CPPIB to buy Antares Capital for $12bn

August 2015 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

Canada Pension Plan Investment Board (CPPIB) announced it has signed an agreement to acquire 100 percent of GE Capital’s US sponsor lending portfolio, Antares Capital, for $12bn.

Based in Chicago, Illinois, Antares Capital is the leading lender to middle market private equity sponsors in the US, offering a ‘one-stop’ source for lending and other services to middle market private equity sponsors within a $96bn a year market.

Over the past five years, Antares Capital has provided more than $120bn in financing and other services to middle market private equity sponsors.

“This acquisition exemplifies our strategy to achieve scale in key sectors through platform investments. It secures a market-leading business that is exceptionally well positioned to deliver value-building investment flows,” said Mark Wiseman, president and CEO of CPPIB. “In doing so, we are advancing the prudent diversification of our investment portfolio, strengthening the Fund even further.”

Upon close of the transaction, Antares Capital will operate as a standalone, independent business governed by its own board of directors. The company will retain the brand most associated with its long and impressive track record in the US middle market, as well as the team responsible for its long-term success: managing partners, David Brackett and John Martin.

“In partnering with CPPIB, Antares is ideally positioned to continue, and expand upon, its market leading support for our private equity sponsor client base,” said John Martin, one of the managing partners at Antares Capital. “In CPPIB we will have a strategic owner who is committed to our business model, with unparalleled capital resources. Additionally, this partnership will allow Antares to better address the realities of today’s leveraged lending environment. Our team will invest side by side with CPPIB Credit Investments and is thrilled about having the opportunity to build our franchise in the years ahead.”

Looking forward to the association with CPPIB and the opportunity it provides for growth and prosperity in the decades to come is Antares Capital’s second managing partner, David Brackett. Mr Brackett said: “CPPIB brings deep understanding and knowledge of our market and permanent capital, which will allow us to serve our customers in both good and challenging times. We also look forward to continuing to offer our clients our existing best-in-class financing products and anticipate broadening our capabilities.”

With approximately 300 employees and access to 300 middle market private equity sponsors, Antares Capital has successfully built long-term relationships over many years, diversifying across multiple industries and sponsors, and developing a mid-market segment which provides attractive supply and demand dynamics due to the changing landscape of lenders in this space.

Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, New York City and São Paulo, CPPIB is a professional investment management organisation that invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits on behalf of 18 million contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income instruments.

“We have been studying the attractive economics of the US middle market lending sector for several years,” said Mark Jenkins, CPPIB’s senior managing director and global head of private investments. “Antares represents a rare opportunity to invest in the leading lender in this segment of the market and involving companies owned by private equity sponsors.

“With this single transaction, we immediately acquire turn-key scale and a long-term partnership with the best, most experienced management team in the market. This business is extremely complementary to our existing business, which is not focused on the middle market.”

The CPPIB/Antares Capital transaction is subject to customary regulatory approvals and closing conditions and is expected to close during the third quarter of 2015.

Fraser Tennant