SBIA Update: November 22, 2019

SBIA Update is a way to stay up-to-date on the latest industry news, SBIA member information, and policies that impact the lower middle market.  Below are a few articles featured in this edition of SBIA Update. For the full news update, please refer to the SBIA Update email in your inbox.

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Legislative & Regulatory Update

Senator Rubio gives Speech on Common-Good Capitalism

“Common- good capitalism is about a vibrant and growing free market. But it is also about harnessing and channeling that growth to the benefit of our country, our people, and our society. Because after all, our nation does not exist to serve the interests of the market. The market exists to serve our nation and our people.”

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SBIA testified before House Financial Services Committee

In light of recent criticisms related to the private equity industry, the House Financial Services Committee held a hearing to examine industry practices as well as legislative proposals related to the regulation of PE funds. Democrats, who run the Committee under the leadership of Maxine Waters, included for discussion Sen. Warren’s “Stop Wall Street Looting Act,” legislation that would require disclosure of PE fund board diversity (not yet introduced), as well as an ILPA supported bill that would implement a quarterly SEC reporting regime for PE funds. While the other legislative proposals were mentioned, the bulk of the hearing focused on the “Stop Wall Street Looting Act” and increased pension returns due to private equity investments.

Moderate Democrats were skeptical of Sen. Warren’s rhetoric and many thought her bill goes too far. They instead suggested increasing transparency but were overall supportive of private equity pointing to investments in their districts and increased returns for pension funds. More progressive Democrats such as Rep. Ocasio-Cortez and Rep. Tliab of Michigan were closer Senator Warren’s position. They focused their Q&A on job losses in connection with the Toy R Us and Shopko bankruptcies that occurred after private equity invested in their companies. They believed that private equity cares about “profits over people.” A common theme from the Republican members of the Committee was that this hearing was overtly political and intended to bolster Democratic presidential candidates, most especially Sen. Warren. Going even further than moderate democrats with their praise, many Republicans pointed to the number of jobs and businesses that the PE industry supports throughout the country and warned that proposals such as the “Stop Wall Street Looting Act” would destroy a vital cog in the American economy. Because of support for private equity from both sides of the aisle, SBIA believes that Democrats in the House aren’t likely to take up Warren bill anytime soon

SBIA President Brett Palmer testified and was able to use both his opening statement and Q&A session to highlight several examples of successful PE investments in middle market and lower middle market companies, and to caution against the Warren bill and other proposals that would kill the PE industry.

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Member Deals 

Stellus Capital

Stellus Capital Management, LLC Provides Unitranche Financing in Support of Growth Initiatives at Intuitive Health

Stellus Capital Management, LLC announced today that its affiliates provided senior debt financing in support of growth initiatives at Intuitive Health, LLC, a portfolio company of Altamont Capital Partners (ACP). Intuitive Health is a leading operator of freestanding emergency room/urgent care combination facilities.

 

Five Points Capital

Five Points Capital Provides Last-Out Unitranche Financing to Support the Acquisition of ticktBox by Screen Engine/ASI

Screen Engine/ASI (SEA) is a research and analytics firm which maximizes market potential and manages risk for the entertainment and media industry. SEA leverages big data across its products and services to provide meaningful insights to domestic and international film and TV, digital and mobile platforms.

In August 2019, SEA acquired ticktBox Enterprises, LLC (ticktBox), a leading global platform offering online ticketing and integrated marketing solutions to some of the world’s top entertainment brands. The acquisition will enable SEA to deepen its relationships with entertainment industry decision makers and broaden its offering throughout the entire movie and TV production, marketing and distribution lifecycle.

Five Points Capital provided last-out unitranche term debt to support the acquisition of ticktBox by SEA, a portfolio company of The Wicks Group of Companies.

 

Tregaron Capital

Tregaron Completes Acquisition of Cutting Edge Landscape

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LBC Credit Partners

LBC Small Cap Provides Senior Secured Term Loan and Equity Co-Investment to Support the Acquisition of Auchinachie by Astar Heating & Air

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HCAP

HCAP Partners Announces New Investment in TCS Healthcare Technologies

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SBIA is the voice and advocate for the lower middle market. Go to www.SBIA.org/about to learn more about the Small Business Investor Alliance.

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