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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“And the balance sheet doubled in size. The asset management business that was essentially nothing at the time of the purchase was basically a startup is now significantly larger than the balance sheet.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“You were hearing some people call it private credit, but still it was nothing like it is today. And as you know, the market's been growing at double digit rates. It's expected to grow at double digit rates for the next five years. You still had some banks around. And what I would say some of the smaller middle market players had more of a presence back then. So Madison, BMO, it's now known as Appigem. Aries and Gallup were around at that time when we started. I'll rock slash blue owl really was not even around at that time. So the market has grown exponentially over that eight year period. So I'll give you an example. So CPP bought, let's say, $12, $13 billion balance sheet. Today, we managed $64 billion. So just to give you a sense of the growth over that time period.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“So over those, call it close to 20 years since you started. You go from 1 billion to twelve to transactions, syndicated market. What did the market for what you were doing look like seven or eight years ago when you did that sale to CPP?”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're buying a large book of loans. So the book was a little over $12 billion, and they paid more than book. And they invested significant equity. And the management team also invested equity in the business. So basically when the deal was done the first time, it was just CPP and management. And about a year later, they brought another Canadian investor in Northleaf Capital.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“So they decided to put the Interiors business on the block because they felt like it had significant franchise value and it did. And many of our competitors, many of whom you've interviewed in the past were in the running to buy the company. And in the end, CPP prevailed.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's an interesting story. None of us wanted to sell the GE because we had seen what had happened with the Heller business. So we were interested in a lot of the other buyers. GE lobbed in a pretty big price. So we and Mass Mutual had a fiduciary obligation to review the deal. Mass Mutual actually agreed to this, that we would only sell to GE if the Anti-Sanagement team was running the business. Meaning we were running the business and we were making the credit decisions because it was really that credit process that was a mess. We were there almost 10 years. It worked well for about eight. The last two years, GE could not in any way shape or form keep up with the regulators. It was a company that had very poor systems. They had made all these acquisitions and were operating on a bunch of disparate systems. So all of a sudden the credit process changed, things became a lot more difficult.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I'd start by saying sponsors loved the idea that their coverage person was, in many cases, sitting on the investment committee and owned a piece of the firm. I started covering the West Coast. And it was a time when there were a lot of middle market private equity sponsors that started on the West Coast, particularly in San Francisco in the mid to late 90s. So Antarry's resonated with a lot of the sponsors. We were still competing with our prior firm Heller Financial, and I would argue Heller was number one in the market. GE was probably number two and we were number three. What happened along the way, which was hugely beneficial to Antiris, is that we started the company in 96. In 2001, GE acquired Heller.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Market, the syndication market was there. And if you had a financing that was greater than $100 million, it was syndicated because lenders at that time only held $30 million in a deal. So just very, very different from today.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Really interesting when I think back to those times because it's so different than today. The market was multiples were more like sponsors were buying companies for seven and a half, eight times. Rarely would you see a purchase price above that? We were loaning three and a half, four, four and a half times. The pricing was actually quite good, but the competitive landscape was so different than it is today. So back then, there were banks. And what's interesting is banks have come in and out of the market over time. But back then it was more of the regional banks. So we competed with La Salle Bank out of Chicago, Key Bank, even to a small extent for Chicago. We competed with some of the French banks for some reason the French banks were pretty strong back then. So it was BNP, credit agricole, and into Suez. But it was inefficient.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Really appealing. Let me set up a meeting. He set up a meeting and within a month, we started Antaire's Capital. So it was a very, very quick process with Mass Mutual in terms of getting it approved. What was the activity like back then?”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“A big asset based lender, that were a factoring business. And one of the individuals in our shop, a guy named Barry Sheer, had the idea that why don't we take our business and go do this on our own? And that's all we'll do is sponsor cash flow lending. It will own a piece of the business. And I think sponsors will love it. We'll make the credit decisions. So it's an interesting story. Barry ran it by a number of us and we were all very interested. But obviously to get started in our business, you need a lot of capital. So he ran the idea by a close friend of his, a guy named Shell Lubar out of Milwaukee. And Shell is a very wealthy individual. He was talking to Shell about potentially investing in the firm unbeknownst to Barry, Shell said, hey, I'm on the board of mass mutual. And this is something that they may find.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of underwriting the business itself and knowing that there's no way I'm going to be repaid from a liquidation of the assets, I'm underwriting the value of the business. So I want to underwrite companies that are market leaders, something that they do is proprietary. They're highly diversified. They have a reason to exist. It's a recurring revenue business, that type of thing. So while it was new to me, I actually liked it a lot more than asset-based. What was the path from being a loan officer to a bank like Heller to what became an asset management business based on private credit? I'll give you the story of how we ended up at Antares. So we were at this very large finance company. And Heller, we were part of this small group that was doing sponsor cash flow lending.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“To learn okay, how do you underwrite cash flow transactions? How do you underwrite loans to private equity sponsors? The market, though, was quite inefficient, Ted. If you think about it, this is bedating myself here. I joined Heller in 1990. So the private equity market was nascent for sure if a sponsor had a $300 or $400 million fund, that was pretty big. And there was no term private credit or private debt. That's where I learned about cash flow lending was at Heller Financial. What was the distinction for you between cash flow lending and asset-backed lending? At American National, I was doing more asset-based lending. So it was underwriting a company-based loan advance against AR and inventory and PP&E. And you're looking at it from a liquidation standpoint. So was this totally new approach?”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I spoke to one of my father's friends, who is a very successful business person who said, you should really go work for one of the banks in Chicago. They spend a lot of money on their training programs. You're going to learn about a lot of different companies. And importantly, you're going to learn about credit. So I interviewed and ended up getting a job with a bank in Chicago called American National Bank, who was part of First Chicago. And it was the fifth largest bank in Chicago. Great training program, and that was the starting credit. What was credit work like back then? So I still remember back then we're doing income statements and balance sheets by hand on a ledger. I'd say at American National Bank, I learned credit, but I actually learned a lot more about cash flow lending when I moved to Heller Financial. And that's where I really started.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sam, great to see you. Great to see you, Ted. Thanks so much for having me. Why don't you take me back to how you got started in the credit world? I was the son of two educators. So when I chose a college, I chose University of Illinois. My parents were both big fans of smaller liberal arts colleges, so they weren't a big fan of me going to Illinois. But they said, hey, if you're going to go to a big public university, you're not going to go straight into business. I had been fascinated with business since I was a little kid, was focused on the stock market and second and third grade, a little unusual. But they said, hey, if you go to University of Illinois, you're going to get that liberal arts background. So I majored in economics. So I took a lot of the liberal arts classes, but I also took finance and accounting was really, really interested in finance and economics in particular.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guest on today's sponsored insight is Tim Lime, the CEO of Antares Capital, a $65 billion private credit manager that began funding private equity-sponsored businesses in 1996. Antares is one of the longest standing lenders to private businesses, having passed ownership to GE in 2005 and CPBIB in 2015, all the while steadily providing liquidity to the economy. Our conversation covers three decades of lending, from the early years dominated by bank activity to the modern era of private credit asset management. We discussed the changes in the business over time, the resources required to succeed, and opportunities and risks going forward.”
2023-10-26 · Capital Allocators · Tim Lyne – Three Decades of Private Credit at Antares (EP.346) · IDENTIFIED FROM THE TRANSCRIPT · source