Ares Management, L.P. announced that a fund managed by its commercial finance platform has signed a definitive agreement to acquire the asset-based lending portfolio of First Capital Holdings, Inc., a leading commercial finance company that provides asset-based loans and factoring to small and middle-market companies. First Capital is a portfolio company of H.I.G Capital. The transaction is expected to close during the second quarter, subject to customary closing conditions. The fund intends to fund the acquisition with a combination of debt and equity.
With this transaction, the Ares Commercial Finance platform, which is part of the firm’s Direct Lending Group, will have approximately $700 million of loan commitments. The Ares Commercial Finance team, which operates across seven office locations throughout the U.S., will be expanded with members of the First Capital investment team.
“We are pleased to acquire this high-quality portfolio, and we welcome the team from First Capital,” said Jack Reilly, a Partner in the Ares Direct Lending Group. “We are excited to have the expertise of the First Capital team, which we believe will be highly complementary to ours and will help us achieve further success and scale in our commercial finance business.”
The Ares Commercial Finance platform provides asset-based and cash flow loans to small and middle-market companies, as well as asset-based facilities to specialty finance companies. Asset-based lines of credit may be structured as working capital financing, special accommodation financing, turnaround financing, debtor-in-possession financing, acquisition financing and specialty lender financing. Target credit facilities range in size from $1 million to $30 million, are typically held to maturity and are not dependent on syndication for approval.
“Today’s announcement is another important milestone in the continued growth of the commercial finance platform within the Ares Direct Lending Group,” added Mitch Goldstein, Senior Partner in the Ares Direct Lending Group. “We have a long held view that commercial finance is an important and growing sector that requires a broad and strong direct lending platform like ours in order to originate, underwrite and service loans.”
“Investors continue to benefit from Ares’ ability to provide a broad array of credit strategies, especially in sectors where banks are increasingly either unable or unwilling to provide sufficient capital to companies or sponsors to meet the demand,” said Michael Arougheti, President of Ares Management, L.P. “We expect to continue to expand our commercial finance platform in order to meet the evolving needs of our investors for attractive and differentiated investment alternatives.”
Ares is a leading global alternative asset manager with approximately $86 billion of assets under management and more than 15 offices in the United States, Europe and Asia as of December 31, 2014, pro forma for the acquisition of Energy Investors Funds on January 1, 2015. Since its inception in 1997, Ares has adhered to a disciplined investment philosophy that focuses on delivering strong risk-adjusted investment returns throughout market cycles.
First Capital provides customized and timely working capital financing solutions primarily to small and middle-market companies engaged mainly in manufacturing, distributing and business services with annual sales greater than $1 million. Lines of credit are in the form of Asset-Based Loans, Factoring or Invoice Purchasing arrangements ranging from $200,000 to $25 million. Originally formed in 1988, First Capital is one of the largest independent asset-based working capital lenders in the country.