Let us count the ways
By several measures, 2019 was a great year for Twin Brook Capital Partners, a Chicago-based middle-market direct lender focused on cash-flow based financing. Twin Brook raised more than $2.75 billion in equity commitments for its third and largest fund to date. The firm marked its fifth anniversary in October 2019. Its total commitments since inception grew about 50 percent from the previous year. And Twin Brook added 16 professionals, to stand at a total of 65 by yearend, and expected to add another 15 in 2020.
New borrowers plus add-ons
Twin Brook, a subsidiary of New York-based alternative investment firm Angelo, Gordon & Co., enjoyed growth in 2019 that was propelled by a robust originations platform and add-on opportunities from its expanding portfolio of borrowers. In addition to adding 44 new borrowers in 2019, the firm’s existing portfolio generated 105 add-on acquisitions. The firm completed 149 transactions in 2019, and its transaction volume of $3.8 billion for the year brought its total commitments since inception to $11.7 billion. Twin Brook served as the lead lender or administrative agent on 93 percent of the transactions it completed in 2019.
As of the end of 2019, Twin Brook had closed 199 platforms backed by 85 unique private equity firms. The firm has been able to maintain portfolio quality along with its rapid growth, with average senior leverage for its portfolio at 4.29x at year-end 2019 versus 4.21x one year earlier. Twin Brook’s average loan-to-value ratio dropped to 45 percent at year-end 2019 from 46 percent one year earlier.
Staying in their lane
For Twin Brook, the key to the firm’s growth has been serving the lower middle market through private equity-backed transactions and not veering out of the lower middle-market lane. The firm has had the same focus from its launch: financing sponsor-led buyouts and recapitalizations of companies with Ebitda of between $3 million and $50 million, with an emphasis on companies with Ebitda of $25 million or less. Twin Brook’s average borrower Ebitda was $19.3 million in 2019 and $17.6 million in 2018. The firm targets borrowers that are U.S.-based, market leaders with diversified revenue bases, histories of stable cash flow, identifiable competitive advantages and strong management teams.
Twin Brook’s new fund in 2019, AG Direct Lending Fund III, seeks long-term opportunities through floating rate, senior secured loans, with a focus on providing first-lien secured debt to lower middle-market, sponsor-backed companies. The firm targets senior financing opportunities up to $200 million and offers customized financing that includes revolvers, first-lien senior secured loans, stretch senior loans, unitranche loans, unsecured mezzanine and equity co-investments. It takes a generalist approach with sector experience in healthcare, insurance, financial services, and aerospace and defense.
To see all the award winners, check out Meet the winners of Mergers & Acquisitions’ M&A Mid-Market Awards.