Last Week's Record-Breaking Deals: HealthEquity $1B, Quanex $475M, Alaska Communications $390M

Good Morning Everyone

This week in Deals:

$2.48 billion in top Growth Capital and Asset-Based deals

Top Growth Cap & Asset-Based Lenders
JP Morgan Chase, Bank of America, Fifth Third Bank, Hercules Capital, One William Street Capital Management affiliates, Jefferies, Trinity Capital, Galaxy, Great Rock Capital, KeyBank CDFI, Republic Business Credit, Culain Capital, nFusion Capital, and First Business Bank

💸Top Weekly Growth Capital Deals

• HealthEquity secures a new $1 billion credit facility and repays debt Read

• Cahill represents lead arrangers in a $975 million credit facility for Quanex’s acquisition of Tyman Read

• Bank of America and Fifth Third Bank arrange a $390 million senior credit facility for Alaska Communications Read

• Hercules Capital provides up to $250 million term loan to Arcus Biosciences Read

• BriteCap Financial secures a $150 million credit facility Read

• Parafin closes a $93 million debt facility with Jefferies and Trinity Capital Read

• Haynes Boone guides Arch Lending in a $70 million crypto-backed financing deal Read

• Great Rock Capital provides $30 million to a portfolio company of Crossplane Capital Read

• KeyBank provides a $2 million loan to C3 Fund for the advancement of women and BIPOC real estate investors Read

Top Weekly Asset-Based Loan Deals

• Republic Business Credit provides $15 million asset-based loan for Gulf Coast food manufacturer Read

• Culain Capital structures $3 million accounts receivable financing for a warehousing and logistics firm in the renewable energy space Read

• First Business Bank funds $2 million factoring facility for facility services provider Read

• nFusion Capital provides $2 million growth line to support construction services firm Read
  

Summary

The asset-based lending (ABL) and growth capital markets showed robust activity last week, with a diverse range of companies securing significant funding to support expansion, refinancing, and strategic initiatives. Notable transactions include Arcus Biosciences' $250 million term loan facility from Hercules Capital, featuring a five-year maturity extendable to six years, and a four-year interest-only period. HealthEquity's refinancing with a $1 billion senior secured revolving credit facility from JP Morgan Chase offers flexible borrowing rates tied to leverage ratios. Alaska Communications secured a five-year $390 million senior secured credit facility to repay existing debt and invest in fiber infrastructure expansion. These deals highlight the tailored approach lenders are taking to meet specific company needs, with features such as extended interest-only periods, flexible rates, and industry-specific uses of funds becoming increasingly common in the current market landscape.

Winners

• Biotech firms are riding a wave of tailored financing options. The extended interest-only periods and flexible maturity options we're seeing are a godsend for biotech CFOs

• Infrastructure companies are finding strong support in the current lending environment. The appetite for financing large-scale, long-term projects is growing, especially in underserved areas

• Specialty lenders focused on high-growth sectors are thriving in the current environment. Other lenders can capitalize on this trend by developing expertise in specific industries and tailoring their products accordingly

• Data-driven alternative lenders are carving out a significant niche in the market. Other lenders can capitalize on this trend by investing in their own data analytics capabilities or consider partnering with fintech companies to enhance their underwriting models

Losers

• Retail companies, particularly those with significant brick-and-mortar presence, may face challenges in securing financing as lenders become more cautious about the sector's volatility (and should highlight their omnichannel strategies and demonstrate how they're adapting to changing market conditions)

• Early-stage startups without significant revenue or assets might find it harder to secure traditional debt financing in this environment. Lenders are showing a preference for companies with proven business models and clear paths to profitability. They should consider alternative financing options like revenue-based financing or exploring partnerships with venture debt providers

• Traditional banks without specialized lending arms may find themselves losing market share to more nimble, industry-focused lenders. To mitigate this, traditional banks should consider developing specialized lending teams focused on high-growth industries or explore partnerships with fintech companies

• MCA (Merchant Cash Advance) lenders may see their market shrink as more small businesses gain access to traditional financing through data-driven lenders like Parafin. To mitigate this, MCA lenders should consider evolving their products to offer more flexible terms and lower rates.

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Tips For Borrowers

1. Consider extended interest-only periods for capital-intensive projects or long development cycles

2. Negotiate flexible pricing terms tied to company performance metrics to reduce costs over time, potentially

3. Explore industry-specific lenders who understand your sector's unique challenges and opportunities

4. Consider partnering with specialty lenders for niche financing needs, such as C3 Fund's focus on supporting BIPOC and female real estate investors in underserved communities.

💡Family Office Opportunities:
This week, we are focusing on family offices. It's a wild market out there, but I have some ideas worth exploring. First up, biotech. It's hot right now, even for pre-revenue companies. But here's the trick: look for strong IP and late-stage trials. Don't put all your eggs in one petri dish, if you catch my drift. Diversify because one failed trial can really mess things up.

Next, tech. Fintech and health tech are hot. Look for recurring revenue models. Keep an eye on MRR, churn, and CAC to LTV ratio. But watch out for bubbles—you don't want to be caught holding the bag if things go south.

Don't sleep on infrastructure, either. Companies upgrading essential services are pulling in big bucks, especially if they're venturing into underserved areas. And no matter what you're looking at, always check those EBITDA margins and leverage ratios. Happy hunting!

Financing & Referral Opportunities for Brokers & Lenders:
1) Data analytics firms and AI startups that can help traditional lenders upgrade their risk assessment models
2) Green-tech firms, sustainable materials manufacturers, and energy efficiency consultants
3) Specialty lenders, business incubators, and even professional associations that support underrepresented groups in high-growth industries

😲Didn’t see that one coming

• Generation Atlanta faces foreclosure over a $104 million loan Read

• South Florida firm charged by SEC with running a $50M-plus Ponzi scheme Read

• Douglas Development defaults on a $52 million loan tied to D.C. portfolio Read

• Nationwide listeria ice cream recall leads to Chapter 11 bankruptcy filing and layoffs for Totally Cool brand Read

• Another Bitcoin mining firm, Rhodium Enterprises, files for Chapter 11 bankruptcy Read

• Roti files for Chapter 11 bankruptcy protection Read

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