1 00:00:05,000 --> 00:00:07,300 Hello and welcome to the second show. 2 00:00:07,300 --> 00:00:10,900 Brooke podcast, I'm your host, Nicholas Neverland the editor of 3 00:00:10,900 --> 00:00:13,100 Real Deals. And on today's program we will 4 00:00:13,100 --> 00:00:15,300 be discussing how the emergence of unit. 5 00:00:15,300 --> 00:00:18,700 Ranch has transformed acquisition Finance markets over 6 00:00:18,700 --> 00:00:22,600 the last five to ten years and what this means for the future 7 00:00:22,900 --> 00:00:26,000 over less than a decade unit. Ranch has grown from a quirky 8 00:00:26,000 --> 00:00:29,600 debt offering provided by a few New Market entrants into the 9 00:00:29,600 --> 00:00:32,200 financing. True of choice, for the majority 10 00:00:32,200 --> 00:00:35,300 of mid-market deals. You need to transfer lenders. 11 00:00:35,300 --> 00:00:38,200 Ripped up the acquisition Finance rule, book shedding the 12 00:00:38,200 --> 00:00:41,100 need for amortization and certain covenants and 13 00:00:41,100 --> 00:00:43,000 simplifying Capital structures through. 14 00:00:43,000 --> 00:00:46,700 The provision of one piece of debt at a single price point, it 15 00:00:46,700 --> 00:00:49,500 is help direct lenders to Hoover up market share from the once 16 00:00:49,500 --> 00:00:52,800 dominant High Street Banks and open up the market for a new 17 00:00:52,800 --> 00:00:56,100 generation of debt funds and Challenger Banks to help 18 00:00:56,100 --> 00:00:57,600 understand why you need tranches. 19 00:00:57,600 --> 00:01:00,800 Been so disruptive and why sponsors have Takin it up. 20 00:01:00,800 --> 00:01:03,800 So readily. I'm joined by two guests. 21 00:01:03,800 --> 00:01:06,200 Jayne Murray leads, the unit. Raunch offering a chore 22 00:01:06,200 --> 00:01:08,300 brookbank. Jen has worked in the leveraged 23 00:01:08,300 --> 00:01:11,600 and acquisition Finance market for more than a decade and held 24 00:01:11,600 --> 00:01:15,100 senior Financial sponsor facing roles at RBS, and Clydesdale 25 00:01:15,100 --> 00:01:18,400 before, joining Sherbrooke to launch, its unique trans product 26 00:01:18,400 --> 00:01:21,200 earlier, this year, since launching the author Jane has 27 00:01:21,200 --> 00:01:24,700 already closed her first three Deals, providing Finance for 28 00:01:24,700 --> 00:01:27,400 transactions back by alcuin Kangal. 29 00:01:27,500 --> 00:01:30,500 And most recently, Rutland Partners gin we go to the It's 30 00:01:30,500 --> 00:01:33,000 the reasons for launching a bank, LED unit, Ranch products a 31 00:01:33,000 --> 00:01:35,500 bit later, but before we get there, I wanted to ask. 32 00:01:35,500 --> 00:01:38,000 If you could just sketch out, how you neutrons developed in 33 00:01:38,000 --> 00:01:40,800 the first place, and what its impact has been on the wide 34 00:01:40,800 --> 00:01:43,700 acquisition Finance market for both Financial sponsors and 35 00:01:43,700 --> 00:01:47,300 indeed lenders. So I think the emergence of you 36 00:01:47,300 --> 00:01:50,400 know, trying to really started just after the financial crash. 37 00:01:50,400 --> 00:01:54,900 2008 2009 there were obviously big teams sitting in the 38 00:01:54,900 --> 00:01:57,200 clearing Banks doing leveraged Finance. 39 00:01:57,200 --> 00:02:01,700 There was a definitely post-crash Retrenching by those 40 00:02:01,700 --> 00:02:05,600 Banks Banks, that started to become a lot more picky around, 41 00:02:05,600 --> 00:02:08,300 for example, which sectors they were willing to play in which 42 00:02:08,300 --> 00:02:09,900 sponsors they were willing to back. 43 00:02:10,000 --> 00:02:12,900 And at that point you had a number of credit funds in the 44 00:02:12,908 --> 00:02:19,300 market with significant money to spend and to deploy and looking 45 00:02:19,300 --> 00:02:23,900 for you know, decent returns, they looked around the market 46 00:02:23,900 --> 00:02:26,700 and obviously saw the opportunity not just to do 47 00:02:26,700 --> 00:02:30,000 perhaps what, they previously done, Junior debt, or a bit of 48 00:02:30,000 --> 00:02:31,900 mess. But actually to go in and 49 00:02:31,900 --> 00:02:36,300 wholesale start financing, stop financing businesses, it very 50 00:02:36,300 --> 00:02:38,700 much disrupted. The market, they came in and 51 00:02:38,700 --> 00:02:41,200 decided to do the end to end piece. 52 00:02:41,200 --> 00:02:44,000 They obviously funds have very different touch points and 53 00:02:44,000 --> 00:02:45,800 different sensitivities to the banks. 54 00:02:46,300 --> 00:02:50,000 For example, they want to get Lenten stale and so the unit 55 00:02:50,000 --> 00:02:54,100 Ranch product, really suited them and and equally, you know, 56 00:02:54,100 --> 00:02:57,100 the banks for a time, really struggled to compete. 57 00:02:57,100 --> 00:02:59,700 These guys came in and really change, change the game. 58 00:03:00,000 --> 00:03:02,900 I'm Also joined by Katie mcmenamin, who is a lawyer at 59 00:03:02,900 --> 00:03:05,900 Travis Smith, I'm Katie has been with the firm for nine years 60 00:03:05,900 --> 00:03:08,800 where she qualified and she's been working in the finance 61 00:03:09,400 --> 00:03:12,800 team, wish, advisors both lenders and sponsors on 62 00:03:12,800 --> 00:03:15,500 financing packages for mid-market, private Equity 63 00:03:15,500 --> 00:03:17,400 deals. Katie is lovely to have you 64 00:03:17,400 --> 00:03:19,500 here. If you had to look back at the 65 00:03:19,500 --> 00:03:22,200 private Equity deals, you've worked on over the last year. 66 00:03:22,700 --> 00:03:25,200 What percentage would you estimate Heather, unitron 67 00:03:25,200 --> 00:03:27,400 structure. And to what extent would you say 68 00:03:27,400 --> 00:03:30,200 all structures? Now, mimic you need tranching. 69 00:03:30,400 --> 00:03:32,300 Respect. Hi Nic, nice to be here. 70 00:03:32,400 --> 00:03:36,300 The answer to that question, probably depends on which heard 71 00:03:36,300 --> 00:03:38,900 of end of the the mid-market you're looking at. 72 00:03:38,900 --> 00:03:42,000 So, definitely the upper end percentage-wise. 73 00:03:42,000 --> 00:03:47,500 You're looking at sort of 60 70, % unit, Ranch deals, and 74 00:03:47,500 --> 00:03:48,900 probably a higher percentage than that. 75 00:03:48,900 --> 00:03:52,900 Have some feature and that mimics any chance whether that's 76 00:03:52,900 --> 00:03:59,000 a non amortizing, tlb kind of like of loose type terms, which 77 00:03:59,300 --> 00:04:02,400 are more akin to this. Out of uni chance package at the 78 00:04:02,400 --> 00:04:05,500 sort of lower end of the mid-market and there's a much 79 00:04:05,500 --> 00:04:08,500 lower percentage of what you might call unit Ranch deals. 80 00:04:08,600 --> 00:04:13,300 Having said that, all of those sort of borrow a friendly, kind 81 00:04:13,300 --> 00:04:15,800 of lose, count of light. Type terms are starting to 82 00:04:15,800 --> 00:04:20,100 trickle down and even into sort of Club deals populated Steel by 83 00:04:20,100 --> 00:04:23,600 the clearers. And we're seeing sponsors expect 84 00:04:23,600 --> 00:04:27,900 to achieve those types of terms and even on the smaller deals. 85 00:04:28,600 --> 00:04:31,400 So unit, ranches touch. The whole of that sort of, 86 00:04:31,400 --> 00:04:34,800 mid-market space. And there's any chance features 87 00:04:34,800 --> 00:04:37,900 even in deals that aren't styled a sort of straight, uni, chance 88 00:04:38,100 --> 00:04:40,100 packages. So it varies, but it's 89 00:04:40,100 --> 00:04:43,000 definitely, it's definitely changed the space and over the 90 00:04:43,000 --> 00:04:45,900 last five years, okay? Really interesting. 91 00:04:45,900 --> 00:04:46,700 Thank you. Katie. 92 00:04:46,700 --> 00:04:50,200 And I really want to just dig in to where the market is now and 93 00:04:50,200 --> 00:04:52,100 how could evolve in the future gen. 94 00:04:52,100 --> 00:04:54,500 I suppose an obvious place to start is with is with your new 95 00:04:54,500 --> 00:04:58,400 project here at schaberg as a bank lending. 96 00:04:58,400 --> 00:05:00,100 What was the thinking behind launch? 97 00:05:00,300 --> 00:05:05,100 Being a unit Ranch product, which I suppose would normally 98 00:05:05,100 --> 00:05:07,200 be associated with with the fund offer. 99 00:05:07,400 --> 00:05:10,300 One of the challenges we face when we first thought about 100 00:05:10,300 --> 00:05:13,000 launching a product and a leveraged Finance space. 101 00:05:13,000 --> 00:05:15,100 And mid-market was, you know, how do you possibly 102 00:05:15,100 --> 00:05:19,700 differentiate yourselves there are say 150 debt funds out 103 00:05:19,700 --> 00:05:21,000 there. There's all a clear is that 104 00:05:21,000 --> 00:05:23,200 still very active? How do you do something 105 00:05:23,200 --> 00:05:25,500 different? And I guess, where we saw the 106 00:05:25,500 --> 00:05:28,100 opportunity was this Katie's touched on particularly in the 107 00:05:28,100 --> 00:05:30,100 lower bin Market, things are not quite so quickly. 108 00:05:30,300 --> 00:05:33,100 Shh. And there seems to be a bit of a 109 00:05:33,108 --> 00:05:36,300 gap where perhaps sooner, some of the debt funds don't really 110 00:05:36,300 --> 00:05:38,900 get out of bed for less than, you know, 15, 20 million 111 00:05:38,900 --> 00:05:42,000 tickets. And yet you have some of the 112 00:05:42,000 --> 00:05:45,400 clearers who would have appetite in that space. 113 00:05:45,900 --> 00:05:49,500 But the process of actually lending money hasn't changed 114 00:05:49,500 --> 00:05:53,100 dramatically in terms of delivery in the last 10 years 115 00:05:53,100 --> 00:05:56,000 bluntly. So we saw an opportunity to 116 00:05:56,000 --> 00:05:58,100 really bridge, the gap between what the depth runs are doing 117 00:05:58,100 --> 00:06:00,700 and what the clearing banks are doing both and Terms of what we 118 00:06:00,707 --> 00:06:04,200 offer, offering the unit, orange bullet style, debt that the 119 00:06:04,200 --> 00:06:08,800 funds can do, but equally being able to offer all of the 120 00:06:08,800 --> 00:06:11,400 flexibility that our bank might more typically do. 121 00:06:11,400 --> 00:06:15,300 So, for example, working capital facilities, capex, facilities, 122 00:06:15,300 --> 00:06:18,300 accordions. And, and really, provide a bit 123 00:06:18,300 --> 00:06:20,900 of a One-Stop shop for that end of the market. 124 00:06:21,900 --> 00:06:25,100 And in terms of delivery to, you know, we're relatively small 125 00:06:25,100 --> 00:06:29,600 bank, and I think being able to deliver in a way that's a bit 126 00:06:29,600 --> 00:06:31,900 more. Like a fun do something that not 127 00:06:31,900 --> 00:06:35,500 many people are are doing. So we try to take advantage of 128 00:06:35,500 --> 00:06:39,800 the fact, we have a small lines of communication and experienced 129 00:06:39,800 --> 00:06:43,200 people on deals and, you know, can it can basically deliver a 130 00:06:43,207 --> 00:06:46,100 bit more like a fun Pooja - what are your observations on that? 131 00:06:46,100 --> 00:06:49,000 And was it surprising to see a bank position there? 132 00:06:49,000 --> 00:06:52,800 They're offering this way or do you think this could be, you 133 00:06:52,800 --> 00:06:55,900 know, the beginning of even sort of the bigger High Street Banks 134 00:06:56,600 --> 00:06:58,400 starting to go along the similar. 135 00:06:58,700 --> 00:07:00,100 Something going down a similar path. 136 00:07:00,200 --> 00:07:03,300 Path and and almost reformulating their product to 137 00:07:03,300 --> 00:07:05,100 be more unit, Ranch like that even. 138 00:07:05,100 --> 00:07:08,400 As now as gen touched on earlier, there definitely was a 139 00:07:08,407 --> 00:07:12,300 time when the clearers were starting to question where they 140 00:07:12,300 --> 00:07:15,800 sat in the market and credit funds are able to write big 141 00:07:15,800 --> 00:07:21,500 checks and at high-end average levels, and some High Street 142 00:07:21,500 --> 00:07:23,700 Banks were starting to question whether their role was being 143 00:07:23,700 --> 00:07:26,600 reduced to super senior RC F as a relationship. 144 00:07:26,600 --> 00:07:31,900 Lend, I think we've seen all of the She Bangs do a really good 145 00:07:31,900 --> 00:07:37,500 job of sort of fighting back if you like and and modifying their 146 00:07:37,800 --> 00:07:40,700 offering. So that they take what what the 147 00:07:40,700 --> 00:07:43,800 sponsors might see is the sort of best features of the credit 148 00:07:43,800 --> 00:07:48,300 funds and mold that together with what they need from a from 149 00:07:48,300 --> 00:07:50,300 a day-to-day High Street. And then do, whether that's 150 00:07:50,300 --> 00:07:54,300 ancillary facilities, whether that's relationship, banking 151 00:07:55,600 --> 00:07:58,000 things that for credit funds are perhaps more difficult to 152 00:07:58,008 --> 00:08:00,100 deliver just because of the way they're set up. 153 00:08:00,200 --> 00:08:06,500 So I wasn't surprised to hear Sherbrooke protect an offering 154 00:08:06,500 --> 00:08:09,900 that basically summed up that that change in the market that 155 00:08:09,900 --> 00:08:14,400 we're seeing High Street Banks. Look to give their sponsors, the 156 00:08:14,400 --> 00:08:18,500 best bits of the unit Ranch offering combined with what they 157 00:08:18,500 --> 00:08:21,100 need from their sort of day-to-day relationship lenders. 158 00:08:21,300 --> 00:08:23,100 Really interesting case, you're not, that's wanted to follow 159 00:08:23,100 --> 00:08:26,500 that up with another question to you and your, how far can they 160 00:08:26,500 --> 00:08:29,600 actually go given the sort of various regulatory obligations 161 00:08:29,600 --> 00:08:32,299 that they are? And you know, if we look at the 162 00:08:32,299 --> 00:08:36,200 market, more broadly, how flexible can a bank be when 163 00:08:36,200 --> 00:08:39,799 compared to a fund and at what point do the bank stop bumping 164 00:08:39,799 --> 00:08:43,700 against red lines that maybe the funds don't necessarily have? 165 00:08:43,700 --> 00:08:46,700 I think it's a really interesting point and and I 166 00:08:46,708 --> 00:08:49,700 suppose it depends what you mean by flexibility and want to 167 00:08:49,708 --> 00:08:56,000 sponsor thinks of as as valuable flexibility definitely High 168 00:08:56,000 --> 00:09:00,700 Street Banks and clearing banks are going to have to Consider 169 00:09:00,700 --> 00:09:03,700 their regulatory obligations obligations in a way that is 170 00:09:03,700 --> 00:09:05,400 different for credit funds, maximum. 171 00:09:05,400 --> 00:09:10,800 Leverage levels, focuses on things, like difficulties in 172 00:09:10,800 --> 00:09:15,800 giving portability needing Financial covenants. 173 00:09:15,800 --> 00:09:19,300 Needing maintenance covenants, as opposed to incurrence based 174 00:09:19,300 --> 00:09:21,900 controls. They always going to be things 175 00:09:21,900 --> 00:09:25,100 that for credit teams in banks are and remain important. 176 00:09:25,500 --> 00:09:28,700 And I think leverage team, certainly the mid-market have 177 00:09:28,700 --> 00:09:32,700 done a good job of Challenging that internally where they can 178 00:09:33,600 --> 00:09:37,100 and I'm gaining flexibility for sponsors, where it makes sense. 179 00:09:37,300 --> 00:09:40,200 But I think they are always going to stand apart from credit 180 00:09:40,200 --> 00:09:42,800 funds. Who can write very large checks 181 00:09:42,800 --> 00:09:44,600 and at very high leverage levels. 182 00:09:44,600 --> 00:09:48,000 And probably in the in the upper mid market and large-cap Deals. 183 00:09:48,200 --> 00:09:52,600 Credit funds will continue to dominate because they can they 184 00:09:52,600 --> 00:09:55,700 can do away with those types of controls which for the much 185 00:09:55,700 --> 00:09:58,000 larger deals are going to be really important for sponsors, 186 00:09:58,100 --> 00:10:00,000 what the High Street Banks and providers. 187 00:10:00,200 --> 00:10:02,800 Chewbacca doing a good job of is and focusing. 188 00:10:02,800 --> 00:10:06,000 This once as Minds on do you need those types of 189 00:10:06,000 --> 00:10:09,400 flexibilities on this deal and or on this deal? 190 00:10:09,700 --> 00:10:13,300 And is the package for offering actually giving you the 191 00:10:13,300 --> 00:10:16,400 flexibility you need with the added benefits of some of the 192 00:10:16,400 --> 00:10:20,400 relationship side of the banking relationship, which were some of 193 00:10:20,400 --> 00:10:24,500 your smaller deals, and smaller. And investi companies might be 194 00:10:24,500 --> 00:10:27,100 more important in their growth story, okay? 195 00:10:27,100 --> 00:10:29,800 Really some really interesting points their cage and maybe 196 00:10:29,800 --> 00:10:32,800 Jennifer Just come back to you on that same point your response 197 00:10:32,800 --> 00:10:33,400 to what? What? 198 00:10:33,400 --> 00:10:37,600 Katie's observations are about how a you as a bank have have 199 00:10:37,600 --> 00:10:41,300 been able to build a unit Ranch offer at the same time as 200 00:10:41,300 --> 00:10:44,700 respecting the you know the red lines that you obviously have to 201 00:10:45,000 --> 00:10:47,000 be cognizant of sure. I mean I think you're never 202 00:10:47,000 --> 00:10:50,900 going to get away from the fact bluntly that banks are probably 203 00:10:50,900 --> 00:10:54,100 always going to need perhaps, you know, two covenants for 204 00:10:54,100 --> 00:10:59,300 example in a transaction, where a fund might need one that looks 205 00:10:59,300 --> 00:11:02,400 and feels more like Maintenance Covenant, but that's quite a 206 00:11:02,400 --> 00:11:05,300 simplistic view of what flexibility means to a 207 00:11:05,308 --> 00:11:07,800 management team in a growing business and ambitious 208 00:11:07,800 --> 00:11:12,100 management team in a business wants to grow and, you know, 209 00:11:12,100 --> 00:11:15,100 needs investment from the sponsor what they're really 210 00:11:15,100 --> 00:11:17,600 looking for. I think is flexibility and 211 00:11:17,600 --> 00:11:19,900 responsiveness from their Landing partner. 212 00:11:20,100 --> 00:11:24,300 So something that may look, you know, a little more flexible on 213 00:11:24,300 --> 00:11:26,600 day. One is that ultimately more 214 00:11:26,600 --> 00:11:30,500 important to them than being able to pick up the phone, Any 215 00:11:30,500 --> 00:11:34,400 day of the week to a bank, to request an increase in, for 216 00:11:34,400 --> 00:11:36,900 example, of working capital facility or a little bit more 217 00:11:36,900 --> 00:11:40,300 money for capex as a business involves, and being able to have 218 00:11:40,300 --> 00:11:43,900 that kind of live conversation. Certainly from our perspective, 219 00:11:43,900 --> 00:11:47,800 rather than focusing on particularly, you know, the 220 00:11:47,800 --> 00:11:51,000 wording sort of having arguments about everything in the document 221 00:11:51,000 --> 00:11:54,600 that's done on day one. What we're trying to do is be a 222 00:11:54,608 --> 00:11:58,700 much more sort of supportive ongoing flexible relationship 223 00:11:58,700 --> 00:12:00,000 that can support business through. 224 00:12:00,100 --> 00:12:02,500 Three to five years. One of the criticisms of 225 00:12:02,900 --> 00:12:06,500 certainty that the bigger Banks is that they have been very 226 00:12:06,800 --> 00:12:09,400 cookie cutter in their approach and you are the tick, the box, 227 00:12:09,400 --> 00:12:12,300 or you don't as that be in an area where you've been able to 228 00:12:12,300 --> 00:12:16,100 perhaps take a different approach as a as a challenger 229 00:12:16,100 --> 00:12:19,400 bank and and look at each deal on its merits, take the sponsor 230 00:12:19,400 --> 00:12:23,200 behind the deal in two accounts. Yeah, I mean just any 231 00:12:23,200 --> 00:12:25,300 observations about how you've looked at those questions as a 232 00:12:25,308 --> 00:12:29,200 way to deliver the flexibility that we've been speaking about. 233 00:12:29,700 --> 00:12:31,600 Certain Out. And about in the market, when 234 00:12:31,600 --> 00:12:35,300 you talk to sponsors and the conversations we've had, I think 235 00:12:35,300 --> 00:12:39,500 we're all in the same boat to an extent and that everyone's 236 00:12:39,500 --> 00:12:44,600 looking to perhaps find the less obvious steel or investment 237 00:12:44,600 --> 00:12:48,200 opportunity. And, you know, with those 238 00:12:48,200 --> 00:12:51,400 opportunities, as sponsors, for example are spending a lot of 239 00:12:51,400 --> 00:12:54,700 time thinking about how they go in a region, eight deals that 240 00:12:54,700 --> 00:12:58,700 aren't cookie cutter auction processes, and inevitably with 241 00:12:58,700 --> 00:13:00,800 those many of them at this end of The market are owned and 242 00:13:00,800 --> 00:13:02,900 managed they may have had a blipping trading. 243 00:13:03,000 --> 00:13:05,700 They may be in a sector that isn't as you rightly say, maybe 244 00:13:05,700 --> 00:13:07,500 a bit of a computer says no for a bank. 245 00:13:08,100 --> 00:13:11,900 But if you know if a sponsor can bring a lot of operational 246 00:13:11,900 --> 00:13:16,300 expertise to bear and they are prepared to invest the time and 247 00:13:16,300 --> 00:13:18,200 really understand the story behind that business. 248 00:13:18,500 --> 00:13:21,700 The think about how they can, if not turn it around and really 249 00:13:21,700 --> 00:13:25,700 sort of turbo boost the growth over the next three to five 250 00:13:25,700 --> 00:13:29,400 years whether that's yeah Acquisitions or organic growth. 251 00:13:30,200 --> 00:13:33,700 And I think there's a bit of an opportunity for us to actually 252 00:13:33,700 --> 00:13:36,400 sit alongside that sponsor and really try and spend some time 253 00:13:36,400 --> 00:13:40,300 getting under the skin of that story and support that. 254 00:13:40,800 --> 00:13:43,000 And I think it's probably fair to say, you know, of the three 255 00:13:43,000 --> 00:13:46,200 Deals we've closed. You know, one of them has some 256 00:13:46,200 --> 00:13:48,500 links to, for example, the oil and gas sector, which may be a 257 00:13:48,508 --> 00:13:52,900 bit computer says, no, you know, the Rutland transaction requires 258 00:13:52,900 --> 00:13:56,600 quite a lot of capital investment over quite a long 259 00:13:56,600 --> 00:13:59,900 period of time and with both of those transactions, you know, 260 00:14:00,100 --> 00:14:03,700 We've really spent time with sponsors and if perhaps, they 261 00:14:03,700 --> 00:14:06,700 are, you know, not transactions. That would be obvious, slam 262 00:14:06,700 --> 00:14:08,900 dunks, but we've managed to get comfortable with them. 263 00:14:08,900 --> 00:14:11,500 That leads us, nicely onto to question. 264 00:14:11,500 --> 00:14:14,200 I had about differentiation and take you. 265 00:14:14,200 --> 00:14:16,500 There are so many providers in the market right now. 266 00:14:16,500 --> 00:14:19,800 It seems that there's a new debt fund launching almost every 267 00:14:19,800 --> 00:14:21,700 week. They're obviously, all fighting 268 00:14:21,700 --> 00:14:25,700 for the same deals. Is it realistic for Linda to 269 00:14:25,700 --> 00:14:30,300 even try and stand out from the crowd and when deals with Stop 270 00:14:30,300 --> 00:14:33,600 being the one that is having to put out the cheapest package on 271 00:14:33,600 --> 00:14:35,700 the weakest terms. So I think it's a really 272 00:14:35,700 --> 00:14:41,400 interesting point there, definitely is a DOT of dry 273 00:14:41,400 --> 00:14:43,200 powder. In terms of credit funds, 274 00:14:43,200 --> 00:14:46,400 ability to deploy cash and in the market. 275 00:14:46,400 --> 00:14:50,400 And they are inevitably putting pressure in terms of pricing and 276 00:14:50,400 --> 00:14:53,100 leverage levels on providers across the market. 277 00:14:53,100 --> 00:14:57,400 And there definitely is as you'd expect from sponsors a focus on 278 00:14:57,400 --> 00:14:59,700 achieving the best terms in terms of. 279 00:15:00,100 --> 00:15:02,300 Comentary terms on all of their deals. 280 00:15:02,300 --> 00:15:05,400 Even when when we're looking at sort of the lower end of the 281 00:15:05,400 --> 00:15:10,400 mid-market, having said that, I think some of the traditional 282 00:15:10,900 --> 00:15:14,800 providers along with some of the newer credit funds have been 283 00:15:14,800 --> 00:15:19,900 quite inventive, in setting themselves apart and on indices 284 00:15:19,900 --> 00:15:24,800 other than pricing, how big it a check, they can write and and 285 00:15:24,800 --> 00:15:27,700 they've identified that to sponsors there are other things 286 00:15:27,700 --> 00:15:30,800 that are important. And so what Hear from a lot of 287 00:15:30,800 --> 00:15:33,200 our sponsors. Our clients even when comparing 288 00:15:33,800 --> 00:15:37,500 debt packages from different providers is that extra turn of 289 00:15:37,500 --> 00:15:40,600 Leverage may actually not be the most important point for them. 290 00:15:40,900 --> 00:15:47,100 And a few basis points may not be the deciding factor when 291 00:15:47,100 --> 00:15:51,200 choosing a provider to go with. Actually it may be the strength 292 00:15:51,200 --> 00:15:54,500 of the relationship with that provider and having a known 293 00:15:54,500 --> 00:15:57,700 quantity in terms of their lender, actually provides a lot 294 00:15:57,700 --> 00:15:59,900 of comfort to sponsors and they do. 295 00:16:00,000 --> 00:16:03,500 Want a diversity of lenders across their investi companies 296 00:16:03,800 --> 00:16:06,500 and they want people who they think they can rely on to be 297 00:16:06,500 --> 00:16:10,300 there for the businesses, not just now, but through the 298 00:16:10,300 --> 00:16:13,500 lifecycle of of the business, but also through the credit 299 00:16:13,500 --> 00:16:16,500 cycle, then when you were formulating, the, the offer here 300 00:16:16,500 --> 00:16:19,200 at Sherbrooke was that sort of front of mind for you. 301 00:16:19,200 --> 00:16:22,200 The fact that this is a very crowded Market, there's a lot of 302 00:16:22,208 --> 00:16:24,900 choice for for sponsors out there. 303 00:16:24,900 --> 00:16:29,900 And did that thought you in any way inform the way you have set 304 00:16:29,900 --> 00:16:31,700 up, Peel your offer to the market. 305 00:16:31,800 --> 00:16:34,200 Absolutely, I think the big challenge for us was, how do you 306 00:16:34,200 --> 00:16:37,500 take the Best of Both Worlds? How do you take the best of what 307 00:16:37,500 --> 00:16:39,500 it means to be a fund in the best of what it means to be a 308 00:16:39,508 --> 00:16:43,200 clearing bank and try and bring something a little bit different 309 00:16:43,200 --> 00:16:45,100 to Market? How do you think about it 310 00:16:45,100 --> 00:16:47,900 differently at the end of the day? 311 00:16:47,900 --> 00:16:50,200 I guess you know the challenge for us is we've launched 312 00:16:50,200 --> 00:16:52,800 something that feels a little bit different, feels a bit 313 00:16:52,800 --> 00:16:57,100 unusual in terms of this One, Stop Shop offer but actually 314 00:16:57,100 --> 00:17:00,500 anybody can come along and in 24 hours copy that Product, they 315 00:17:00,500 --> 00:17:04,000 can copy the W and then it really comes down to, okay, how 316 00:17:04,000 --> 00:17:06,300 do you deliver it in such a way that you have something that's 317 00:17:06,300 --> 00:17:09,500 sustainable that you can build on and that really delivers to, 318 00:17:09,800 --> 00:17:11,800 you know, not only the sponsors but management teams what they 319 00:17:11,800 --> 00:17:14,800 actually need and want. And I think you know, some of 320 00:17:14,800 --> 00:17:18,300 that obviously comes down to things we've already touched on 321 00:17:18,300 --> 00:17:20,500 speed of delivery, quick decision-making. 322 00:17:21,400 --> 00:17:24,000 Just frankly, you know, doing what the funds do really well 323 00:17:24,000 --> 00:17:26,300 being on the end of the phone 24 hours a day. 324 00:17:26,300 --> 00:17:28,800 If you need to be, I'm giving quick answers. 325 00:17:28,800 --> 00:17:31,300 It, giving Clarity into Ability quickly. 326 00:17:31,800 --> 00:17:36,600 But equally, you know, once the transactions done having local 327 00:17:36,600 --> 00:17:40,100 presence, boots on the ground, you know, having that ongoing 328 00:17:40,600 --> 00:17:43,900 flexible close relationship and that responsiveness and that, 329 00:17:43,900 --> 00:17:47,100 and that's where it feels like. Hopefully there is a chance to 330 00:17:47,100 --> 00:17:48,500 do something different to get away. 331 00:17:48,500 --> 00:17:52,000 From the classic stereotypes of, you know, you're very formal 332 00:17:52,200 --> 00:17:54,600 Bankers in bowler, hats who move very slowly. 333 00:17:54,600 --> 00:17:59,600 And and I've been one and equally, you know, funds who are 334 00:17:59,600 --> 00:18:01,900 very good. Good at what they do tend to be 335 00:18:01,900 --> 00:18:04,500 on the end of a phone, but perhaps, when ideals don't, you 336 00:18:04,500 --> 00:18:07,800 know, as involved. So really trying to create 337 00:18:07,800 --> 00:18:10,000 something a little bit different is is the challenge. 338 00:18:10,000 --> 00:18:12,100 But you know it feels like there's a gap. 339 00:18:12,100 --> 00:18:15,700 And if you look at the fact that I guess we started in January 340 00:18:15,700 --> 00:18:18,500 and we've closed three Deals already and have a pretty busy 341 00:18:18,500 --> 00:18:22,300 pipeline, it feels like there is appetite in the market for 342 00:18:22,300 --> 00:18:23,800 something a bit different. Okay. 343 00:18:23,800 --> 00:18:27,300 One last question to you both and it's a more general question 344 00:18:27,300 --> 00:18:29,300 about the wider state of the market. 345 00:18:30,500 --> 00:18:32,400 Katie. Maybe, I'll maybe I'll come to 346 00:18:32,400 --> 00:18:35,900 you first on this one. We've just discussed how how the 347 00:18:35,900 --> 00:18:39,100 market has become very competitive at cetera. 348 00:18:40,100 --> 00:18:44,000 D think that lenders are pricing risk appropriately when the 349 00:18:44,000 --> 00:18:46,800 market is, is indeed. So saying to mediate and so 350 00:18:46,800 --> 00:18:50,000 competitive, I guess it can be a race to the bottom. 351 00:18:50,000 --> 00:18:52,800 In some respects. Is there anything anything we 352 00:18:52,800 --> 00:18:58,100 should be worried about? I think, as I say, I think 353 00:18:58,100 --> 00:19:02,400 lenders have actually taking a step back and thought quite 354 00:19:02,400 --> 00:19:06,000 carefully about the direction of the market and what all the 355 00:19:06,000 --> 00:19:10,300 competition means and what we're seeing in terms of new entrants 356 00:19:10,300 --> 00:19:13,300 and particularly on the, on the credit side is rather than 357 00:19:13,300 --> 00:19:17,300 focusing on on being able to necessarily write the biggest 358 00:19:17,300 --> 00:19:21,500 checks or provide the most competitive terms in terms of 359 00:19:21,500 --> 00:19:25,200 pricing and actually, they've sought to set themselves apart 360 00:19:25,200 --> 00:19:29,300 by having a particular strategy. So whether it's sector focused, 361 00:19:29,500 --> 00:19:34,100 whether Part of the market size of deals, we've seen credit 362 00:19:34,100 --> 00:19:38,300 funds, not dissimilar to Sherbrooke strategy, focusing on 363 00:19:38,300 --> 00:19:40,300 that sort of lower end of the market. 364 00:19:40,500 --> 00:19:43,300 And I think that is all a response to people being 365 00:19:43,300 --> 00:19:45,800 conscious of the fact, particularly of where we are in 366 00:19:45,800 --> 00:19:47,900 the credit cycle and particularly in the UK with all 367 00:19:47,900 --> 00:19:52,000 the uncertainty that we're facing that purely a race to the 368 00:19:52,000 --> 00:19:56,600 bottom in, in terms of price and terms is, is potentially, not 369 00:19:56,600 --> 00:19:59,900 the best way to return value to anybody's investors, I think. 370 00:20:00,000 --> 00:20:03,500 Us have been thinking carefully about the deals they're doing. 371 00:20:03,500 --> 00:20:07,800 I think whilst there is a lot of competition for a lot of deals. 372 00:20:07,900 --> 00:20:12,600 I don't think we're quite seeing the heady days of perhaps 373 00:20:13,000 --> 00:20:15,600 pre-2008, where you might question. 374 00:20:15,600 --> 00:20:19,000 Whether credit decisions and pricing points wearing exactly 375 00:20:19,000 --> 00:20:21,200 the right place. And I think people are still a 376 00:20:21,200 --> 00:20:24,600 little bit more reticent and thoughtful when picking their 377 00:20:24,600 --> 00:20:26,200 deals. Jen, what are your thoughts? 378 00:20:26,200 --> 00:20:28,200 Well, it's interesting. It's an interesting challenge 379 00:20:28,200 --> 00:20:31,600 when you're setting something up from Scratch particularly in 380 00:20:31,600 --> 00:20:34,800 something as binary is leveraged Finance, because let's be 381 00:20:34,800 --> 00:20:37,500 honest, if something goes wrong, you're probably going to lose 382 00:20:37,500 --> 00:20:42,600 some money and that you could, you know, employ a lot of time 383 00:20:43,100 --> 00:20:45,700 messing around with pricing models and perfecting them. 384 00:20:45,900 --> 00:20:49,500 But at the end of the day you just need one or two to, you 385 00:20:49,500 --> 00:20:52,100 need to get it wrong once or twice and if it's one of your 386 00:20:52,400 --> 00:20:55,000 you know, first six deals you have a big problem. 387 00:20:55,000 --> 00:20:58,400 So I think it's you know, again sort of coming back to some of 388 00:20:58,400 --> 00:21:02,600 what Katie said for us it's Much more about actually really 389 00:21:02,600 --> 00:21:05,700 understanding if it is something a little more complex or a 390 00:21:05,700 --> 00:21:08,900 little more quirky, how do you align your interests with those 391 00:21:08,900 --> 00:21:10,700 their sponsors? Because, you know, their minds 392 00:21:10,700 --> 00:21:13,400 are going to be very much focused on their own returns. 393 00:21:13,400 --> 00:21:16,000 How do we make sure we're we're really in it together. 394 00:21:16,000 --> 00:21:20,500 We understand you know, if something goes wrong how will 395 00:21:20,500 --> 00:21:24,900 they work with us to correct it or to get over that bump all of 396 00:21:24,908 --> 00:21:28,500 these things or four more important to us frankly than a 397 00:21:28,700 --> 00:21:30,200 than a headline? Ice. 398 00:21:30,200 --> 00:21:34,100 Because at the end of the day, you can put an extra sort of 25 399 00:21:34,100 --> 00:21:37,900 Pips on a margin. But you know, what's the, what's 400 00:21:37,900 --> 00:21:40,500 the weight of equity behind you? What's the desire to see this 401 00:21:40,500 --> 00:21:44,000 business grow and succeed? You know how incentivized and 402 00:21:44,000 --> 00:21:47,500 management, how incentivizes a sponsor, how significant and 403 00:21:47,500 --> 00:21:49,100 investment is it for that sponsor. 404 00:21:49,400 --> 00:21:51,500 These questions are exponentially more important to 405 00:21:51,500 --> 00:21:54,100 us than a headline price. Jennifer, Katie. 406 00:21:54,400 --> 00:21:55,900 Thank you very much. It's been a real pleasure 407 00:21:55,900 --> 00:21:58,700 speaking to you both, and to all the listeners, thank you very 408 00:21:58,700 --> 00:22:00,900 much for your time. Think we'll wrap it up there.