CapitalSource, a commercial finance firm providing senior and mezzanine loans to middle-market companies, is bulking up its staff while planning to do one or two more collateralized loan obligations this year after completing the $450 million CapitalSource Commercial Loan Trust 03 CLO last month. Additionally, the firm has snagged a half dozen GE Capital Corp. employees and a PNC Bank staffer to kick start the firm's Chicago office. Dan Duffy, former managing director in capital markets at GE, began at CapitalSource two weeks ago as head director of the corporate finance group in Chicago. "We've essentially started a general industries team for corporate finance in Chicago," he said. He noted that CapitalSource did not scoop up an entire team of employees from GE. He said it was more of an independent process. He added that the firm is looking for four or five more hires to join the Chicago team. He would not discuss any likely candidates.
Don Cole, director of operations at the firm, said CapitalSource, which offers financing to companies owned by private equity firms or other strategic investors, is shooting for future CLOs in the $400-600 million range. "We don't use [CLOs] as an off-balance sheet vehicle," he said, explaining that the firm uses them to finance its loans and internal growth. CapitalSource completed a $275 million CLO in May 2002 and a $325 million CLO in October 2002, Cole said.
Duffy added that Michael Sznajder and Greg Browne, also from GE in Chicago, would be moving over to the firm next Monday to be directors. Sznajder was a managing director in global sponsored finance in charge of healthcare, while Browne was a senior v.p., originating healthcare transactions. He said Sznajder and Browne will focus primarily on healthcare related finance at CapitalSource. Duffy is reporting to Joseph Kenary, the managing director and head of CapitalSource's entire corporate finance division, based in Chevy Chase, Md. Kenary was at Heller Financial's HealthCare Finance division before joining CapitalSource in January 2002. Matthew Kirst, a former senior v.p. in global sponsored finance at GE and Rich Jander, formerly of PNC Business Credit where he was a v.p. in leveraged finance for private equity-sponsored transactions, also joined CapitalSource last month as a director in corporate finance. A PNC official declined to comment.
Jeffrey Kilrea, who co-headed GE's media and communications lending effort and is now a director of media and communications finance, and Ryan Golding, a former assistant v.p. at GE in the media lending space and now an investment officer, also joined CapitalSource in Chicago last fall. All of the departing Chicago-based GE players were employees of Heller before GE merged with the firm in 2001. "GE's left a lot of small finance companies in their wake," one banker said, speaking to the bevy of financial service firm acquisitions GE has made in the past few years. A GE spokesman confirmed Duffy's departure but declined to comment further and he did not return calls by press time regarding the other GE employees.