Hermes Capital Partners
NEW CLUB DEAL
To meet lower middle-market borrower needs in the new economy innovative lenders are providing viable alternatives to traditional lending models, and collaborating to connect growing companies to efficient ancillary channels of lower middle market finance. Multitranche finance accommodates such collaboration through hybrid structures, such as a combination of cash-flow-based lending, asset-based lending, and subordinated debt.
Multi-tranche finance is defined by three or more loan facilities (or "tranches") to a single or specific ) borrowers. With historically low-interest rates on bank loans, combined with the higher cost of credit fund term or subordinated debt, the blended cost of capital to a borrower in the current interest rate environment is often less under a multi-tranche structure than under a comparable standard unitranche structure. The advantages of multi-tranche finance for lower middle market borrowers is clear; they can enhance their working and growth capital to fuel business plans and help maintain a competitive edge.
New Club Deal