BOSTON/NEW YORK (Reuters) – Glade Brook Capital Companions LLC, the enterprise capital agency led by Paul Hudson, is pitching a brand new fund to buyers concentrating on the debt of personal expertise firms impacted by financial disruption from COVID-19.
FILE PHOTO: A girl talks on the telephone on the Airbnb workplace headquarters within the SOMA district of San Francisco, California, U.S., August 2, 2016. REUTERS/Gabrielle Lurie/File Picture
The $1.5 billion Greenwich, Connecticut-based agency started advertising and marketing the Particular Conditions Fund final week and is concentrating on $100 million for it by the tip of April, in keeping with a pitch doc seen by Reuters.
The fund will put money into most popular inventory, convertible bonds and senior debt, in main and secondary markets, in what Glade Brook sees as “top quality” however “dislocated” personal expertise firms, in keeping with the supplies.
“We see a unprecedented alternative to speculate,” the advertising and marketing doc says, given a latest shift in financing for personal expertise firms from conventional fairness to debt as firms search to keep away from repricing their fairness amidst the financial disaster.
The fund’s first funding, in keeping with an individual acquainted with the state of affairs, can be a portion of a brand new $1 billion mortgage to Airbnb. Reuters reported Tuesday night time that Airbnb was in superior talks for brand new debt right here , simply weeks after it closed a $1 billion funding from personal fairness corporations.
Different investments may embody loans to media, leisure, cloud computing and health firms, with yields of between 7% and 12% and anticipated returns of between 25% and 50% over 24 months, in keeping with the doc.
“Going ahead, I count on to see many extra conditions the place personal market lenders can be offering loans to struggling personal firms that are unable to entry liquidity from the syndicated financial institution market,” mentioned Leonard Klingbaum, a finance associate at Ropes & Grey, with out remark straight on the Glade Brook fund.
Glade Brook, based in 2011 by Shumway Capital Companions alum Hudson, pivoted lately from hedge fund-style investing in public securities to longer-term bets on the expansion of personal tech firms, a so-called progress fairness strategy.
Roughly two-thirds of Glade Brook’s present portfolio contains companies which have seen elevated demand for his or her providers amid the worldwide financial and well being disaster associated to the coronavirus, in accordance an e mail despatched to Glade Brook buyers on March 26.
They embody the U.S. web-based pharmacy Capsule; Patreon, a digital platform for artists; and Instacart and Miss Contemporary, on-line grocers in North America and China, respectively.
“We consider the disaster is accelerating secular developments already underway and can strengthen progress tailwinds lengthy after the disaster,” Glade Brook wrote.
Reporting by Lawrence Delevingne in Boston and Joshua Franklin in New York; Modifying by Peter Henderson and Leslie Adler