8 percent during the same period, compared to 10 percent at the end of last September.
TPG Specialty Lending’s total assets under management is $1.61 billion, according to PDI data. Founded in 1992, TPG Capital (formerly Texas Pacific Group) is a global private investment firm managing a number of buyout, growth equity, venture capital and debt funds.
The portfolio’s net asset value per share increased slightly year-on-year, reaching $15.78 at the end of last quarter compared to $15.62 at the end of Q3 2015.