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Private Debt Fund Management

December 30, 2015

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MGG provides bespoke financing solutions to mid-size and growing companies, working with owners and management teams to help build lasting value, address immediate needs, and solve complex situations. Kevin Griffin, CEO and CIO, provides us with a unique insight into the firm’s work.

MGG Investment Group was launched in 2014 by industry veteran Kevin Griffin, with the goal of providing debt capital to the deeply underserved lower- to middle-market (under $50 million EBITDA) companies, especially in situations or asset classes that deter other lenders.

"Demand for capital by mid-size and small growing businesses has for decades exceeded supply, but post-financial crisis the imbalance has become much more acute," said Mr. Griffin, who has originated, structured and invested more than $3 billion of transactions throughout his nearly two decade career. "We have a history of successfully partnering with our portfolio companies to help them grow while generating attractive risk-adjusted returns for investors through several market cycles."

Indeed, Mr. Griffin has been working with and investing in middle market companies his entire career. After graduating from Georgetown University, Mr. Griffin started as a work-out and M&A advisor to mid-size companies with leading boutique investment bank Houlihan Lokey. Mr. Griffin began investing initially with American Capital – one of the first public business development companies – then at Fortress Investment Group’s Drawbridge lending fund. Until founding MGG, Mr. Griffin was a Managing Director and on the Credit Committee at Highbridge’s Principal Strategies senior lending group.

"The opportunity has always been large for those familiar with the middle market but as many community banks have disappeared – nearly 2,000 banks have been eliminated since the financial crisis – and big banks have abandoned this space post-crisis, in part due to stricter capital rules, the opportunity has grown quite significantly," said Mr. Griffin. "What separates us is that we bring a private equity-style due diligence skillset, which is needed to be successful in the direct lending market in which we operate."

"In particular, we favor and excel at investments in complex and special situations that require distinct underwriting," he said.

That is why Mr. Griffin has assembled a best-in-class team of middle-market specialists like himself whom he has worked with or known for years. Together with his partner Gregory Racz – who worked with Mr. Griffin during the financial crisis and started his career as a corporate lawyer at leading M&A law firm Wachtell Lipton Rosen & Katz – MGG’s seasoned team hails from blue chip lenders, banks, and accounting firms including Cerberus, TPG, Oaktree, Apollo, JP Morgan, and PwC, and has deep expertise across most industries.

"During our in-depth diligence process, we engage directly with the target company management for many weeks if not for months before lending capital," Mr. Griffin said.

MGG typically also speaks with the company’s current investors, customers, suppliers, and competitors, among others, during its diligence, and engages nationally recognized third party forensic accountants, attorneys, and industry consultants to supplement and confirm MGG’s in-house efforts, to help identify and assess risks, and to conduct thorough background checks on potential borrowers and their principals.

Very few companies seeking financing make it through MGG’s diligence process. MGG lends capital each year to roughly less than 3% to 5% of all potential borrowers.

This investing discipline over the past nearly two decades and through many market cycles has built a strong record of trust with key industry players and companies, enabling Mr. Griffin and team to develop a unique sourcing network.

"I think we have earned a reputation among borrowers for getting deals done the right way and providing certainty to close," said Mr. Griffin. "As a result, we continue to enjoy strong repeat business and word-of-mouth referrals."

MGG typically provides senior secured first lien debt financings. However, its flexible mandate enables it to provide bespoke solutions across the capital structure to meet the needs of the specific borrower. Post-investment, MGG tracks each investment closely. Throughout the life of an investment, MGG takes a "cradle to grave" approach to portfolio management, with deal teams interacting monthly if not weekly with borrowers from origination through realization. MGG’s risk-management first mentality enhances MGG’s ability to monitor assets and identify potential issues at an early stage, as well as to spot potential add-on investment opportunities.

"We take tremendous pride in serving as a trusted partner to companies and entrepreneurs to help them achieve their goals," said Mr. Griffin. "What is exciting is that the U.S. middle market is the fifth largest global economy with hundreds of thousands of companies. As we look to the future, we see lots of opportunities to help owners and management teams, and we will continue with our current approach of selecting the most attractive private investments in order to provide our investors with the strongest possible returns."

Company: MGG Investment Group LP

Contact Name: Gregory Racz

Email: gracz@mgginv.com

Web Address: www.mgginv.com

Address: 888 Seventh Avenue, 43rd Floor, New York, NY 10106

Telephone: 212-356-6100