Two seasoned leveraged finance players have left their posts at General Electric Capital Corp. and U.S. Bancorp to serve the ultra-low end of the middle-market with a new leveraged buyout fund. Richard Buckanavage, formerly a managing director for sales and market intelligence in the loan syndication group at GE and Timothy Hassler, a former v.p. of capital markets at U.S. Bancorp, have co-founded the new Westport, Conn.-based fund Patriot Capital Funding.
The pair noted that while many lower middle-market cash flow lenders start with companies having a minimum $15 million EBITDA, Patriot will be serving companies under that range. "We're looking to provide financing for companies with EBITDA between $5-20 million," Buckanavage said. He added that Patriot would cater to sponsor-backed transactions for lower middle-market U.S. based manufacturers, distributors and service companies. "Our financing is for the most part cash-flow based," he noted. The shop will provide senior and junior secured and senior subordinated debt.
Buckanavage started work at Patriot on March 10, after leaving GECC on March 7, while Hassler left his position at U.S. Bancorp last November to begin documentation for Patriot's startup. At U.S. Bancorp, Hassler reported to Kirk Porter, senior v.p. of capital markets origination. Patriot was officially instituted on Feb.11, when the shop held its first close at $150 million, Buckanavage said, adding that the target for the fund is $250 million. "We believe this low end of the middle-market is underserved. We think it's a great time," Buckanavage said. "A lot of funds that have been started are CLOs or CDOs and they are looking at taking passive participation in large liquid deals and our goals are opposite," he added, explaining that Patriot is doing relatively illiquid deals.
Meanwhile, Buckanavage's spot at GECC has been filled by Kevin Burke, a former loan salesman in leveraged loan syndications at Deutsche Bank. Burke began working at GECC last Monday in the same capacity as Buckanavage. Burke is reporting to Kenneth Lindholm, managing director for global placement at GE, a spokesman said. Burke was let go from Deutsche Bank in January of 2002 as the bank trimmed jobs worldwide to hedge an earnings slump. Burke could not be reached for comment.