TSLX names new president

 Robert “Bo” Stanley took up the new role, while the BDC also spoke of decreased origination volume in the first quarter.  

TPG Specialty Lending {TSLX} announced that it has named Bo Stanley as the BDC's new president in its quarterly earning call on Thursday (5 May).  Prior to joining TSLX as a credit originator in 2011, Stanley spent 11 years as a director at Wells Fargo Capital Finance, where he held multiple positions related to underwriting and origination.

Co-chief executive John Easterly also said that the company declared a $0.39 dividend and reported net investment income of $23.2 million, down slightly from the $23.6 reported for the fourth quarter of 2015.

TPG's leverage at the end of the first quarter stood at 0.74x, down from 0.80x at the end of 2015. Chief financial officer Ian Simmonds said that TPG has adequate liquidity, with $298 million in undrawn commitments on the company's revolver facility. Total assets for the company remained steady from the fourth quarter of last year at about $1.6 billion.

The mid-market focused company also reported that it had $165 million in gross originations in the first three months of the year, down from the $399 million reported for the fourth quarter of 2015. Easterly attributed some of the dropoff to market instability in the first quarter.

Stanley added that TPG had been able to take more advantage of market conditions in the early 2016, as banks continued to pull away from lending. “The investment backdrop during the first quarter was robust as traditional and/or undercapitalised lenders remained unwilling or unable to underwrite and manage risk. Further technical conditions and volatility in secondary markets presented the opportunities for outsized risk/return in service sectors and companies on which we had a differentiated perspective,” he said.

Simmonds said that the company's $50 million stock repurchase plan, which automatically purchases shares based on threshold prices beginning at one penny below the most-recently published net asset value per share, reflected confidence in TPG's portfolio. With a price to book ratio of 1.06x, TPG remains one of the few BDCs trading at a premium to book value and in March, the company closed a public offering of five million shares of common stock.

TPG executives said that the company invests in 48 companies across 19 industries with an average investment of $33 million. The largest portions of the portfolio are dedicated to business services and healthcare, with 20.1 percent and 16.9 percent of the portfolio, respectively. Specialty chemicals provider Vertellus is TPG's only investment currently on non-accrual status, which TPG attributed to oversupply in its primary market. Co-chief executive officer

TPG's exposure to retail was discussed on the call, with a particular focus on Sport Authority, which announced in April its plans to close 140 stores. John Easterly said that TPG had entered into the investment with some expectation of bankruptcy or liquidity events and that it expects to receive payment on term loans to Sport Authority starting in the second quarter.

Discussing of role of retail in TPG portfolio more broadly, he said the company was not making bets on the success of any particular retailer that it invests with. Instead, Easterly said that TPG's staffing and experience left it particularly well-suited to understand the liquidation value of inventory in their retail investments.

 “ There is a kind of Boston mafia around retail,” said Easterly, explaining that TPG has hired Boston-based people from Wells Fargo for retail investment and partnered with Bank of America and other players on custom deals in the retail space.

Looking ahead, co-chief executive Michael Fishman said that while the challenging conditions for originations at the end of last year had carried over into the first quarter of 2016, TPG spent much of the first quarter rebuilding its deal pipeline. He said that TSLX's large capital base is giving the firm an edge around leading large deals.