Grier Eliasek, President and Chief Operating Officer of Prospect Capital Management, joined Keith Black, Managing Director of RIA Channel, to discuss investing in middle-market debt and equity strategies.
Prospect Capital Management has one of the longest track records in middle-market direct lending, as the senior management team has been together for 25 of the firm’s 36-year history. Since its inception, Prospect has invested over $22 billion in over 1,100 private investments, resulting in over 500 exits. Today, the firm employs over 70 investment professionals and over 80 business infrastructure professionals who help portfolio companies run better. These employees have invested more than $1 billion in Prospect’s funds.
Prospect has $12 billion in AUM across four core strategies: structured credit, real estate, and middle-market direct lending, and middle-market buyouts. Prospect reviews over 3,000 deals annually but closes on less than 2% of the opportunities.
Prospect has been in the middle market direct lending sector since before the global financial crisis and is increasingly focused on the lower middle market, where there is less competition, more robust pricing, and equity upside. Prospect works with independent sponsors and proprietary deal flow to offer investments in middle market direct lending, as well as a one-stop shop that invests in both equity and debt to support buyout transactions. PE firms have a record amount of dry powder, which creates lending opportunities to facilitate buyouts. The firm is pursuing multiple organic growth initiatives and evaluating tuck-in and add-on acquisition opportunities to add to existing platform businesses owned as buyout equity investors.
Eliasek states that Prospect is seeking double-digit yields in the structured credit markets through the Priority Income Closed-End Fund. He views CLO debt and equity investments and other types of asset-backed securities as an all-weather investment strategy.
Prospect’s real estate strategy doesn’t invest in retail and office properties but focuses on multi-family investments. These multi-family properties experience rent growth after Prospect adds capital improvements after closing on the purchase. The current strategy focuses on credit and preferred investments and may rotate to equity investments at a later point in the cycle.
Prospect offers two business development companies (BDCs). Prospect Capital Corporation (PSEC) is publicly traded, while the Prospect Floating Rate and Alternative Income Fund (PFLOAT) is a non-traded BDC.
WEBCAST – Priority Income Fund: Understanding Senior Secured Loans and Collateralized Loan Obligations
Prospect Capital presents Priority Income Fund, a 1940 Act closed-end registered investment company that invests in equity and junior debt tranches of Collateralized Loan Obligations (“CLOs”), or pools of first lien senior secured loans to large U.S.-based companies. Join us for this in-depth discussion to learn more about senior secured loans and CLOs, and how Priority Income Fund may fit into your investment objectives.
Accepted for 1 CFP® / IWI / CFA CE Credit
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About Prospect Capital Management