Madison Capital buys $141m PE loan portfolio

The mid-market lender acquired the portfolio for an undisclosed amount. The loan portfolio has $141m in commitments.

Madison Capital Funding, a lender to mid-market private equity firms, has purchased a portfolio of loans to 40 portfolio companies of private equity firms with $141 million in commitments. The firm did not disclose a purchase price.

The seller was also a mid-market lender, according to Chris Williams, senior managing director at Madison. Williams declined to name the lender. The private equity firms that back the borrowers are all focused on the mid-market, Williams said.

The loans are not distressed, Williams said.

Madison, which is owned by New York Life Investments, generally provides cash-flow based financing to finance mid-market private equity deals. The purchase of the loan portfolio is a strategy the firm has used a few times in the recent past, Williams said.
Madison competed with “five or six other entities” for the portfolio, he said.
“We offered a fair price, but a large part was the certainty to close, and the significant support we get from our triple-A rated parent,” Williams said. New York Life Investments is an investment management company that serves institutional clients, individuals and corporations and has $235 billion under management.

Madison completed two more traditional deals recently. The firm closed financing for an add-on deal for Spire Capital Partners, whose portfolio company Carpathia Hosting, which provides IT hosting services, bought internet hosting company ServerVault last month.

The firm also financed private equity firm Cortec Group's acquisition of medical equipment provider 180 Medical.

Cash flow-based lending has slowed in the financial downturn, but deals continue to get done and entities are still providing financing, Williams said.

Madison has seen deal flow in the mid-market start to increase in the past six weeks, Williams said.