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Activity in the leveraged lending business "really started to pick up" in 2010, following a couple previous "brutal years," said John Martin, president and CEO of GE Antares Capital.
"The market is in a fairly rational place right now from a leverage standpoint," Martin told students at Gleacher Center January 29. The presentation was sponsored by the Evening MBA and Weekend MBA Programs office, the Private Equity/Venture Capital Group, and the Finance Club.
With an $8 billion portfolio, GE Antares is considered a leader in the middle-market leveraged lending business. The firm partners with private equity groups and takes the lead on acquisition financings, dividend recapitalizations, and refinancing deals across an array of businesses and industries.
During recent tough times, "while a number of our competitors chose to exit or pull back from the space, we continued to be as active as the deal flow would allow us," Martin said. "We spent 2009 in particular and probably early 2010 really working our portfolio borrowers in concert with the private equity sponsor customers that we have." Because many borrowers were experiencing stress in their operations, GE Antares "had to work with them very closely, very cooperatively, looking for the private equity groups to invest more capital" to help support liquidity or production.
In 2010, GE Antares completed more than 160 transactions, Martin said, 71 of them in the fourth quarter alone.
Martin cofounded Antares Capital Corp. with a group of colleagues from Heller Financial Inc. in 1996, when private equity was exploding. While he and his colleagues didn't consider themselves entrepreneurs at the time, when the group hooked up with Mass Mutual and secured $3 million in capital, "that began our entrepreneurial journey," he said.
"As you look back on it, it was probably crazy. No one had ever done this before. Leveraged lending was the bastion of commercial banks and investment banks and very well-capitalized large institutions—money managers and the like. No one had ever gone off and started up one of these businesses," Martin said, "and I think a lot of people looked at us like we had three heads."
The group of a dozen people started from scratch. They set up an office, and "divided up responsibilities and hit the road," Martin said. They had developed a "very efficient model" and "great relationships with customers," he said. GE acquired Antares in October 2005.
Martin said his firm succeeds because of enduring relationships it builds with customers, some of which span 20 years. "These aren't just transactions we're doing with them. These are partnerships," he said.
Ryan Moore, a student in the Evening MBA program, enjoyed hearing about a different type of career opportunity. "It was really refreshing to see a different side of some of these LBO transactions. The leveraged finance side is something that we don't necessarily get a lot of exposure to here. We typically get more exposure to the sell side of the business, what Wall Street typically does."
He said he was pleasantly surprised to hear about someone who found entrepreneurial success by "kind of just falling into it," rather than it stemming from a childhood dream. "There still is time to be that entrepreneur. You still can find success. It doesn't necessarily need to be a lifelong journey necessarily."
—Mary Sue Penn