Of ‘Fallen Angels and Hidden Gems’ -- Diversification is Key
Primarily, Fate and his team want the marketplace to understand that this endeavor is a diversified commercial finance company versus a monoline specialist. “We are interested in every industry sector and asset class and we have people on board who understand all of the nuances of each asset class. For example, the regulated institutions may be not as eager to lend into sectors such as energy and coal in the current market, but we see great opportunities there. Admittedly, Fate notes that one should proceed with caution in a sector like energy which can be volatile, but there are fallen angels and the hidden gems that when structured and priced properly are solid investments in the current market. “We can also compete for larger, stronger credits and we have the backing to make big plays in that market.”
In addition, Fate notes that organizationally, Stonebriar is designed to be quick on its feet. He states, “We are a private and unregulated entity and that’s the key. We can sift through the details of a transaction quickly. We have a defined set of policies and procedures that have been developed from the best practices we have established over the past 25 years. We are very deliberate in following the practices and procedures that have made us successful at what we do, but our processes are efficient and effective.”
Assembling the Team
Assembling (and to a large degree reassembling) the team has been one of the most gratifying experiences for Fate thus far. Joining Fate at Stonebriar for yet another run are Tim Milazzo as CFO; Andy Fletcher as general counsel; Jeff Wilkison as the chief risk officer supported by Dirk Stock; and Mark Gibson working alongside Steve White in capital markets. Since the March 11 announcement, Stonebriar has added Kevin Sensenbrenner as its asset manager, Tom Linebarger as Director of Originations in the Midwest and Carrie Stovall as office manager. “We will round out our team with a few more key hires in 2015 and beyond.”
A newcomer to this cohesive team is decidedly no newcomer to commercial finance. Steve White, an industry veteran from GE Capital, joins Stonebriar as a senior managing director. Fate shares, “I’ve known Steve for quite some time. He’s a high energy guy with many connections in the ELFA community as well as Wall Street money center institutions. Steve will maintain his office on the East coast for easy access to many important strategic partners.
And of course, there’s Paul Bossidy. Fate recalls, “Paul understood our value proposition from the very beginning. He said, ‘Dave, I think you’re spot on here. This is an underserved market and I’ve checked out your team. I think I can help.’” Bossidy, who today serves as Stonebriar’s board chairman, was as good as his word. In the period that followed, he was instrumental in arranging important connections with an impressive list of potential investors. Fate says, Bossidy's guidance has been and will continue to be invaluable in Stonebriar’s success.
Off to a Strong Start and Looking Ahead
With fewer than three months since opening its doors for business, Fate is confident he and his team have hit their intended mark. “We’ve seen a lot of interest from potential customers in a wide variety of industries and asset types. In terms of concentrations, we are for the time being, essentially at zero … no concentration on any one credit or in any one industry. We have the skill set in place to proceed intelligently and on our own terms … we intend to be patient. We are not in a hurry to build our book. We will evaluate each opportunity we see and choose those that meet our criteria.”
With that in mind, Fate shares that he and the Stonebriar team aspire to close up to $300 million of new business volume in 2015. “I think that’s achievable. We have already funded our first three deals in May in the rail, franchise and manufacturing industries … so we’re off to a good start.”
Looking ahead, Fate sees 2016 as the year in which Stonebriar undertakes building out its direct originations team with professionals located in key markets across the U.S., Canada and select foreign jurisdictions.