Refinancing in a Capital Constrained Environment

Over the last three years, companies have faced challenges that have adversely impacted performance – ranging from COVID-related effects, macro-economic events, and geo-political instability. Many of these impacted businesses are now faced with higher than expected leverage and limited access to capital. This economic environment has also reduced opportunities for M&A. However, in an environment where loans cannot be extended and exits are not being achieved, some investors in specific situations may still require an exit.

In situations where lenders are requiring borrowers to repay, Prudential Private Capital can be a source of refinancing capital. We continue to be in the market with a consistent appetite for financing committed sponsors and fundamentally sound companies. Alongside our active LBO financing capabilities, we are open to refinancing situations where there may be elevated leverage or a forthcoming maturity, often in time compressed circumstances. Our One-Stop financing solution with the ability to provide capital across the balance sheet - including senior debt, subordinated debt, and various forms of equity - can bring material capital at market pricing levels to address the existing balance sheet, provide flexibility, and support growth in the business.

With a patient approach we have the capacity and resources to grow as a financial partner for our portfolio companies. Our decades-long history of investing Senior and Junior Capital for middle-market companies demonstrates our experience as a trusted advisor to portfolio companies navigating through challenging times.

Below we highlight a recent transaction that helped facilitate the refinancing of an incumbent lender:

US Technology Company refinances and increases growth capacity with Junior Capital

The Company is a portfolio company of private equity firm, which first backed the Company in 2018.

In March 2023, we provided a one-stop funding solution to refinance a suboptimal balance sheet, provide growth capacity, and extend the investment horizon for the owners to continue to capitalize on a post-COVID business recovery.

The Company chose to work with us given our deep experience in the sector, flexible refinancing solution and ability to provide growth capacity in follow-on transactions, reflective of our long-term relationship approach to providing capital

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Our Approach

Prudential Private Capital is one of the largest private debt providers globally with $98.6 billion of investments across 15 global offices. We have a long history of partnering with businesses and are currently partners to over 1,200 companies and institutions in a wide range of sectors (as of 03.31.23).

Our funding capabilities include Senior Notes, where we invest across the entire credit quality spectrum, and Junior Capital including Subordinated Notes and Structured or Co-Invest Equity. We are a buy-and-hold investor, with investments starting from $15 million to larger hold sizes in excess of $300 million.

We have a relationship-centric approach and partner with management teams by providing long-term patient capital to fulfil strategic objectives, diversify funding sources, fund growth capex or acquisitions, and facilitate shareholder transitions. Our teams are focused on regional markets and maintain direct relationships with a wide range of institutions, across privately-owned mid-market businesses, public institutions, non-public institutions and charitable entities. To learn more about our junior strategies visit our mezzanine and direct lending pages.