YouSaid · the spoken record

Tim Lyne

lines on the record: 66
first: 2023-10-26
most recent: 2023-10-26
sittings or episodes: 1
sources: podcast

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“Side if I have a positive attitude and I'm a credit person. So in general, I'm looking for the downside. If I didn't have that positive mental attitude, it'd be more difficult for me to actually see the upside in opportunities, in new businesses, and so forth. And then I try and impart that positive mental attitude throughout the firm and especially with my executive team. I really do believe that it makes a big difference.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“That we need to make decisions without perfect information. So given my very analytical background, early in my career, it was, well, you know what? I don't have 100%. I'm just going to analyze more. I'm going to research more. And what I realized was you're never really going to have perfect information to make a decision. So again, going back to the listening, it's you have to have the analysis. You have to surround yourself with really, really bright people. Ask the right questions, be incredibly inquisitive, listen, ask more, and then ultimately make the decision. I'd say that is something I learned probably later in life is how important it is to have a positive mental attitude. I truly think that it just makes from both a personal and a professional level, it leads to just a much better life on the professional.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Never ever rest on your laurels. So my belief is that you constantly Adapting, innovating, evolving. Because if you're not, your competitors will and you're going to fall behind it.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Never could have done what we'd done without having the whole group together, challenging each other, bringing different strengths to the table. So I wouldn't be in this position today without that team.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I mentioned at the beginning that my parents were educators, so I really needed to learn the business side from someone else. My aunt was a very successful businesswoman. She was a CEO of a very large hospital in Chicago. She was around us quite a bit growing up, constantly talking to me about the stock market, talking to me about what the census was at her hospital that day. What is the challenge on the insurance side? challenges with her management team. So she really helped me in terms of classes to take in college, jobs out of college. When I told her about Antares, she's like, do it, jump on it. Opportunity like this may never come along again. So it would be her. Her name was Sheila Line. And then secondly, it would be my partner's, the original group from Antares, because once again, we...”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd say a non investment pet peeve drives me crazy is people that don't listen. So people that interrupt me, it drives me absolutely crazy because what I know when they're interrupting me is they're not listening to me. And I truly think that listening, especially as a CEO, president, senior manager at any company, if you have a lot of really smart people around you and you ask really good questions and you listen to the answers, you're going to learn a lot.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think about one of the things that my parents taught me growing up, it was all about work hard, perseverance, determination, and never giving up. So whether it was in school, a class, a sport, there simply wasn't an answer like, hey, I'm not going to do this anymore. So throughout my career, I've looked at it and said, this is something I need to do. This is for me like a core competency. I need to be able to do this. So it's kind of forcing myself to do it. The more I do it, the more comfortable I become.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“I challenge myself all the time. So it's interesting. I'm very comfortable in front of large crowds. I'm comfortable on a panel. I'm comfortable meeting with sponsors, investors, but I'm not comfortable walking into a room of 70 people and just working the room. But I make myself do it.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I would say that I think most people think of me as a extrovert, but I need to work it. It's not as natural as people would think.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“You're a credit business, think about it. There needs to be incentives to have losses as low as possible, but generate new incentives that we really want to do and generate fee income and raise money. So you have salary, bonus, carry, and equity ownership. Equity ownership, I think, is quite important because as the firm grows, you want your team to see significant growth in their equity value. I think that's hugely important. And thus far, we've been able to get it right.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Bring different things to the table in huge respect for each other. I thank them for being my partners. I learned a great deal from them. I hope that they've learned a great deal from me. We built a pretty significant business over a long period of time. And like I said, everyone had a role in building it, but each of them brought something a little bit different to the table. It's been a great experience.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we look at some of the growth plans for our business and the tenants, how is it that we really want to grow the business? And we have a very detailed strategic plan on different whether it's real estate, infrastructure, all those different opportunities. And in most cases, it would be those would occur via acquisition, new product line like that. So the investment banks know that we're looking to enter the space, then it's really finding the right company that actually really knows how to underwrite risk. And importantly has a culture that we feel will work with our culture. Because I feel our culture is quite unique, really, really collaborative team. We don't work in silos. So I think culture is incredibly important in order to make those acquisitions work effectively.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a really good question, and I think about that regularly. So if it's a build, it's a natural adjacency to something that we're already doing. So when I think about nav lending, I don't really need to go buy a team. Our originators are already calling on the sponsors. We know how to underwrite credit. We're underwriting portfolios. When I'm going to do something, it's a new product. So let's say we were going into real estate. I would do that via acquisition or pulling a team out of another institution. I don't necessarily need to buy the company or the portfolio. Maybe I pull a team out. We've looked quite a bit at Europe. I wouldn't start a European lending business from scratch and grow it organically because I just think there's so many different countries. Each country is different. It's not like doing business in the US. So you need to have...”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm incredibly excited about it. There are so many. Have new products, then we can take it new geographies on the lending side. We're going to expand our fundraising, adding people in Europe, adding folks down the road in Asia, entering the high net worth sector. So the opportunities are really, really significant. Just need to make sure that we're prioritizing the right ones, that we're minimizing risk to the organization, and that we have the right people in place to execute the plan.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Don't know that there's going to be anything different this time. You're still going to have some of the distressed shops out there that are going to try and purchase debt from players in the deal and try and get to a blocking vote and take the company at a different direction. But that's always been there. So I don't really see anything new. The documents are certainly a little looser than they were 10 years ago. But we have not seen sponsors really take advantage of those. For the most part, the sponsors that we deal with have been really good actors. We've not really seen bad actors thus far.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Companies do go into distress sometimes into bankruptcy. There's typically all kinds of games that distress managers play and people sitting around the table and what becomes a zero-sum game. I'm curious if you've seen anything different or the flavor of what might happen maybe last time around it was CDS and triggering CDS in the very early wave of defaults.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Pull a few of them back into that side of the business. So we're absolutely prepared for it. They've been working on maximizing recoveries for our investors for a long period of time. That's not something that worries me. I think we'll be pretty on top of that. We're ready for it.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we have a dedicated credit advisory group, which most companies would be called a workout group. And it is staffed with a very senior team. So today we have 18 on that team. A lot of managing directors, senior vice presidents that have been working on restructurings for 20 years. It's actually expensive to have that in place when everything is rosy, when interest rates are low, the economy is growing. But what we're able to do is we have other people in the business at the junior mid-levels, even a few at the senior levels that when things are really good, they'll move back to the core credit investing side of the business. And then when the economy starts to deteriorate, restructurings are increasing.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Some point in time, we'll probably have another downturn in economic cycle. And sponsor activity is just a vast multiple of what it was the last time you went through this rodeo. And I'm curious to hear how you're preparing to weather a tougher time than it's been on your team.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“They're not fun conversations, but we've been doing this with them for over 20 years. So probably 90% of the cases that we're dealing with today, we've done this with the sponsor in the past. So it's, hey, we're looking at it looks like you're going to have a liquidity problem in two quarters, or it looks like you may trip a covenant. Let's get in front of it. What are you thinking about doing? Does it make sense to bring an advisor in to review the cash flow forecast that the company's producing? So it's a lot of back and forth. And most of the time, we get to the right place, but we don't get to the right place on the first one or two calls. So it takes a while.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Aerospace industry. Our portfolio there is quite small. We've certainly seen issues in consumer businesses selling into retail. That's been an issue really ever since. Retailers overplenished bought too much inventory and they've been working to sell that inventory. And then more recently, some issues in the healthcare portfolio with physician practice management businesses. But it's somewhat limited to those groups. If you look across the portfolio, revenue and EBITDA is still growing organically.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Way ahead of it. We do a deep dive. We've done a liquidity analysis on all the 480 companies in the portfolio, how much cash do they have on hand, what's their revolver availability, how much cash is coming in, going out. And the liquidity risk is actually quite small, but we're having those conversations with the sponsors way in advance of them running out of money, them defaulting on a covenant with the idea they own the business. So they should be right-sizing the capital structure. That means they inject additional equity. Maybe we provide some concessions, but if they don't invest equity, then maybe it's an opportunity for someone to come in with a pick preferred or something like that to solve the capital structure. That's on the financial side. There's certainly some idiosyncratic risks that we've been dealing with. But if you were to look at industries, we've seen issues in the commercial.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Obviously, there's certainly financial risk that is more acute today in our portfolio companies than a couple years ago, just given the significant increase in rates. The good thing is for companies that were underwriting today and that we've been underwriting while rates have been increasing, we've taken that into account. So we're underwriting really good companies with an interest rate scenario that is the latest curve. So our leverage is lower. The more challenging situations are the deals that we underwrote a couple years ago, still really, really good companies, but they're just overlevered. They were done at seven plus times EBITDA. And by the way, a highly adjusted EBITDA. So the risk there is companies are struggling with meeting their interest or fixed charges. And what we do there is we have those conversations with the sponsor.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Then you're, let's say, loaning 25, 30% of the equity value. And importantly, you have triggers to get paid back. Once a company sold pays back the loan, or you can hop not to get paid back. So I don't think it's high risk. I think it's actually a very good business. And I think there's a pretty significant opportunity there.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“A sponsor may just want to inject capital into one of their businesses, maybe they don't want to do a capital call. I think that is what is going to be used for most of the time, I guess. Some of them are used as a dividend, but I think most of the time you're going to see that as a use at one of their portfolio companies. People are like, oh, but isn't it leverage on leverage? The way we would underwrite a deal like that is we want a diversified portfolio. So let's say the sponsor has eight to 12 companies in their portfolio. They have a valuation ascribed to each of those portfolios, but part of the underwriting process on our side is getting comfortable with what we really think the equity value is. So you're valuing each company, subtracting the data. Here's the equity value. So you have a diversified number of companies.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Issues, they're overallocated or whatever. And there's a big secondaries business and private equity. I think that given the huge growth in private debt over the last five years, there's a big opportunity in secondaries. I also believe that there's a pretty decent opportunity in NAV lending, which is lending against essentially the equity value in a private equity sponsor's portfolio. That's pretty big today in Europe and it's just catching on here in the US.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the base direct lending business, just really excited about how much I think that's going to grow. So I think at the very top, you're going to have private equity penetration of middle and upper middle market companies in North America just continue to grow. So McKinsey will say that that's maybe 12% today. Those private equity sponsors are going to be looking for direct lending solutions, probably more than syndicated solutions. I think the private credit market's going to grow direct lending by, let's say, 15% a year for the next five years. I hope we grow faster than the market. So that's on the base. I think that there's a big opportunity in secondary lending. Secondaries have been around for a long time in private equity. So LPs commit to a fund. And for whatever reason, they need to sell. They have liquidity.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it'd be really tough today to be a player in private credit that's a billion or a 5 billion or even a $10 billion player. It's tough to make it work. So you need to be a player of scale. Is it more complex than it was 20 years ago? Sure. But we've set up the company to address that. So I would argue that this is a business that actually becomes easier the bigger you become because there are significant economies of scale on the infrastructure part. And honestly, even on the front end, as you grow this business and have more AUM.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Parable companies in our portfolio to see okay, what has revenue been growing? What are margins? What's CapEx? So that helps us make informed decisions. And then at our executive committee level, it's a combination of talking about just competitive dynamics, fundraising, what's changing in the environment. So investment committee meets three official days a week. They typically meet five because there's deals that pop up. Our executive committee meets once a week, but we're talking to each other every day because we have to provide each other with feedback that we're learning in the market to make better decisions.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's a combination of investment committee that's making the real-time decisions on deals and our executive committee. Our business today is a 24-7 business. Originators and the investor front end folks are constantly providing us feedback on deals that are happening in the market. Particularly, let's say we lose a deal. So we're learning of the terms of that deal. reacting real-time hey, was that an anomaly? Is that maybe some new lender in the market just trying to gain share? Or has the market really moved that much? That's on the investor side. We have a portfolio of 488 companies, so we're able to see what's going on in a bunch of different industry sectors. That makes us much better investors on the front end because so many of these companies that are coming in, one of the first things the team does is look at”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Been doing it for 27 years, and the way we approach it is very diversified and defensively oriented portfolios. Generally, we're trying to make portfolios as diverse as possible, diverse by obligor concentration. So generally low, one, two percent, 1% even better, diversified in terms of industry for sure. Our largest industries are healthcare software and business services. They're about 50% of our portfolio. So that's the idea. That's how you build it. So today, that portfolio, if you take all the companies that we finance today, it's about 480 companies.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're going to make that decision on each deal that we're doing and on some deals, yes, the market's moved up. There's less competition. We're going to receive some enhanced pricing. So is everyone else that's doing that deal?”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“There certainly were periods of time, Ted, where from a relative value standpoint, you look at it and you just say, wow, the competition out there, we knew about a number of lenders that had pulled back. They were short on capital. You're very aware of what's going on in the market. You begin to hear those types of things. You're surprised to see that, hey, someone else isn't showing up on this call. They're not competing for the deal. So in those cases, you look at it and you say, wow, I think that our pricing on this deal can be 50 basis points higher than it may have been 75, 100 basis points higher than it may have been in a very hot market. And I hate the term price taker, to be honest, because if we don't feel or believe that the pricing on a deal, the risk rewards in line, we're just not going to do it. So I look at it and say,”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Up until the last year and a half, there was just an abundance of capital and deals getting done. And obviously the boom in private credit. As you're going through that period of time, how do you think about where you're at price taker and where you're a price maker?”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're not underwriting really tough credits. We're not a distress shop. So we're underwriting really solid market leading businesses. So maybe on the spread, there could be a 25 basis point difference and maybe on the fee 25 to 50 basis point difference between different lenders competing for a deal. You have a bunch of really experienced people on our investment committee, our investing team all looking at it saying here's where I think we need to be to win the deal. It's a bit of a give and take in terms of the deal and the pricing.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's a pretty efficient market. What we may gain is if we're going to be seeing the deal from more sponsors. So maybe some of our competitors are seeing it from four or five and we're seeing it from eight. And a couple of the ones that we're seeing it from have operating partners that bring expertise. So on a couple of the calls, our credit team early on may be on calls with someone who has deep knowledge of a particular industry and we're learning from that individual as well.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Their sponsors, the investing team or credit team, is the same team. So let's say that's four or five people from associate up to managing director. They are taking in all of the information, getting answers to all of their questions to make a really informed decision.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Can get a little tricky if a couple sponsors are doing additional work and trying to win a deal at the very end, trying to gain exclusivity. And normally that's only down to three. And maybe they're doing a lot of diligence work that they're paying for. And if they lose the deal, they're out of pocket. That's where you may need to create trees because one sponsor may be sharing information that shouldn't benefit the others, i.e. they're doing a consulting report with McKinsey or Bain. But other than that, you're basically working off of an investment banking book and then our investing team puts together a list of questions. And they're going through those questions with sponsors. But until such time that you really would need to have people tree off, it's the core, the originators covering the...”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you go from, in the old days, a sponsor to as many as 20 looking at a deal, I'd love to hear more about the information that comes to you, particularly when you have many sponsors looking at the same deal. And what that does to your ability to understand the company and underwrite the risk.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Originator doesn't even need to take it to the screening committee because he or she just knows up front we're not going to do this deal.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“What do we think the appropriate leverage multiples are, and how would we price it? But they also really dig in and say, okay, it's early on. It's an investment banking book. The investment bank is going to sell. It's all positive. From our side, we're lenders. There's downside risk. There's really no upside. So we're looking at it and saying, what are the major issues with that particular company? How do we think we're going to mitigate those? And then if it makes it through screening, we would do a little bit more work, take it to our investment committee, assuming it goes well with our investment committee. We issue a proposal. If we win the deal, we continue our diligence, ultimately commit, and then close. That process, Ted, has not really changed in 20 plus years. So it's the same process, the rigor that's applied on every deal that comes in the door. And there are deals that come in where”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So the goal of the originator is to gain trusted advisor status with the sponsor. So that means we want to be the first call on the last call. So we want that sponsor to call us to run the company by us, the structure that they're considering, what they like about the deal. You need to understand to the market's pretty efficient. If a deal is an auction deal, we may be seeing that from as little as two or three sponsors to as much as 20 sponsors may be contacting us on that one deal. So we have a screening committee, very senior folks on the front end. So when I say the front end, I'm talking about originations and credit professionals that are evaluating the deal. So basically, the best way to think about the originations team and the credit team, they're investors. It's our investment team. They're looking at it and determining, is this a company we want to finance? And if so,”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's essentially half the business is front end. Front end would be originators that call on sponsors, the underwriting team that's underwriting the new deals, portfolio management team that's both managing the deals and doing a lot of work on industry. So each portfolio manager covers a specific industry, goes in depth on that industry, knows what's going on in that industry. And then we also have our credit advisory team. That's the investing side”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we have 435 employees, and it's about evenly split between what I would call the front end and the infrastructure side of the business.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Comes to the multiples and basically the leverage we're willing to provide and the pricing. And then also how much can we hold? So a lot of it is the consistency we've been doing it forever, our reliability. It's a huge thing and it sounds so simple, Ted. But if we say we're going to get there unless there's something crazy that pops up in diligence, we're going to get there and we're going to get there on the same terms that we had originally outlined. So I think that's really a big part of it. And the people, they know our originators and credit folks, it's a really, really experienced group. So most of these sponsor coverage professionals have been covering these sponsors for a long time. And I know most of them as well.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“I talk first Ted about the sponsor because more of the sell for the financing is with the sponsor than it is the borrower unless the borrower's already in our portfolio. So with the sponsor, in many cases, we've known these private equity sponsors since the sponsor started the company. We're now 27 years in business. So many of these sponsors we were around when the firm was founded. We've worked with them for many years. We've worked through difficult situations with them because not every deal goes the way it was originally intended. So they've spent time in our credit advisory group, aka a workout group. We've had very difficult conversations with the sponsors, but that's actually further enhanced our relationship with them. So that's one thing. These sponsors know that we see the vast majority of deals in the marketplace were really responsive. They know that we're going to be competitive when it comes to the...”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“We started the asset management group and we really didn't start raising outside funds for a couple years. We closed our first SMA a few years after they purchased us, raised a couple multi-investor funds. We've raised significant separately managed accounts. I did a lot of research talking to others in the industry. One of the things I learned is, yeah, you might get paid a little bit less for the larger separately managed accounts with really large global institutional investors, but there's going to be economies gained with that as well. So it probably is going to be better to have, for example, 10 to 15 really, really significant separately managed accounts versus trying to manage 80 small ones. To me, a small, separately managed account is anything under $300 million.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“The evolution of the industry is this idea at one time people say, what's the EBITDA where a deal goes syndicated at one time owes $50 million? And then it became $75 million. Then it became $100. If a deal comes in our shop today, a $100 million EBITDA company, there's a very good chance that's going to go private credit, not syndicated.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we had created the Unitronch product when I was back at GE and Terry's. I actually led that effort. So we started that in 2010. And honestly, when we started the Unitronch product, we really thought this is going to be an alternative financing vehicle for sponsors to use during periods of market dislocation. Had no idea that it would actually become this primary financing vehicle, which it has. In 2000, let's say 16 or 400 million dollar Unitranch was a pretty decent sized deal. By 2019, that was $600 million. And as you know, today, it's multi-billion dollar unit tranches. Lenders can hold north of a billion, but a lot of lenders in the private credit market hold two, three, four, five hundred million dollars on a deal.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you grow the amount of capital you're managing, whether it's on balance sheet or in funds, how did the nature of the market change? You think of a syndicated market as everyone's in it together, right? You're trying to find the capital for the deals. Then there's so much capital that you can imagine there being competition and you probably don't syndicate anything anymore. When did that start to shift in the market”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source