Audax Group, a Boston-based alternative asset management firm, is planning to provide senior debt lending for middle-market companies in an effort to fill the gap left by the wave of bank mergers in the last few years. "Sponsors are searching for additional sources of senior debt, primarily due to consolidation among banks providing capital to the middle-market," said Kevin Magid, who heads Audax Group's debt capital markets business and was previously a managing director in the leveraged finance group of CIBC World Markets. "We have a $440 million mezzanine fund and we look forward to adding a senior debt capability."
"In the recent past you've seen new players, either finance companies or institutional investors, looking to fill the continuing demand," Magid noted. In addition to RBC Leveraged Capital, and Merrill Lynch,CDC IXIS North America is said to be preparing a middle-market lending shop headed by ex-UBS Warburg leveraged finance pro Art Penn (LMW, 2/3). Responding to which type of companies Audax will cater to, Magid said, "All middle-market companies seeking debt capital as well as LBOs or portfolio companies of equity sponsors. Companies we have made mezzanine loans to are often looking to expand their middle-market banking relationships." He said one advantage to serving existing relationships is that Audax would already have done the credit work on that company.
Magid confirmed the goal is to launch the effort sometime in 2003, but he declined to specify an amount for any vehicles. In terms of attempts to raise the capital, he stated, "We are exploring a finance company model, and or CDOs, but have no firm plans at present." If Audax enters the senior loan business, additional staff will be needed, he added.