Chicago-headquartered asset manager Victory Park Capital is to make a $50 million investment in Renovo Financial, a private lending company that assists investors in turning around properties.
The investment with Renovo, also based in Chicago, can be upsized to $100 million. Proceeds will be used to refinance the Renovo’s existing portfolio, finance loan portfolio growth and support expansion into new markets outside of the Chicagoland counties, VPC announced in a statement.
“Renovo’s market leadership in the Chicagoland area, experienced management team and industry knowledge are exceptional,” Tom Affolter, partner at VPC, said. “We believe this is an opportunistic time to partner with Renovo to help provide loans in the underserved residential rehab lending space and expand into new markets.”
VPC typically lends to mid-market companies through specialty lending vehicles and the loan to Renovo appears to be its first investment in real estate. VPC had not responded to a request for comment at time of publication.
The firm has three fund strategies according to its website: direct lending, distressed investments / credit opportunities and small business investment company (SBIC). The firm seeks to invest between $5 million and $100 million and is able to complete larger transaction sizes through its syndication capabilities.
Founded in 2011 by Kevin Werner, chief executive of Renovo, and private equity firm Granite Creek Partners, Renovo originates short-term rehabilitation loans and long-term landlord loans to creditworthy and experienced residential rehab investors. The strategy enables borrowers to reduce their cost of capital as well as acquire and sell properties at highly attractive rates of return.
Renova intends to use the VPC funding to accelerate growth initiatives and diversify its product offerings. “The massive dislocation in the credit markets during the recession provided an opportunity for a specialized finance company, like Renovo, to provide capital to creditworthy residential rehabbers. In partnering with VPC, we are pleased to have secured a large amount of capital to fulfill the needs of our borrowers as they continue to enjoy success in their businesses,” Werner commented in the statement.