Direct lending is an avenue for companies like yours to access capital as an alternative to the syndicated loans or senior floating-rate capital traditionally provided by banks. Direct lending loans are provided by "non-bank" lenders, such as institutional investors.
Direct lending loans are primarily first lien, senior secured floating-rate loans, but can also be second lien, revolvers, or accordion/delayed-draw facilities. They have flexible amortization profiles and final maturities that usually range from 5 to 6 years.
The direct lending market has become a permanent source of capital for borrowers. It is largely a leveraged buyout-driven, sponsor-led market, but relies on private placement-style credit and terms underwriting.
Hear Matt Harvey, Jeff Dickson, and Sarah Bittner provide an overview of Direct Lending.
- $25 million - $400 million
- Recapitalizations/dividend recapitalizations
- Shareholder buyouts
- Generational transfers
- Non-sponsored management buyouts
- Sponsored leveraged buyouts
- Cross-border financings
- Floating rate
- Revolvers, accordions, and/or delayed-draw term loans
- 1%-10% yearly amortization with an excess cashflow sweep
- Typical maturities of 5-6 years
- Ability to do multi-currency, cross-border transactions
- Flexible prepayment terms
- Relationship-focused capital provider