Jefferies Group and Massachusetts Mutual Life Insurance Co. subsidiary Babson Capital Management plan to lend up to $2.5 billion to middle-market companies after teaming up to form Jefferies Babson Finance. The joint venture will enable MassMutual to invest capital into the middle-market space and leverage Babson's portfolio management expertise and operations, said Tom Finke, managing director and head of the U.S. bank loan team at Babson. This will provide Jefferies with the capability to offer senior lending to its investment banking clients.
Carl Toriello has been named the senior managing director and head loan officer at the joint venture, which has been capitalized with $250 million of equity. "We will leverage that equity and as the business grows we will look at the various forms of growth. Whether that be raising additional equity capital or taking advantage of the securitization market," Finke said.
Last year, Joseph Schenk, Jefferies' cfo, commented the firm can provide its clients financing advice but cannot always provide the services they recommend (LMW, 9/21/03). Since then the firm has added Andrew Woolford and Neil Wessan from CIBC World Markets, as co-heads of a private placement group. Torriello previously worked as a senior v.p. at GE Commercial Finance.
Commenting on how the two firms got together, Finke explained that the relationship goes back more than a decade. Richard Hendler, Jefferies ceo, has had a long standing relationship with Mass Mutual and with Babson's CEO Stuart Reese. "This is another effort in a long-term relationship," he noted.
MassMutual also owns Antares Capital Corp., which is one of the leading mid-market lending firms, but Finke does not see any issues here due to the depth of the space. Antares is separate from Babson and when you have a large financial company like MassMutual there will be overlap, he indicated, also pointing out that MassMutual owns Oppenheimer Funds. A Jefferies spokesman did not return calls by press time.