By Daniel Lanyon on Thursday 12 January 2017
The asset management firm is bullish on the alternative lending market, particularly in the retail and consumer brands sectors.
Boston-based Scargo Hill Capital will provide senior secured loans to the lower middle-market across retail, consumer products and the broader supply chain following the launch of its new direct lending platform.
Scargo Hill is an institutional asset manager focused on providing investors with access to senior secured private debt in lower middle-market firms, especially among emerging growth retail companies and consumer wholesale brands.
It's co-founder Andrew Moser believes that access to capital will increasingly come from non-traditional or alternative sources to bank capital where investors can find “strong risk adjusted returns, and low correlations” to traditional asset classes.
“The ongoing credit challenges and widening gap across lower middle-market companies has made it very challenging for them to access adequate liquidity,” said Moser.
“Historically, asset-based lending has been most closely associated with financing for troubled companies, but Scargo Hill’s primary focus will be on providing transition capital to fuel ‘turn-ups’, emerging companies and consumer brands,” Moser added.
“Traditional sources of capital have become extremely burdensome and challenging to access for companies seeking growth capital or for those in transition,” said Moser.
The firm is led by co-founders Moser, Managing Partner and Chief Executive Officer, Thomas J. Lynch, Managing Partner and Chief Risk Officer, and Mark E. Gallivan, Principal.
Lynch says in the years since the financial crisis, private debt has further emerged from a niche market to become a significant institutional asset class with demand from both investors and borrowers continues to grow.
“The persistent dislocation in the credit market for lower middle-market companies has created a compelling investment opportunity. Scargo Hill’s portfolios will be constructed utilising a manufacturing versus selection process, meaning we will source, underwrite, monitor, and intervene proactively when necessary to protect and safeguard invested capital,” he said.
The firm’s new platform includes strategic and lead investors, Schottenstein affiliate SB Capital Group and Stephen G. Miller, CEO of 360 Merchant Solutions.