Asset Management Finance recently completed a $100 million senior secured revolver for its Revenue Share Interests (RSI) vehicle. "We raised $100 million of senior debt from Société Générale and ING Capital and City National Bank with the purpose of financing revenue sharing interest, which we intend to purchase, if you will, from independent management firms," said Norton Reamer, president and ceo. He would not discuss the maturity or pricing of the loan. "As a specialty finance company, we need a fair amount of capital and we need to have some leverage to make returns," he later explained.
RSI is a vehicle in which a passive partnership is set up between AMF and the management of a company and provides limited term, non-recourse funding in return for a percentage of gross revenue. AMF would hold a passive, non-voting revenue share interest and management resumes full earning power when AMF's interest is over. The funds provided by AMF can be used to provide liquidity and facilitate planning. They can also be used for management buyouts, buybacks and growth initiatives. AMF currently has a patent pending and Reamer anticipates doing about eight transactions a year. He said they currently have a number of options in the pipeline and anticipates doing another transaction by year-end. In the future these transactions could range from a $5 million investment up to $45-50 million.
The company had previously raised $90 million of equity or near-equity led by National Bank Financial, a subsidiary of the National Bank of Canada, and Pacific Life Insurance Co. Of the three lead banks on this transaction, Reamer said, "They are three institutions that are very much involved in the investment management industry."