KKR expands mid-market lending talent

Sean Stevens, who joined KKR to work on its mid-market lending partnership with Stone Point and CPPIB, formerly worked at KeyBanc Capital Markets.

Kohlberg Kravis Roberts hired Sean Stevens earlier this year as it continues to build up its capabilities around mid-market lending. 

The firm hired Stevens as a director in its Capital Markets team in April from KeyBanc Capital Markets to focus on third party sponsor coverage. Stevens focuses on “sourcing, structuring and executing” capital markets deals and principal investments for clients through KKR’s MerchCap Solutions. MerchCap, which launched last July, is a joint venture with KKR, Canadian pension giant the Canada Pension Plan Investment Board and fellow firm Stone Point Capital. Stone Point joined in July, and CPPIB came on board in January. 

Prior to KeyBanc, Stevens worked at Bank of America Merrill Lynch. In his 16 year career, Stevens has worked at Mezzanine Management, and held various finance roles with Morgan Stanley and Chase Securities. 

The banks have pulled back meaningfully from the standpoint of providing capital.

Scott Nuttall

KKR provides mid-market lending from from various funds like MerchCap, according to a spokesperson. The firm formed MerchCap last year to fill the void left by traditional lenders leaving the mid-market lending space. Initially, the joint venture was called KKR-SPC Merchant Advisors, which had $300 million split evenly from both firms (KKR’s from its balance sheet).

In January, CPPIB joined the partnership with a $50 million commitment. At the time, CPPIB also announced it had $2 billion for direct investments in mid-market debt and other corporate activities for clients of MerchCap Solutions, according to a statement.

“What we hear from our clients in that space is that the banks have pulled back meaningfully from the standpoint of providing capital,” said KKR’s head of global capital and asset management group Scott Nuttall last year during an earnings call. “As we’ve been out with our mezzanine business, our direct lending business and our capital markets business, we hear that as a recurring refrain.”

“This JV will allow us to have a dedicated pool of capital and a dedicated effort against that third party space,” Nuttall said. “We feel great about the [lending] opportunities in front of us.”   

MerchCap has been involved in several transactions since last year, including working as sole arranger, book runner and syndication agent on $147 million of debt financing for Madison Dearborn’s acquisition of Things Remembered. The firm also worked as joint lead arranger and bookrunner on a $305 million term loan related to the purchase of Payless ShoeSource by Golden Gate Capital and Blum Capital.