Solar Capital Ltd. Acquires Kingsbridge Holdings LLC; Expands Specialty Finance Platform
November 05 2020 - 4:01PM
Solar Capital Ltd. (NASDAQ: SLRC) (the “Company” or “Solar
Capital”) announced that on November 3, 2020, it acquired a
majority stake in Kingsbridge Holdings LLC ("Kingsbridge") from TZP
Capital Partners II, LP and its affiliates and the Kingsbridge
management team. Kingsbridge, based in Lake Forest, Illinois, is a
leading independent lessor of information technology, industrial,
healthcare, and commercial essential-use equipment to a diverse set
of high credit quality customers. With the acquisition, Solar
Capital will have invested approximately $216 million, in a
combination of approximately $136 million of equity and $80 million
of debt, to acquire 87.5% of Kingsbridge in partnership with
the Kingsbridge management team which is rolling a portion of their
equity ownership as part of the transaction.
The addition of Kingsbridge, with its highly
experienced team and scalable infrastructure, further enhances the
Company's diversified specialty finance platform. Solar Capital
directly sources and underwrites cash flow, asset-based, and life
science loans, and equipment financings; and now lease transactions
with primarily investment grade rated counterparties. Pro forma for
the Kingsbridge acquisition, approximately 84% of the Company’s
comprehensive portfolio would have been comprised of specialty
finance investments at September 30, 2020.
Kingsbridge was founded in 2006 by the
management team and has underwritten over $1 billion of leases
since inception. At September 30, 2020, Kingsbridge’s highly
diversified portfolio of leases totaled approximately $440 million,
with an average funded exposure of approximately $850,000 per
obligor, and was 100% performing. Over 70% of Kingsbridge’s
portfolio is invested in assets leased by investment grade
borrowers.
Kingsbridge is expected to distribute
substantially all of its net earnings on a quarterly basis. Solar
Capital Partners LLC (“SCP”) anticipates the investment in
Kingsbridge will generate a blended cash yield of 10% to 11% on
average, consistent with SCP’s existing specialty finance
strategies. The Company’s debt and equity investments in
Kingsbridge are expected to generate approximately $20 million of
gross income in 2021. These investments are also expected to be
classified as qualifying assets for the Company. The acquisition is
being funded with available capacity under Solar Capital's
revolving credit facility, which currently carries an approximate
marginal effective interest rate of 2.00%. Pro forma for the
acquisition and based on the funded debt balance at September
30, 2020, Solar Capital's leverage would have been 0.77x
debt-to-equity.
“This acquisition furthers Solar Capital’s
strategy of adding unique finance businesses to the platform,” said
Mitch Soiefer, Partner and Head of Lender Finance at SCP, the
Company’s investment advisor. "During our two year loan investment
in Kingsbridge, we gained a deep understanding of the business and
developed a good relationship with its phenomenal management team.
We were able to see firsthand its strong track record which has
continued through the COVID-19 crisis.”
"Kingsbridge’s business model of providing
leases for mission critical equipment complements our existing
leasing business while providing Solar Capital with exposure to a
new predominantly investment grade customer base,” said Cedric
Henley, Partner and Chief Risk Officer of Specialty Finance for
SCP. "Additionally, their sourcing capabilities enhance Solar
Capital's ability to originate investments across multiple business
lines in order to find the best risk reward while increasing the
earnings power of the Company’s portfolio.”
"We are excited about the opportunity to expand
Kingsbridge’s relationship with Solar Capital and the
growth opportunities our partnership provides the Kingsbridge
platform going forward," said Dan Flagstad, Co-founder and Co-Chief
Executive Officer of Kingsbridge. "Solar Capital's stable,
long-term funding will enhance Kingsbridge’s ability to provide
innovative financing solutions to its clients."
About Solar Capital Ltd.
Solar Capital Ltd. is a closed-end
investment company that has elected to be treated as a business
development company under the Investment Company Act of 1940. A
specialty finance company with expertise in several niche markets,
the Company primarily invests directly and indirectly in leveraged,
U. S. middle market companies in the form of cash flow senior
secured loans including first lien and second lien debt instruments
and asset-based loans including senior secured loans collateralized
on a first lien basis primarily by current assets. For more
information, please visit www.solarcapltd.com.
About Kingsbridge
Kingsbridge Holdings is a leading independent
lessor of information technology, industrial, healthcare, and
commercial essential-use equipment to a diverse set of high credit
quality customers. Kingsbridge provides intelligent, independent
financing solutions and asset management expertise to help
customers make informed decisions regarding equipment acquisition.
With the view that every transaction requires customized attention,
the firm's ability to bring superior structuring and transaction
management offerings to its customers has made Kingsbridge a go-to
source for leasing and financing solutions. Kingsbridge is
based in Lake Forest, Illinois. For more information,
please visit www.kingsbridgeholdings.com.
Forward-Looking Statements
Statements included herein may constitute
“forward-looking statements,” which relate to future events or the
Company’s or Kingsbridge’s future performance or financial
condition. These statements are not guarantees of the Company’s or
Kingsbridge’s future performance, financial condition or results
and involve a number of risks and uncertainties, including the
impact of COVID-19 and related changes in base interest rates and
significant market volatility on the Company’s or Kingsbridge’s
business, portfolio companies and the global economy. Solar Capital
and Kingsbridge operate in a very competitive and rapidly changing
environment, in which new risks emerge from time to time. Some of
the factors that could cause actual results to differ materially
from the forward-looking statements contained herein include,
without limitation: (i) Kingsbridge’s ability to maintain its
historical financial performance, (ii) departures of key members of
the Kingsbridge management team following closing, and (iii)
material adverse changes to the portfolio of assets held by
Kingsbridge as of or following the closing. For a more detailed
discussion of factors related to Solar Capital's business, see the
information under the caption "Risk Factors" in Solar Capital's
most recent annual report on Form 10-K and its subsequent quarterly
reports on Form 10-Q filed with the Securities and Exchange
Commission. Given these risks and uncertainties, you should not
place undue reliance on these forward-looking statements. Solar
Capital undertakes no duty to update any forward-looking statements
made herein, unless required to do so by applicable law.
ContactSolar Capital Ltd.Investor
Relations(646) 308-8770
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