Ritchie Capital Management has hired away nine members of GE Commercial Finance's debt financing team to start its own group. The team, led by Bill DeMars, will provide debt financing to early- to mid-stage companies that have already received equity rounds from private equity firms. Ritchie made the move to complement its venture capital arm, as the two groups can evaluate the debt and equity of a private company, said DeMars, who was managing director of technology lending at GE. DeMars declined to comment on the amount of capital the firm will devote to the new venture, or how it will fit into Ritchie's corporate structure.
The group will target companies that typically cannot secure bank financing because they lack profitability and cash flow, said DeMars. It will seek deals in several sectors, including communications, Internet, semi-conductors, clean energy, life sciences, health care and pharmaceuticals. Ritchie will be lending to companies in both the pre-revenue and revenue stages of development. Ritchie will make secured loans ranging from $1-5 million for pre-revenue companies, and $5-25 million for businesses nearing break-even EBITDA. Due to the young nature of the companies, Ritchie will be at the top of the capital structure, he added. DeMars declined to quantify how much capital the firm was allotting to the strategy.
The team had been together since 1998, and had already weathered several acquisitions. The group started at LINC Capital, which was acquired by Heller Financial. Heller was subsequently bought by GE in 2001. A GE spokesman did not comment by press time.
Ritchie Capital is run by Thane Ritchie, who was on the U.S. national bobsledding team in the early 1990s and also played in the National Football League for the Pittsburgh Steelers and Chicago Bears.