Solar Capital Ltd. announced it has acquired a majority stake in Kingsbridge Holdings LLC from TZP Capital Partners II, LP and its affiliates and the Kingsbridge management team. Kingsbridge, based in Lake Forest, IL, is an independent lessor of information technology, industrial, healthcare, and commercial essential-use equipment to a diverse set of high credit quality customers.
With the acquisition, Solar Capital will have invested approximately $216 million, in a combination of approximately $136 million of equity and $80 million of debt, to acquire 87.5 percent of Kingsbridge in partnership with the Kingsbridge management team which is rolling a portion of its equity ownership as part of the transaction.
The addition of Kingsbridge, with its highly experienced team and scalable infrastructure, further enhances the company's diversified specialty finance platform. Solar Capital directly sources and underwrites cash flow, asset-based, and life science loans, and equipment financings; and now lease transactions with primarily investment grade rated counterparties. Pro forma for the Kingsbridge acquisition, approximately 84 percent of the Company’s comprehensive portfolio would have been comprised of specialty finance investments at Sept. 30.
Kingsbridge was founded in 2006 by the management team and has underwritten over $1 billion of leases since inception. At Sept. 30, Kingsbridge’s highly diversified portfolio of leases totaled approximately $440 million, with an average funded exposure of approximately $850,000 per obligor, and was 100 percent performing. Over 70 percent of Kingsbridge’s portfolio is invested in assets leased by investment grade borrowers.
“This acquisition furthers Solar Capital’s strategy of adding unique finance businesses to the platform,” said Mitch Soiefer, Partner and Head of Lender Finance at Solar Capital Partners LLC (SCP), the Company’s investment advisor. "During our two-year loan investment in Kingsbridge, we gained a deep understanding of the business and developed a good relationship with its phenomenal management team. We were able to see firsthand its strong track record which has continued through the COVID-19 crisis.”
"Kingsbridge’s business model of providing leases for mission critical equipment complements our existing leasing business while providing Solar Capital with exposure to a new predominantly investment grade customer base,” said Cedric Henley, Partner and Chief Risk Officer of Specialty Finance for SCP. "Additionally, their sourcing capabilities enhance Solar Capital's ability to originate investments across multiple business lines in order to find the best risk reward while increasing the earnings power of the Company’s portfolio.”
"We are excited about the opportunity to expand Kingsbridge’s relationship with Solar Capital and the growth opportunities our partnership provides the Kingsbridge platform going forward," said Dan Flagstad, Co-founder and Co-Chief Executive Officer of Kingsbridge. "Solar Capital's stable, long-term funding will enhance Kingsbridge’s ability to provide innovative financing solutions to its clients."