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Europe
Table of contents<br />
History of the Firm<br />
Opportunistic Investing<br />
Themes<br />
People<br />
Case Studies<br />
01<br />
02<br />
06<br />
08<br />
10
History of the firm<br />
<strong>Crestline</strong> Investors Inc. (“<strong>Crestline</strong>”)<br />
is an employee-controlled asset<br />
management firm founded in 1997<br />
by Douglas Bratton.<br />
The company was originally formed to<br />
manage the alternative investments<br />
of Edward P. Bass, and in 2001, was<br />
expanded to outside investors. The<br />
firm’s mission is to provide attractive<br />
risk-adjusted returns for sophisticated<br />
asset owners.<br />
We use our credit expertise and<br />
innovative products to pursue value<br />
creation in global markets. To date,<br />
<strong>Crestline</strong> has launched 9 specialized<br />
opportunistic funds.<br />
<strong>Crestline</strong> has a 67-person<br />
investment team with broad<br />
investment experience across market<br />
cycles, geographies, and asset classes.<br />
In addition, a team of dedicated<br />
professionals provides the highest<br />
caliber of operational excellence,<br />
relationship management and<br />
governance for <strong>Crestline</strong>’s clients.<br />
Investment teams are based in Fort<br />
Worth, Texas and London, UK with<br />
supporting offices in New York,<br />
Chicago, Toronto and Tokyo.<br />
The Bass organization has a legacy of sponsoring successful<br />
investment platforms…<br />
ESL Investors
Opportunity<br />
Provision of bespoke capital to smaller companies and the financing<br />
of out-of-favour cash flowing assets, in North America and Europe.<br />
Strategy<br />
Off market, bilateral, senior secured or first dollar out financing,<br />
structured with significant investor protections, in sizes of $50m<br />
or smaller, addressing a less competitive market. A repeatable<br />
investment underwriting process, focused on capital preservation.<br />
Team<br />
An investing team based in the US and Europe that has<br />
completed over 50 deals over since 2013, with experience of<br />
mid-market lending, restructuring, private equity, asset based<br />
lending, distressed debt and turnaround management.
“In the main mid-market (€30m-€250m<br />
of debt) most funds are still focused<br />
on sponsor-backed deal flow with<br />
targeted IRR’s of 7-9%. However, more<br />
interesting opportunities exist for more<br />
risk tolerant funds who can fill the<br />
current gap between direct lenders and<br />
special situations funds and are looking<br />
for unlevered IRR’s of 10-12% for more<br />
complex situations in Europe which do<br />
not fit the investment criteria of banks nor<br />
mainstream direct lenders.”<br />
- Deloitte Alternative Deal Tracker Q2 2016
Market Conditions<br />
Small firms are the lifeblood of Europe’s economy.<br />
Around 99% of all non-financial companies in the<br />
European Union are SMEs, that is, firms with fewer<br />
than 250 employees and less than €50m in annual<br />
turnover. They account for 58% of value added and<br />
66% of jobs. - The Economist<br />
But new bank lending to small firms in the euro area<br />
plummeted 35% between 2008 and 2013 to €649 billion.<br />
It fell sharply in Britain too.<br />
Europe’s banks, laden with bad debts and forced by new<br />
prudential rules to hold more capital against corporate<br />
loans, will continue to surrender market share to non<br />
bank lenders.<br />
“Our time-sensitive refinancing<br />
required speed and certainty of<br />
execution, and flexible structuring”.<br />
- Former CEO of luxury goods manufacturer and retailer
Banks<br />
Hedge Funds<br />
Investing<br />
between<br />
traditional<br />
capital providers<br />
Direct Lending<br />
Real Assets<br />
Private Equity<br />
“Adding illiquid credit to a portfolio will<br />
provide access to often underor poorlyutilised<br />
return sources (illiquidity, skill<br />
and complexity premia) and at a point<br />
in the cycle where there is a critical<br />
need for investors to diversify sources of<br />
credit risk.”<br />
- Towers Watson
<strong>Crestline</strong>’s Opportunistic Investment<br />
strategies offer capital solutions, ranging<br />
from $10 to $50 million, to under-served or<br />
capital constrained asset classes,<br />
including SME’s, out-of-favour sectors,<br />
stressed situations or special situations.<br />
• Off Market Origination<br />
• Bilateral or small club transactions<br />
• Senior, secured or ‘first dollar out’<br />
• Smaller deals, less competitive, dynamic<br />
• Often asset backed
Asset-based/<br />
Cash Flow<br />
Purchases, lends against<br />
or creates platforms<br />
around assets or cash<br />
flow streams<br />
Corporate<br />
Capital Solutions<br />
Provides capital in the form of<br />
secured debt or structured equity<br />
to middle market and lower middle<br />
market companies<br />
Recurring or<br />
contractual<br />
revenue<br />
Significant<br />
hard asset<br />
value cushion<br />
Multiple cash<br />
flowstreams,<br />
value pools or<br />
ways to<br />
de-risk/exit<br />
“The facility was a timely solution at a time<br />
when the complexity of the situation we<br />
found ourselves in meant very few lenders<br />
were willing to invest the time or money in us”<br />
- Chairman, Property Company*<br />
*The borrower is not a <strong>Crestline</strong> client and dealt with the European team in a<br />
previous professional capacity.
Mr. Bratton is founder and majority owner of<br />
<strong>Crestline</strong> Investors, Inc., the general partner of<br />
<strong>Crestline</strong> Management, L.P., the investment manager,<br />
and <strong>Crestline</strong> Associates, L.P., the general partner of<br />
the <strong>Crestline</strong> fund of funds domestic products.<br />
He is the Chair of the Investment and Executive Committees.<br />
Mr. Bratton has been an investment professional<br />
with organizations utilizing alternative asset<br />
strategies since 1983.<br />
Doug Bratton<br />
He has extensive experience in hedge fund<br />
management, multi-strategy portfolio construction,<br />
private equity and venture capital.<br />
Keith Williams<br />
Partner, Senior Portfolio<br />
Managerand Investment<br />
Committee Member<br />
20 years’ experience<br />
• Prior to joining <strong>Crestline</strong>, Keith developed and<br />
executed liquid and illiquid distressed strategies<br />
and was responsible for deal sourcing and<br />
execution for private debt strategies in Goldman<br />
Sachs’ Special Situations Group<br />
• Keith also worked at McKinsey and Company<br />
and US restructuring boutique. Keith holds<br />
a BBA in Finance from Southern Methodist<br />
University and an MBA from Rice University.<br />
Michael Guy<br />
CIO Europe and Investment<br />
Committee Member<br />
20+ years’ experience<br />
• Before joining <strong>Crestline</strong>, Michael was co-<br />
Head of Global Loans and Special Situations<br />
Group at BAML, co-Head of European Special<br />
Situations at Credit Suisse and was founder<br />
and Senior Portfolio Manager of the Tenax<br />
Credit Opportunities Fund.<br />
• Michael also worked at McKinsey &<br />
Company in London. Michael is a graduate<br />
of the Harvard Business School and Oxford<br />
University.
Andrey Panna<br />
Managing Director, Europe<br />
18 years’ experience<br />
Sanjeev Sarkar<br />
Managing Director, Europe<br />
16 years’ experience<br />
• Prior to joining <strong>Crestline</strong> ,Andrey served<br />
as Co-Head of European Distressed Debt<br />
Research and Special Situations at UBS, and<br />
co-founded the Tenax Credit Opportunities<br />
Fund with Michael Guy. Prior to this , Andrey was<br />
Portfolio Manager, illiquid special situations and<br />
distressed debt, Credit Suisse, London.<br />
• Andrey holds a BA from Lipscomb<br />
University, USA.<br />
• Prior to joining <strong>Crestline</strong> , Sanjeev was cofounder<br />
of the Tenax Credit OpportunitiesFund<br />
with Michael Guy. Sanjeev has over 10 years<br />
experience working as a principal investor,<br />
including as a Venture Partner for a single<br />
LP Fund investing in special situations and<br />
providing growth capital. He also served as a<br />
senior analyst at ADM Capital and Associaate<br />
Cazenove Private Equity.<br />
• Sanjeev has a Masters in Finance from the London<br />
Business School and is a qualified accountant.<br />
Joseph Pigott<br />
COO Europe<br />
18 years’ experience<br />
Jonathan O’Brien<br />
Analyst<br />
3 years’ experience<br />
• Before joining <strong>Crestline</strong>, Joe was Managing<br />
Director, Fixed Income at Bear Stearns<br />
International. He was also a founding partner<br />
of the Pamplona Management’s Credit<br />
Opportunity Fund responsible for credit<br />
investing in their Credit Opportunities Fund and<br />
Portfolio Manager at Rosette Merchant Bank.<br />
• Jonny was previously an Analyst for an<br />
Australianfamily office with focus on late stage<br />
venturecapital and early stage private equity.<br />
• Jonny holds a Bachelor of Commerce with<br />
adouble major in Economics and Finance<br />
fromthe University of Melbourne<br />
• Joe hold a BA in literature from the University<br />
of McGill. and an MBA in Finance from<br />
McMaster University<br />
“Working with a flexible and thoughtful counterpart<br />
got the transaction over the line”<br />
- CEO RCapital
Case Studies<br />
Jack-Up InvestCo (DBB)<br />
• Offshore Wind Turbine<br />
Maintenance<br />
• €50m bond (5 lenders)<br />
• Five year final maturity<br />
• First ranking security<br />
interest on vessel and<br />
other Fund assets<br />
Luxury Goods Co.<br />
• $22 million facility<br />
(2 lenders)<br />
• Three year term loan<br />
• Senior<br />
• First ranking security<br />
interest on inventory<br />
brand and real estate<br />
Wood Fuel Manufacturer Co.<br />
• Wood Fuel Manufacturer<br />
• $10 million acquisition<br />
facility<br />
• First ranking security<br />
interest over all assets<br />
Secured Consumer Lender.<br />
• Secured consumer lending<br />
• $10 million facility<br />
• Three year bilateral<br />
Term Loan with warrants<br />
• First ranking security over<br />
pledged assets
Property Development Co.<br />
• Property Development<br />
Company<br />
• $11 million facility<br />
• Five year bilateral Senior<br />
Term Loan with profit share<br />
• First ranking security<br />
interest on real estate<br />
Rentplus<br />
• Specialist Residential Real<br />
Estate company<br />
• £20 million bilateral facility<br />
• Two year final maturity<br />
• First ranking security<br />
interest on new build UK<br />
residential property<br />
Leisure Co.<br />
• UK Hospitality Group<br />
• $15 million bilateral<br />
Term Loan<br />
• Equity participation<br />
• First ranking lien on<br />
property assets<br />
Auto Dealership Co.<br />
• $10 million facility<br />
• Three year bilateral<br />
Term Loan<br />
• First ranking security on<br />
real estate and a AA-rated<br />
receivable<br />
“Our construction financing was difficult for<br />
traditional shipping banks to provide, because of<br />
the vessel’s more specialised and bespoke nature”.<br />
- Former CEO, DBB
Europe<br />
This financial promotion is issued by <strong>Crestline</strong> Europe, LLP which is authorised and regulated by the Financial<br />
Conduct Authority (FCA). This report may not be reproduced, distributed or transmitted in whole or in part in<br />
any media. Some information contained in this document is based on data received from third parties that we<br />
consider reliable and is accurate to the best of Crest-line’s knowledge. However, <strong>Crestline</strong> has not independently<br />
verified the information and does not otherwise give any warranty as to the truth, accuracy, or completeness of<br />
such third party data, and it should not be relied upon as such. The material is not intended to be a formal<br />
research report and nothing in this presentation should be interpreted to state or imply that past results are an<br />
indication of future performance. This document is a summary, is for informational purposes only and does not<br />
constitute an offer to sell or a solicitation of any offer to buy or sell securities of any entity, investment product<br />
or investment advisory service. There can be no guarantee that any <strong>Crestline</strong> Fund will achieve its investment<br />
objective. An investment in any <strong>Crestline</strong> Fund is speculative and involves a high degree of risk, and investors<br />
risk loss of their entire investment. Past performance is not indicative of future performance. Any opinions<br />
expressed herein are our current opinions only. There can be no assurance or guarantee that<br />
<strong>Crestline</strong>’s investment strategy will achieve its stated goal. All information provided in this presentation is for<br />
informational purposes only. In addition, it should not be assumed that any of the securities and/or strategies<br />
discussed herein were or will prove to be profitable. <strong>Crestline</strong> accepts no liability for loss arising from the use of<br />
this material.