In this episode, David Leland from BC Partners discusses tailoring capital structures for portfolio companies in sectors like TMT and healthcare. Topics include proactive refinancing strategies, private credit usage, business restructuring, and navigating investments across jurisdictions.
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Quick takeaways
BC Partners emphasizes tailoring capital structures to suit portfolio businesses' needs.
Operational support during crises and proactive refinancing optimize BC Partners' portfolio performance.
Deep dives
BC Partners Investment Strategy and Refinancing Approach
BC Partners invests across sectors like TMT, healthcare, industrials, and consumer retail but has limited appetite for the latter in their current fund. They take a proactive approach to refinancing, using equity when necessary. With expectations of declining interest rates, they have been active in refinancing and repricing their portfolio credits to optimize duration and cost of capital.
Utilization of Private Credit and Operational Support
BC Partners has a history of using private credit transactions tailored to their investment thesis and often refinances between private credit and syndicated markets. The company focuses on providing operational support to its businesses, especially during challenging times like COVID-19 and the war in Ukraine. They aim for smooth transitions, including debt for equity swaps, to maximize value and maintain stability.
Hold Periods and International Investments
BC Partners typically holds investments for 4-5 years but may extend periods due to market dislocations. Their investments span North America and Europe, requiring considerations for regulatory differences across jurisdictions, such as bankruptcy laws. They aim for consensual agreements with creditors to avoid court processes, especially in Europe, to preserve value and minimize legal expenses.
The question on everyone’s lips these days seems to be: are you going BSL, or are you going direct? But when private equity sponsors are building out their portfolio companies’ capital structures, their first concern is often whether the instruments they’re employing are a fit for the business at hand.
In this week’s Cloud 9fin episode, 9fin senior reporter Bianca Boorer sits down with David Leland, partner and head of capital markets at BC Partners, to discuss the recent refinancing wave, managing portfolio companies through crises, and how to determine the right blend of private credit and leveraged loans for a portfolio company.
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