Coming off the heels of a robust fourth quarter, the beginning of 2017 offers a much better lending environment than the same period a year earlier, when the availability of financing was volatile. "We look at our pipeline of transactions right now, and it’s about as robust as it's been in quite some time," says John Martin, co-CEO of middle-market lending powerhouse Antares Capital, in an interview shot with Mergers & Acquisitions.
Along with co-CEO David Brackett, Martin predicts a 10 to 15 percent increase in business for Antares in 2017. "We have visibility into at least the first half of 2017 indicating that we're going to be very busy."
Brackett and Martin foresee a lower tax rate for corporations and capital gains, and a more lenient regulatory environment during Donald Trump’s presidency. Among other things, Brackett says a Republican-controlled executive branch will likely spearhead a positive boost in infrastructure spending. As for other sectors, the healthcare industry may experience pushback with the potential repeal of Obamacare.
These aren’t the only changes to come. Prior to Trump taking office, the U.S. Federal Reserve voted unanimously to raise interest rates for the second time in a decade. The federal fund rates tightened modestly, as the bank’s target range rose to between .25 percent and .50 percent. With respect to interest rates, Brackett and Martin say, "We're still in a very conservative time."
Brackett and Martin offer a one-two punch as leaders of the most prolific middle-market lender in the U.S. They met at Heller Financial, the Chicago-based finance firm that rose to prominence in the '80s and '90s. They left Heller with about a dozen dealmakers in 1996 to launch Antares, with backing from Mass Mutual Life Insurance Co. In 2001, GE acquired Heller and then in 2005, GE bought Antares. As soon as GE announced it would sell GE Capital’s Sponsor Finance group in April 2015, a bidding war broke out with a long list of reported would-be acquirers, including Apollo Global Management (NYSE: APO), Ares Management (NYSE: ARES), the Blackstone Group (NYSE: BX), Kohlberg Kravis Roberts & Co. (NYSE: KKR), Mitsubishi UFJ Financial Group Inc. (NYSE: MTU), SunTrust Banks Inc. (NYSE: STI) and Guggenheim Securities. Ultimately, the winning $12 billion bid came from Canada Pension Plan Investment Board (CPPIB). The highly competitive deal gave CPPIB access to U.S. middle-market loans and a rolodex of nearly 300 PE firms and won Brackett and Martin our 2015 award for Dealmakers of the Year.
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Corrected January 11, 2017 at 8:46AM: 5271739954001