Only last week, the industry discovered that Monroe Capital introduced a brand-new asset-based financing unit tailored toward the retail and consumer product vertical with popular industry specialists – Andrew Moser and Marc Cost – to co-lead the brand-new effort. In the following exclusive interview with ABL Advisor, Ted Koenig speaks honestly about the believing behind the move, Monroe’s choice of management and the advantages Monroe Capital gives debtors in the sector. ABL Consultant likewise talks with Andy Moser, who offers understandings into the unique and intricate dynamics merchants and their loan providers deal with in today’s environment.
ABL Advisor: Aside from the truththat a retail finance offering complements Monroe Capital’s existing verticals, why did you decide to form this vertical now and what are the existing market characteristics that convinced you that this is the idealcorrect time for Monroe to establish an asset-based financing group tailored towards this sector?
Ted Koenig: We have been following this space for quite some time. If you recall, our early roots at Monroe were in doing second lien, asset-based term loans in the 2000 to 2003 period for retail offers such as Zany Brainy, FAO Schwartz, Family Toy, Payless Cashways, MC Sports, Natural Wonders and others. For many years because, we have become mostly very first lien, senior secured loan providers. Our portfolio has actually grown quite a bit since those early days– we now have about $3 billion in the ground with over 220 business as debtors in essentially every Moody’s market class. Our healthcare, technology and media verticals have actually been very successful for us.
Retail and consumer productsdurable goods accounts for about 30% of the US gross domestic product and manya lot of our current consumers remain in this market segment. We see a chance to capitalize on our deep, long-lasting dated and irreversible capital base, together with a history of finest in class underwriting and credit, to be a “solutions oriented” lender in this space. There has been, and will continue to be, dislocation in the retail financing space, with what has been taking place to managed monetary institutions courtesy of the Fed, OCC, Comptroller etc, combined with the recent drastic consolidation in the total asset-based financing market and to the retailers themselves, as numerous have actually been and will be significantly challenged by the Internet. We have the ability to offer a clean and stylish solution to middle-market business operating in this area that the banks today merely can not match in regards to availability, liquidity and versatility of structure. As it has been the case with our other verticals, my guess is that we will end up being favored partners to business and to other banks in this area, rather than being viewed as rivals.
ABL Advisor: Our readers are obviously knowledgeable about Andy and Marc from their lots of years in the industry. With their cumulative experience in mind, what made you select Andy and Marc to be the best group to co-head this new vertical at Monroe Capital?
Koenig: Together, Andy and Marc have almost 50 years of experience in the retail and the customer items area as lenders and investors. They have actually worked for numerous and various lending platforms; some successful and some not. They have had their share of wins and likewise their share of losses. A few of the losses were the outcome of institutional or regulative issues connected with their previous employers and some, sadly, were self-inflicted. However in my opinion, there are not 2 much better people in the market that have the depth and breadth of understanding and connections with retailers and consumer products companies. Andy and Marc’s connections extend to the many private equity sponsors, financial investment banking firms, turn-around management consultants and the other specialists that deal regularly in this space. These people understand what merchant customers need and when they need it from a financing standpoint. The skills of Andy and Marc, combined with the “no loss, credit first” mindset and outstanding track record of Monroe, need to result in a winning mix for this new vertical of ours.
ABL Advisor: Andy, please share with our readers what attracted you and Marc to Monroe and the opportunity to release this brand-new group as part of Monroe Capital?
Andy Moser: What attracted us to Monroe were lots of things; firstprimarily, rather just, the individualsindividuals– manymuch of whom we have actually been close to, regard and have admired for numerous, many years. While the vertical is brand-new for Monroe, their comfort and knowledge of the industry sector and pertinent possession classes provides Marc and me terrific convenience that we have a unified approach and the ability to execute regularly for the market in a wayin such a way that permits us to satisfy and often exceed the expectations of our consumers and partners. Furthermore, their existing and wider infrastructure and platform undoubtedly helps in our capability to scale this brand-new vertical and enable us to focus with safety and stability top of mind. Lastly, Monroe’s constant and well-respected performance history, together with a diverse and permanent capital base, made the choicedecided to sign up with an apparent one. To develop on what we do best and with our lots ofseveral years of experience to draw upon now within an existing finest in class company, manages us an amazing chance that we look forward to being a part of for many years to come.
ABL Consultant: From what we gather, the retail sector deals with some special and significant difficulties– changes in spending practices brought about by e-Commerce and keeping in step with millennials and their habits, the migration far from 2nd tier shopping centers and the genuinerealty and other concerns this migration poses. Exactly what is your outlook for the sector and exactly what does it take to succeed given these difficulties?
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