March 2015
Specialty Finance Industry Insights A review of M&A activity and public market valuation in the consumer and commercial specialty finance sectors
William Blair
Table of Contents Introduction .....................................................................................................................................................................................................................................................1 Consumer Specialty Finance .....................................................................................................................................................................................................................2 M&A Trends.................................................................................................................................................................................................................................................2 Select M&A Transactions .......................................................................................................................................................................................................................3 Public Valuation Update .........................................................................................................................................................................................................................4 Commercial Specialty Finance..................................................................................................................................................................................................................7 M&A Trends.................................................................................................................................................................................................................................................7 Select M&A Transactions .......................................................................................................................................................................................................................8 Public Valuation Update .........................................................................................................................................................................................................................9 Capital Markets Transactions ................................................................................................................................................................................................................ 12 Recent Equity Offerings ....................................................................................................................................................................................................................... 12 Recent Debt Offerings .......................................................................................................................................................................................................................... 14 Recent Preferred Equity Offerings .................................................................................................................................................................................................. 15 Financial Services & Technology Analysts and Coverage .......................................................................................................................................................... 16 Investment Banking Team Biographies ............................................................................................................................................................................................ 17 Select William Blair Transactions ........................................................................................................................................................................................................ 18 Notes ................................................................................................................................................................................................................................................................ 19 Disclosures..................................................................................................................................................................................................................................................... 20
Specialty Finance Industry Insights Table of Contents
William Blair
Introduction Specialty finance can be broadly defined as any financing activity that takes place outside the traditional banking system. Typically, specialty finance firms are thought of as non-bank lenders that make loans to consumers and small to midsize businesses that cannot otherwise obtain financing. This report covers trends in M&A activity, transaction multiples, and public company valuations in the consumer and commercial specialty finance sectors. Specifically, consumer specialty finance includes auto finance, collection, alternative financial services, credit card, and mortgage companies. Commercial specialty finance includes business development companies (BDCs), commercial finance, commercial real estate lending, and leasing companies. We hope you enjoy this report, and we welcome any feedback.
Summary of M&A Activity
Both the M&A and equity markets performed strongly in the first quarter. Total global year-to-date M&A volume is over $400 billion, up more than 5% from the corresponding period last year, and over the same period the total disclosed dollar volume of new equity issuances (both initial public offerings and follow-on offerings) is up more than 17%. While some industry veterans believe valuations are ahead of themselves, deal activity suggests otherwise.
This theme persists within the specialty finance sector and we believe 2015 M&A activity will remain strong for high quality companies in this sector. Large strategic acquirers with healthy war chests will likely continue to pursue companies with differentiated solutions, go-to-market strategies, and proven strong growth and profitability. In addition, private-equity firms remain highly active in the specialty finance sector. Aging portfolio companies of private-equity firms – in particular, specialty finance businesses purchased before or during the downturn – may create liquidity opportunities in the near to midterm and will continue to fuel middle-market M&A activity.
Specialty finance companies generate high margins and recurring cash flows. In addition, these companies have meaningful operating leverage. As a result, M&A transactions in the sector are generally completed at attractive multiples. Since 2002, approximately 53% of the aggregate deals in the consumer specialty finance sector have been completed at above 10.0 times LTM net income, and approximately 18% have been completed at more than 3.00 times LTM book value. In the commercial specialty finance sector, approximately 46% of the aggregate deals since 2002 have been completed at above 10.0 times LTM net income, and approximately 22% have been completed between 1.50 and 3.00 times LTM book value. Acquirers in the sector are most often strategic parties that are able to pay more because of the significant revenue synergies generated by pushing new or stronger finance products through an established distribution platform. In addition, many private-equity funds have developed a differentiated level of industry knowledge and expertise, and as a result have established strong reputations in the sector. In 2015 thus far, M&A activity in the sector has been strong, driven primarily by strategic acquirers looking for new products and segments, differentiated platforms, and additional avenues for growth. Examples include New Residential Investment Corporations' acquisition of Home Loan Servicing Solutions and Huntington Bancshares’ acquisition of Macquarie Equipment Finance. While global economic uncertainty may cause the broad universe of buyers and sellers to proceed more cautiously in 2015, we remain optimistic that both M&A and capital markets activity will remain strong for solidly performing businesses.
Robert Metzger +1 312 364 8517
[email protected]
J.P. Young +1 312 364 8160
[email protected]
Kegan Greene +1 312 364 8113
[email protected]
Specialty Finance Industry Insights Introduction 1
Consumer Specialty Finance Sector
William Blair
Consumer Specialty Finance M&A Trends •
Year-to-date aggregate M&A transaction volume is running slightly ahead of the comparable period in 2014, though disclosed dollar volume is meaningfully lower over the same period.
•
Approximately 53% of the aggregate deals since 2002 have been completed at above 10.0 times LTM net income, and approximately 18% have been completed at more than 3.00 times LTM book value.
•
Transactions less than $50 million were completed at an average of 5.9 times LTM net income, meaningfully lower than LTM net income multiples on deals above $50 million.
Historical Transaction Volume 100 80 60 40 20 0
Average: 49
79
47
41
2002
2003
75
53
2004
2005
2006
54
2007
32
33
46
50
2008
2009
2010
2011
25.0%
42
47
39
2012
2013
2014
10
8
2014 YTD
2015 YTD
Historical Transaction Dollar Volume ($ in millions) ($ in millions) $60,000 $40,000 $20,000
-
$17,055
$26,075
2002
2003
$51,379 $8,866 2004
Average: $16,322
$16,926
2005
2006
$2,090 2007
$3,299
LTM Net Income Multiple Breakdown
14.5%
32.3%
10.0x 5.0x 0.0x
5.9x $100mm
18.2%
Greater than 3.00x 1.50x to 3.00x
27.3%
Less than 1.50x
LTM Book Value Multiple by Transaction Size 1.50x 1.40x 1.30x 1.20x 1.10x 1.00x 0.90x
1.36x
$100mm
William Blair
Select M&A Transactions Transaction Value / Announced Date
Sub-Sector
Buyer Name / Target Name
03/10/15
Mortgage
The J.G. Wentworth Company/ Weststar Mortgage, Inc.
02/23/15
Mortgage
Investor group/ FBC Mortgage, LLC
03/03/15 02/22/15 02/18/15 02/10/15 02/09/15 02/09/15 01/28/15 01/28/15 01/27/15 01/12/15 01/08/15 12/18/14 12/15/14 12/10/14 12/10/14 12/01/14 11/24/14 11/13/14 11/10/14 11/07/14 10/21/14 10/08/14 09/24/14 09/23/14 09/16/14 09/11/14 09/09/14 08/25/14 08/06/14 08/01/14 07/07/14 07/02/14 06/05/14 05/05/14 04/17/14 04/16/14 04/15/14 04/02/14 03/27/14 03/26/14 03/03/14 03/01/14
AFS
Collection Collection Mortgage Mortgage Mortgage Mortgage Mortgage AFS
Mortgage Mortgage AFS
Mortgage Mortgage Mortgage Mortgage AFS
Mortgage AFS
Mortgage Auto
Mortgage
Collection Auto Auto
Mortgage AFS AFS
Mortgage
Collection Auto
Mortgage Mortgage Mortgage AFS AFS AFS AFS
Auto
Mortgage Mortgage Mortgage
Transaction Value $54.0
LTM Net Income -
LTM Book Value -
Springleaf Holdings, LLC/ OneMain Financial Holdings, Inc.
$4,250.0
7.5x
1.30x
New Residential Investment Corp./ Home Loan Servicing Solutions, Ltd.
$1,296.1
7.6x
1.02x
$7.0
-
-
Cerberus Capital Management, L.P./ Gescobro Collection Services
Cherry Hill Mortgage Investment Corporation/ Aurora Financial Group, Inc. Legal & General Group/ New Life Mortgages Ltd.
Wilshire Bancorp, Inc./ Bank of Manhattan's mortgage lending division Skipton Building Society/ Topaz Finance Limited
Paragon Financial Resources/ Houston Capital Mortgage, Inc. EZCORP, Inc./ Twelve pawn store operations
Citizens Financial Corp./ Reliance Mortgage Company
Impac Mortgage Holdings, Inc./ Mortgage operations of CashCall, Inc. BNP Paribas/ JD Group's consumer finance business Aquiline Holdings LLC/ LenderLive Network, Inc.
Academy Mortgage Corporation/ Republic Mortgage Home Loans, LLC
Open Mortgage, LLC/ 360 Mortgage Group's reverse mortgage origination business MidAmerica Mortgage, Inc./ Affinity Lending Soultions. LLC
-
$5.0
-
$19.3
-
$398.0
-
-
-
Tiptree Financial Inc./ Reliance First Capital, LLC
$34.7
Nishi-Nippon City Bank, Ltd./ Nishi-Nippon Credit Guarantee Co., Ltd.
$24.3
5.2x
0.70x
-
-
-
loanDepot.com LLC/ Mortgage Master, Inc.
Bankers Bancorp of Oklahoma, Inc./ Advance Mortgage Corporation Fortress Investment Group LLC/ Omnisure Group, LLC
Morrison Grove Capital Advisors/ MMA Financial TC LLC
-
$15.9
-
-
-
-
Arrow Global Group PLC/ Capquest Group Limited
$258.2
Banco Santander SA/ Carfinco Financial Group Inc.
$297.8
13.8x
4.08x
GoldenTree Asset Management LP/ Origen Financial, Inc.
$483.3
-
2.91x
$63.0
5.7x
-
-
-
Mint Leasing, Inc./ Investment Capital Fund Group, LLC Home Point Capital/ Maverick Funding Corp.
First Cash Financial Services, Inc./ CAMex Holding, LLC ZAIS Financial Corp./ GMFS, LLC
Encore Capital Group, Inc./ Atlantic Credit & Finance, Inc. Milestone Partners/ PayLink Payment Plans, LLC
MutualFirst Financial, Inc./ Summit Mortgage, Inc.
Strategic Growth Bank Inc./ Guardian Mortgage Company, Inc. Freedom Mortgage Corporation/ BluFi Lending Corporation
-
$196.1
-
$25.7
-
-
-
-
LendingClub Corporation/ Springstone Financial LLC
$140.0
14.5x
Aaron's/ Progressive Finance Holdings
$700.0
-
Nelnet, Inc./ Education Lending Services, Inc. Lone Star Funds/ DFC Global
Sunset Brands, Inc./ MotorMax
Investor group/ Southern Trust Mortgage LLC
InterLinc Mortgage Services, LLC/ Hometown Mortgage Services, Inc. First Bells Bankshares, Inc./ Cendera Funding, Inc.
Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.
$127.1 $1,417.0
-
-
-
-
0.79x
-
-
-
-
Specialty Finance Industry Insights Consumer Specialty Finance 3
William Blair
Public Valuation Update Auto Finance Indexed Price / LTM Earnings Ratios as of 2/28/2015 16.0
Current: 13.5x
14.0 12.0 10.0 8.0
6.0 Feb 2010
Feb 2011
Feb 2012
Public Company Valuations
Feb 2013
Feb 2014
Stock Price /
Company
Stock Price Ticker 2/28/15
Ally Financial Inc.
ALLY
Consumer Portfolio Services, Inc.
CPSS
America's Car-Mart Inc.
CACC
Nicholas Financial Inc.
NICK
Debt / Equity
$20.78 $10,005.6
CRMT
Credit Acceptance Corp.
Equity Market Cap.
3-Yr CAGR Margin
LTM
’09-’14
LTM
LTM
LTM
(2.5%)
0.6%
$178.2
NMF
7.6x
6.6x
1.40x
11.4%
1.8%
$183.4
0.8x
$22.53
Median
ROAE
0.71x
$3,829.7
Mean
ROAA
10.6x
$183.30
Santander Consumer USA Holdings Inc. SC
FY2015
BVPS
15.3x
$456.0
$14.89
LTM
Net Income
Asset CAGR
4.8x
$53.21 $6.96
EPS
0.5x
16.9x
16.2x
2.02x
17.6%
NA
20.9%
10.8%
(8.9%)
26.4%
18.8%
10.2%
36.7%
$7,862.6
$3,752.6
NMF
2.2x
10.5x
12.9x
9.3x
11.3x
2.29x
2.17x
NA
9.2%
2.6%
4.7%
$2,142.8
1.7x
13.5x
10.6x
1.71x
10.6%
4.1%
7.5%
5.5%
LTM
NMF
13.1%
13.6x
1.18x
6.2%
7.6%
15.4x
NA
5.45x
10.6%
2.5x
11.6x
Feb 2015
26.6% 24.5%
(3.4%)
12.3%
5.5%
40.7%
19.6%
6.6%
1.6%
22.9%
26.3%
18.8%
1.6%
23.6%
Collection Indexed Price / LTM Earnings Ratios as of 2/28/2015 26.0x
Current: 12.4x
22.0x 18.0x 14.0x 10.0x 6.0x
2.0x Feb 2010
Feb 2011
Feb 2012
Public Company Valuations
Feb 2013
Feb 2014
Stock Price /
Company
Stock Price Ticker 2/28/15
Asta Funding Inc.
ASFI
Performant Financial Corporation
PFMT
Encore Capital Group, Inc. PRA Group, Inc. Mean
$8.47
Equity Market Cap.
Debt / Equity
EPS LTM
FY2015
LTM
LTM
$259.1
1.2x
27.6x
22.4x
3.04x
$2,508.5
$977.2
1.6x
1.8x
14.3x
15.6x
10.6x
$645.2
1.4x
12.4x
Specialty Finance Industry Insights 4 Consumer Specialty Finance
3-Yr CAGR Margin
LTM
0.62x
$50.09
Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.
ROAE
’09-’14
NMF
PRAA
Median
ROAA
LTM
10.0x
$1,031.4
$5.25
BVPS
0.2x
$39.97
4.2x
10.4x
7.9x
Net Income
Asset CAGR
$110.0
ECPG
Feb 2015
NA
(2.1%)
NA
6.6%
1.78x
44.5%
13.6x
3.81x
10.6x
6.9%
47.5%
11.4%
(8.8%)
7.8%
15.9%
2.31x
28.5%
36.5%
10.3% 5.6%
19.9%
2.41x
36.5%
7.2%
19.4%
LTM 28.5%
9.7% 4.8%
13.5%
20.5%
20.0%
19.7%
15.7%
13.6%
20.0%
14.9%
William Blair
Alternative Financial Services Indexed Price / LTM Earnings Ratios as of 2/28/2015 18.0x
Current: 11.2x
15.0x 12.0x 9.0x
6.0x Feb 2010
Feb 2011
Feb 2012
Public Company Valuations
Feb 2013 Stock Price /
Company
Stock Equity Price Market Ticker 2/28/15 Cap.
Cash America International, Inc.
CSH
$21.58
$652.5
0.2x
NMF
22.1x
1.16x
EZCORP, Inc.
EZPW
$10.44
$560.1
0.4x
15.8x
8.9x
1.16x
0.2x
NMF
Enova International, Inc.
ENVA
First Cash Financial Services Inc.
FCFS
QC Holdings, Inc.
Springleaf Holdings, Inc.
$1,363.2
RM
$15.60
$198.8
WRLD
$82.11
LEAF
World Acceptance Corp. Mean
$762.0
$48.14
QCCO
Regional Management Corp.
$23.09
Debt / Equity
$1.72
$38.45
$30.1
$4,415.3
3.2x
EPS LTM
FY2015 LTM
6.8x
0.5x
BVPS
6.5x
16.4x
16.8x
1.9x
13.7x
8.6x
4.6x
7.99x
NA
8.8x
16.3x
$776.8
$1,094.9
1.9x
1.6x
8.3x
11.6x
8.0x
12.4x
$707.2
1.2x
11.2x
8.9x
Median
4.89x
Feb 2014
Net Income
Asset CAGR
ROAA
ROAE
3-Yr CAGR
Margin
’09-’14
LTM
LTM
LTM
LTM
3.7%
1.4%
(0.9%)
(10.1%)
23.3%
4.4%
4.0%
NA
(5.4%)
NA
3.5%
15.1%
57.2% 19.8%
6.5%
NA
5.2%
8.7%
2.0
2.18x
(10.3%)
7.1%
7.5%
4.6%
32.6% 31.6%
9.0%
44.5%
11.8%
(5.4%)
2.46x
9.9%
22.8%
0.43x 1.13x
Feb 2015
14.5% 11.9%
7.6%
(22.9%) 1.3%
29.9%
2.67x
10.1% 8.5%
12.3%
16.4%
7.1%
20.1%
3.5%
10.9%
1.67x
10.1%
6.2%
14.3%
1.7%
10.5%
Credit Card Indexed Price / LTM Earnings Ratios as of 2/28/2015 36.0x
Current: 21.9x
30.0x 24.0x 18.0x 12.0x
6.0x Feb 2010
Feb 2011
Feb 2012
Public Company Valuations
Feb 2013 Stock Price /
Company
Stock Price Ticker 2/28/15
Equity Market Cap.
Debt / Equity
EPS LTM
FY2015
Alliance Data Systems Corporation
ADS
$278.51
$17,491.8
5.4x
35.4x
18.7x
Discover Financial Services
DFS
$60.98
$27,272.7
2.0x
12.4x
11.4x
Synchrony Financial
SYF
American Express Company AXP MasterCard Incorporated Visa Inc. Mean
MA V
Median Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.
$81.59
$83,154.5
$90.13 $103,510.0 $31.95
$26,638.8
3.0x 0.2x 2.6x
14.7x 29.1x 11.5x
Feb 2014
Feb 2015 Net Income
BVPS
Asset CAGR
ROAA
ROAE
3-Yr CAGR
Margin
LTM
’09-’14
LTM
LTM
LTM
LTM
NMF
31.1%
2.75x
12.6%
12.4x
2.96x
NA
14.9x
4.95x
25.9x
NMF
4.9%
4.5%
29.6%
2.9%
21.2%
3.8%
15.5%
21.6%
29.3%
17.1%
9.5%
6.0%
18.2%
NMF
23.8%
38.2%
3.1%
30.4%
NA
3.7%
33.0% 33.4%
$271.31 $166,557.4 $70,770.9
NMF
2.7x
30.3x
22.2x
26.2x
18.3x
5.86x
4.13x
3.6%
13.5%
13.8% 8.3%
20.4%
26.2%
13.8%
12.9%
29.3%
43.3%
$55,213.6
2.6x
21.9x
16.8x
3.96x
12.6%
4.1%
29.3%
13.8%
33.2%
Specialty Finance Industry Insights Consumer Specialty Finance 5
William Blair
Mortgage Indexed Price / LTM Earnings Ratios as of 2/28/2015 25.0x
Current: 10.3x
20.0x 15.0x 10.0x 5.0x
0.0x Feb 2010
Feb 2011
Feb 2012
Public Company Valuations
Feb 2013 Stock Price /
Company
Stock Price Ticker 2/28/15
Ellington Financial LLC
EFC
$20.48
$685.1
2.2x
Nationstar Mortgage Holdings Inc.
NSM
$26.65
$2,424.7
NMF
PMT
$21.44
$1,597.5
2.0x
SGM
$10.02
Heritage Financial Group, Inc. Ocwen Financial Corp. PennyMac Mortgage Investment Trust PHH Corporation
Stonegate Mortgage Corporation Walter Investment Management Corp. Mean
HBOS
OCN
PHH
WAC
Equity Market Cap.
$25.89
$8.14
$24.28 $16.67
Median Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.
Specialty Finance Industry Insights 6 Consumer Specialty Finance
$228.0
$1,024.1 $1,243.1 $258.3
Debt / Equity
EPS LTM 9.8x
FY2015
ROAE
3-Yr CAGR
Margin
’09-’14
LTM
LTM
LTM
LTM
8.5%
78.9%
(9.3%)
7.3x
2.07x
54.1%
1.8%
20.0%
NMF
15.2%
4.2%
12.8%
44.5%
47.7%
NA
(12.9%)
5.1%
47.9%
9.5%
8.5%
44.5%
6.1x
4.4x 8.4x
NA
NMF
8.7x
8.4x
12.5x
ROAA
LTM
1.7%
3.8x
4.1x
BVPS
20.8%
23.4x
1.1x
Net Income
Asset CAGR
0.88x
27.3x
8.7x
6.7x
1.61x
0.71x 1.01x
24.4%
28.8%
NA
0.5%
6.1%
5.3%
33.6% 57.1%
1.4%
(2.8%)
(11.3%)
2.12x
58.7%
(0.6%)
(9.8%)
0.95x
NA
NMF
2.4x
12.5x
9.8x
1.15x
25.9%
$1,024.1
2.1x
10.3x
7.8x
0.95x
24.4%
(2.4%)
1.3% 1.7%
25.5%
11.0%
0.80x
$628.8
$1,065.8
Feb 2015
8.3x
1.3x
10.9x
Feb 2014
(10.4%)
NA
8.6%
8.6% 8.4%
(9.3%)
8.6%
Commercial Specialty Finance Sector
William Blair
Commercial Specialty Finance M&A Trends •
Year-to-date aggregate M&A transaction volume and disclosed dollar volume are running significantly above those of the comparable period in 2014.
•
Approximately 46% of the aggregate deals since 2002 have been completed at above 10.0 times LTM net income, and approximately 22% have been completed between 1.50 and 3.00 times LTM book value.
•
Transactions less than $50 million were completed at an average of 5.6 times LTM net income, slightly lower than LTM net income multiples on deals above $50 million.
Historical Transaction Volume 50 40 30 20 10 0
39
45
26
2002
2003
43
40
2004
2005
Average: 32
42
2006
2007
29
2008
28
22 2009
16
2010
2011
29
26
2012
2013
125.0% 35
2014
9
4
2014 YTD
2015 YTD
Historical Transaction Dollar Volume ($ in millions)
$16,000 $12,000 $8,000 $4,000 $0
$1,551
$7,885
$9,126
2003
2004
2002
$6,484
$5,702
2005
2006
$11,162
2007
LTM Net Income Multiple Breakdown
23.1%
30.8%
10.0x 5.0x 0.0x
5.6x $100mm
71.7%
21.7%
6.5%
Greater than 3.00x 1.50x to 3.00x Less than 1.50x
LTM Book Value Multiple by Transaction Size 1.50x 1.00x 0.50x 0.00x
1.00x
$100mm
William Blair
Select M&A Transactions Transaction Value / Announced Date
Sub-Sector
Buyer Name / Target Name
03/09/15
Commercial Finance
BankUnited/ CertusHolding's small business finance unit
03/03/15
Commercial Finance
Triumph Capital Advisors/ Doral Money Inc.
03/03/15 02/24/15 02/20/15 02/11/15 02/10/15 02/06/15 01/23/15 01/20/15 01/15/15 01/09/15 12/30/14 12/15/14 11/26/14 10/31/14 10/31/14 10/14/14 10/13/14 10/10/14 10/09/14 09/29/14 09/26/14 09/04/14 08/26/14 08/11/14 08/05/14 08/04/14 07/11/14 06/28/14 06/10/14 06/05/14 06/02/14 06/02/14 05/15/14 05/05/14 04/22/14 04/08/14 03/28/14 03/14/14
Leasing Leasing
Commercial Finance
Commercial Finance Commercial Finance Leasing
Commercial Finance
Commercial Finance Commercial Finance Leasing
Commercial Finance Leasing Leasing
Commercial Finance Leasing
Commercial Finance Leasing Leasing
Commercial Finance
Transaction Value
Wood Creek Capital Management/ Milestone Equipment Holdings
Fortress Investment Group/ UniCredit Credit Management Bank
-
$21.0
Temasek Holdings Limited/ SVB India Finance Private Limited
$45.4
UniCredit Bank Austria/ Transfinance
-
General Finance Corporation/ Bristlecone Ventures, LLC
$7.3
AgTexas Farm Credit Services/ Great Plains Ag Credit
-
-
-
Meta Financial Group, Inc./ AFS/IBEX Financial Services, Inc.
-
-
General Electric Capital Corporation/ Milestone Aviation Group Limited
$1,775.0
FIMBank/ First Factors
$5.7
Heritage Commerce Corp/ BVF/CSNK Acquisition Corp.
Omega Commercial Finance Corp./ AmericaVest CRE Mortgage Funding Trust, Inc. National Bancshares, Inc./ Doral Healthcare Finance
United Community Banks, Inc./ Business Carolina Inc.
FBR & Co./ Securities Lending Business Tiger Global Management/ OnDeck
-
-
Ares Management, L.P./ Keltic Financial Services, LLC
-
-
-
-
Pine Tree Equity Management, LP/ Celtic Capital Corporation
-
-
-
$441.0
Carolina Alliance Bank/ Dave McBride Leasing, LLC
-
0.14x
-
Cargills Bank Ltd./ Capital Alliance Finance PLC
-
-
1.7x
-
Signature Bancshares, Inc./ Lease Finance Group, Inc.
-
$22.5
-
National Commerce Corporation/ CBI Holding Company, LLC
Commercial Real Estate Northwest Federal Credit Union/ Park Place Equity, LLC
Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.
-
-
-
Commercial Real Estate Wood Creek Capital Management, LLC/ Genesis Funding Limited
Commercial Finance
-
-
$129.6
General Electric Capital Corporation/ VB Leasing CZ
Element Financial Corporation/ PHH Vehicle Management Services Group LLC
Commercial Finance
-
-
Blackrock Kelso Capital Corporation/ GB Credit Partners LLC
Leasing
Commercial Finance
-
-
1.58x
Minnwest Corporation/ HiLine Credit Corporation
Commercial Finance
-
15.2x
-
Commercial Finance
Commercial Finance
-
-
$151.4
General Finance Corporation/ YS Container Services Limited
Commercial Real Estate Sutherland Asset Management Corp./ CIT Small Business Lending Corporation Commercial Finance
-
Fortress Investment Group LLC/ MicroFinancial Incorporated
Funding Circle Limited/ LeapPay, Inc.
Commercial Finance
-
Prosper Marketplace, Inc./ American HealthCare Lending, LLC
Commercial Finance
Leasing
-
-
Beacon Credit Union/ Midwest Ag Finance, Inc.
First Midwest Bancorp, Inc./ National Machine Tool Financial Corporation
Commercial Finance
$133.3 $624.0
Aquiline Holdings LLC/ Engs Commercial Finance Co.
Leasing Leasing
-
-
Commercial Real Estate Walker & Dunlop, Inc./ Johnson Capital Group, Inc. Commercial Finance
-
$425.0
Wesleyan Assurance Society/ Syscap Holdings Limited
LTM Book Value
-
Huntington Bancshares Incorporated/ Macquarie Equipment Finance, Inc.
LTM Net Income
-
-
-
$1,402.5
24.2x
3.80x
-
-
-
$2.0
-
$77.0
-
-
Specialty Finance Industry Insights Commercial Specialty Finance 8
William Blair
Public Valuation Update Business Development Companies (BDCs) Indexed Price / LTM Earnings Ratios as of 2/28/2015 25.0x 20.0x
Current: 11.4x
15.0x 10.0x
5.0x Feb 2010
Feb 2011
Feb 2013
Feb 2012
Public Company Valuations
Stock Price /
Company
Stock Price Ticker 2/28/15
Apollo Investment Corporation
AINV
BlackRock Kelso Capital Corporation
BKCC
Ares Capital Corporation Capitala Finance Corp. CM Finance Inc.
Fidus Investment Corporation Fifth Street Finance Corp.
Full Circle Capital Corporation Garrison Capital Inc.
Golub Capital BDC, Inc.
Harvest Capital Credit Corporation
Hercules Technology Growth Capital, Inc.
Horizon Technology Finance Corporation KCAP Financial, Inc.
Main Street Capital Corporation Medallion Financial Corp.
Medley Capital Corporation
Monroe Capital Corporation OFS Capital Corporation
PennantPark Floating Rate Capital Ltd. PennantPark Investment Corporation Prospect Capital Corporation Saratoga Investment Corp. Solar Capital Ltd.
Solar Senior Capital Ltd. TCP Capital Corp. THL Credit, Inc.
TICC Capital Corp.
TPG Specialty Lending, Inc.
Triangle Capital Corporation Mean
$1,844.2
0.8x
11.8x
$8.78
$654.5
0.5x
5.2x
$17.30
CPTA
$18.81
FDUS
$16.60
FSC
$13.73
$5,434.1 $244.0 $187.6 $266.0
$7.08
$1,085.6
GARS
$15.03
$251.9
HCAP
$12.55
$77.9
FULL
GBDC HTGC
HRZN KCAP
$3.88
$17.76
$46.4
$837.8
$15.55
$998.2
$7.50
$275.4
$14.13
$136.0
MAIN
$30.95
$1,397.7
MCC
$9.46
$555.6
TAXI
$10.45
MRCC
$14.91
PFLT
$13.97
OFS
PNNT PSEC
$12.13 $9.51
TSLX
TCAP
Median
Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.
Specialty Finance Industry Insights 9 Commercial Specialty Finance
$208.1 $714.1 $854.4
$16.60
$808.6
$16.17
TICC
$116.9
$20.12
SUNS TCRD
$141.9
$3,093.0
$15.76
TCPC
$258.6
$8.63
SAR
SLRC
EPS LTM
$7.79
ARCC CMFN
Equity Market Debt / Cap. Equity
$12.09 $7.29
$18.54 $23.67
$84.8
$186.5 $409.9
0.7x 0.8x 0.7x
BVPS
FY2015 LTM 8.1x
0.89x
10.0x
0.88x
8.9x
10.8x
NA
9.8x
8.1x
NA
0.6x
12.2x
10.0x
1.0x
NMF
5.9x
1.0x 0.9x
21.4x 8.3x
8.0x 9.9x
1.0x
12.5x
13.6x
1.0x
14.1x
11.7x
0.7x
10.0x
7.8x
1.3x
9.2x
0.2x 0.6x 0.8x
8.3x 8.8x
8.1x
10.2x
13.4x
13.6x
0.9x
25.2x
7.0x
1.1x
11.8x
10.6x
13.8x
8.6x
0.8x 0.6x 0.8x 0.8x 1.1x
10.3x 14.0x 9.0x 7.0x
9.8x 9.4x
11.1x 8.1x 8.9x
0.2x
17.8x
12.5x
0.4x
NMF
10.3x
0.7x
16.0x
11.7x
0.6x
11.1x
$778.9
0.5x
11.1x
$779.6
0.8x
11.0x
0.8x
$425.0
0.8x
$440.0
$1,000.4
1.0x
NA
24.8x
8.8x 6.9x
Feb 2014 Net Income
Asset CAGR
ROAA
ROAE
3-Yr CAGR
Margin
’09-’14
LTM
LTM
LTM
LTM
7.4%
5.3%
8.2%
4.1%
1.04x
32.6%
0.95x
NA
0.94x 1.09x
NA NA
0.73x
45.0%
0.96x
NA
0.62x
NA
1.14x
28.7%
1.52x
20.6%
0.96x
(0.4%)
0.95x
2.6%
0.87x 0.98x 1.47x 0.75x 1.07x 0.87x 0.97x
NA NA
53.9% NA NA NA NA
0.86x
22.5%
0.71x
10.9%
0.82x 0.90x 0.92x
57.6% 13.8% NA
1.07x
16.9%
0.78x
35.8%
0.91x 1.18x
Feb 2015
NA NA
8.0%
NA
36.7%
21.3%
NMF
4.8%
11.6%
22.8%
4.1%
5.6%
NA
(6.9%)
(1.7%)
38.2%
15.8%
4.8%
13.5%
4.6%
3.5%
4.9% 5.5%
7.2% 4.6%
NA
28.0% NA
59.8% 79.7%
60.4%
7.2%
8.0%
NA
57.2%
5.3%
10.9%
5.9%
9.7%
5.0%
14.9%
5.5%
(19.1%)
4.9%
11.6%
17.0%
5.7%
3.3%
11.7%
2.4%
10.5%
4.9%
10.1%
3.9%
7.0%
3.0% 4.8% 5.5%
NMF
14.4% NA
5.5%
29.6%
6.3%
NA
9.3%
NA
25.2%
4.1%
10.3%
(5.9%)
3.2%
5.7%
NA
3.0%
5.0%
(7.5%)
58.9% 49.6% 23.9% 47.9% 71.6% 69.9%
9.8%
13.3% 6.8% 9.2%
11.8%
47.2%
5.6%
41.8% 39.7% 52.9%
6.9%
(2.9%)
5.8%
5.8%
27.1%
NA
8.0%
31.2%
48.1%
(0.6%)
12.1%
7.2%
10.8%
11.2%
5.4% 6.4%
10.8%
37.5%
44.2%
33.3% 26.5%
9.2%
12.7%
10.8% 9.5%
10.1%
13.2%
5.3% 5.2%
9.6%
10.0%
9.3%
NMF
(8.1%)
45.0%
9.1%
12.4%
12.2% 9.4%
10.3%
16.1%
3.6% 3.7%
Dividend Yield
74.9%
9.1% 7.7%
11.6% 8.0% 8.7% 9.3%
49.6%
11.2%
52.1%
8.4%
14.8%
12.5x
10.7x
9.8x
1.42x
0.97x
30.4%
24.2%
4.7%
8.3%
(20.7%) 12.3%
43.6%
9.8%
9.3%
11.4x
9.9x
0.94x
21.5%
4.9%
8.7%
14.9%
47.5%
9.5%
William Blair
Commercial Finance Indexed Price / LTM Earnings Ratios as of 2/28/2015 35.0x 30.0x
Current: 23.1x
25.0x 20.0x 15.0x
10.0x Feb 2010
Feb 2011
Feb 2012
Public Company Valuations
Feb 2013 Stock Price /
Company
Stock Price Ticker 2/28/15
CIT Group Inc.
CIT
$46.28
$8,139.8
4.0x
PacWest Bancorp
PACW
$45.84
$4,722.0
3.6x
NewStar Financial, Inc.
NEWS
SVB Financial Group
SIVB
Mean
$9.98
$122.90
Median
Equity EPS BVPS Market Debt / Cap. Equity LTM FY2015 LTM
Feb 2014 Net Income
Asset CAGR
ROAA
ROAE
3-Yr CAGR
Margin
’09-’14
LTM
LTM
LTM
LTM
8.1x
13.7x
0.99x
(4.4%)
2.3%
12.0%
$6,263.4
23.6x
7.9%
1.64x
25.1%
1.5%
17.0x
2.22x
25.0%
4.9x 18.3x
21.2x
2.64x
$4,897.6
23.1x
16.0x
12.7%
1.4%
$5,492.7
3.8x 23.1x
16.0x
1.60x
15.0%
$465.1
3.3x 8.6x
NMF
NMF
0.73x
Feb 2015
5.0%
0.4%
Dividend Yield
NMF
44.5%
1.3%
49.3%
24.6%
4.4%
1.7%
(9.2%)
13.4% 8.8%
18.5%
15.4%
26.2%
19.3%
2.8%
1.4% 10.0%
15.4%
21.9%
2.8%
1.4%
16.6%
NA NA
Commercial Real Estate Lending Indexed Price / LTM Earnings Ratios as of 2/28/2015 20.0x
Current: 15.7x
15.0x 10.0x
5.0x Feb 2010
Feb 2011
Feb 2012
Public Company Valuations
Feb 2013 Stock Price /
Company
Stock Price Ticker 2/28/15
Ladder Capital Corp
LADR
$18.40
$946.3
2.1x
21.3x
Walker & Dunlop, Inc.
WD
$16.03
$510.1
3.2x
NMF
$556.3 2.3x
10.1x
18.4x
15.7x
$510.1 2.1x
15.7x
Resource America, Inc. Mean
Median
REXI
$9.30
Equity EPS Market Debt / Cap. Equity LTM $212.6
1.5x
BVPS FY2015 LTM
Feb 2014
Feb 2015 Net Income
Asset CAGR
ROAA
ROAE
3-Yr CAGR Margin
’09-’14
LTM
LTM
LTM
8.7x
1.38x
8.8x
1.33x
12.0x
1.47x
50.5%
1.39x
8.8x
1.38x
LTM
Dividend Yield
NA
3.5%
8.9%
27.8%
21.2%
52.6%
2.7%
12.3%
13.8%
9.0% 20.8%
14.4%
2.6%
51.5%
3.3%
3.5%
13.1%
2.6%
51.5%
3.3%
8.9% 20.8%
14.4%
2.6%
1.4%
5.7%
NA
NA NA
Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.
Specialty Finance Industry Insights Commercial Specialty Finance 10
William Blair Leasing Indexed Price / LTM Earnings Ratios as of 2/28/2015 Current: 13.2x
21.0x 16.0x 11.0x
6.0x Feb 2010
Feb 2011
Feb 2012
Public Company Valuations
Feb 2013 Stock Price /
Company
Stock Price Ticker 2/28/15
AerCap Holdings N.V.
AER
$44.50
$9,448.2
3.8x
9.8x
Air Lease Corporation
AL
$38.24
$3,915.5
2.4x
16.1x
$24.28
$504.7
2.9x
8.5x
AeroCentury Corp. Aircastle LTD
CAI International Inc.
Element Financial Corporation GATX Corp.
Marlin Business Services Corp. Mobile Mini, Inc.
Ryder System, Inc.
TAL International Group, Inc.
Textainer Group Holdings Limited Willis Lease Finance Corp. Mean
ACY
AYR CAP
EFN
GMT
MRLN MINI R
TAL
TGH
WLFC
$10.07 $23.07 $12.80 $62.25 $18.71
Equity Market Cap. $16.2
$1,867.5 $3,380.9 $2,757.7 $239.9
Debt / Equity LTM 3.2x 2.2x 2.8x
$41.73
$1,372.1
4.6x
$32.26 $21.34
Median Note: Dollar amount in millions. Source: SNL Financial and Capital IQ.
Specialty Finance Industry Insights 11 Commercial Specialty Finance
$4,980.3 $1,834.4 $179.6
2.5x 2.4x
3-Yr CAGR
Margin
LTM
LTM
LTM
Dividend Yield
15.6%
67.6%
22.3%
NA
12.9x
1.41x
NA
3.8%
9.7%
68.8%
24.4%
0.4%
1.14x
36.9%
3.7%
14.1%
6.3%
26.5%
NA
2.24x
5.9%
2.9%
15.1%
22.8%
2.09x
3.7%
3.6%
5.2%
13.2%
8.3x
15.6x
12.6x
11.8x
9.7x
ROAE
4.4%
NMF
11.3x
ROAA
’09-’14 LTM 45.3%
11.5x
22.7x
Net Income
2.75x
18.5x
NMF
NA
1.1x
Asset CAGR
Feb 2015
8.7x
10.3x
13.9x
$1,915.1
BVPS
FY2015 LTM
NA
3.3x
$41.49 $93.99
EPS
Feb 2014
11.8x 11.6x 14.8x 11.4x 10.8x
0.45x 1.09x 2.11x 1.34x 3.67x
4.5% 6.9%
NA
6.0% 9.1%
2.31x
18.9%
1.57x
26.2%
NMF
4.6% 0.7% 2.6%
5.9% 6.0% 2.5%
11.5%
3.9%
11.9%
4.1%
16.3%
4.6% 3.4%
18.3%
NA
26.9% NA
46.3% 8.8%
8.4%
12.5% 16.0%
3.8%
NA
14.1%
2.4%
10.0%
1.8%
25.9% 3.3%
4.2%
19.1%
7.8%
NA
33.6%
2.7% 1.6% 6.9% 5.8%
3.5x
$2,493.2 2.9x
24.0x
14.7x
17.3x
12.1x
0.81x
1.77x
4.1%
15.2%
6.6%
3.5% 10.7%
(1.8%)
24.6%
8.0%
17.2%
3.2%
NA
$1,867.5 2.9x
13.2x
11.6x
1.57x
6.9%
3.8% 11.5%
13.2%
16.0%
2.6%
Capital Markets Transactions
William Blair
Capital Markets Transactions Recent Equity Offerings Initial Public Offerings Market Cap. at Pricing / Pricing Date
Company
02/13/15
Great Ajax Corp.
$14.25
12/10/14
LendingClub Corporation
$15.00
12/16/14 12/11/14 11/20/14 10/08/14 07/30/14 05/08/14 04/09/14 03/20/14 03/05/14 02/05/14 02/05/14 01/22/14 01/15/14 11/08/13 11/06/13 10/15/13 10/09/13 10/03/13 09/24/13 07/11/13 05/08/13 05/02/13 05/01/13 03/26/13 03/21/13 02/14/13 02/07/13 12/04/12 11/07/12 11/07/12 10/24/12
On Deck Capital, Inc.
Avolon Holdings Limited Neff Corporation
Eagle Point Credit Company Inc. Synchrony Financial
Alcentra Capital Corporation Ally Financial Inc.
TPG Specialty Lending, Inc.
TriplePoint Venture Growth BDC Corp. CM Finance Inc.
Ladder Capital Corp
Santander Consumer USA Holdings Inc. American Capital Senior Floating, Ltd. JGWPT Holdings Inc.
StoneCastle Financial Corp. Springleaf Holdings, Inc.
Stonegate Mortgage Corporation
Cherry Hill Mortgage Investment Corporation Capitala Finance Corp.
Fifth Street Senior Floating Rate Corp. PennyMac Financial Services, Inc.
Harvest Capital Credit Corporation
Ellington Residential Mortgage REIT Garrison Capital Inc.
Five Oaks Investment Corp. Orchid Island Capital, Inc. ZAIS Financial Corp.
WhiteHorse Finance, Inc. OFS Capital Corporation
Stellus Capital Investment Corporation Monroe Capital Corporation
Price
5.0
Amount $71.3
$20.00
10.0
$200.0
$15.00
10.5
$157.1
$20.00 $20.00
13.6 58.0 5.2
-
$16.00
7.0
$112.0
$25.00 $15.00 $15.00
95.0 8.3 6.7
$17.00
13.3
$14.00
13.9
$24.00 $15.00 $25.00 $17.00 $16.00 $20.00 $20.00 $15.00
$21.25 $15.00 $15.00 $15.00 $15.00
10.3x
$125.0
-
$2,375.0 $100.0 $225.3
-
12.4x 9.1x
-
6.3
$157.1
-
10.0 21.0 7.1 6.5 4.0 6.7
5.3
$15.00
$100.0
17.2x
$15.00 $15.00
-
$1,799.8
11.1
$20.00
-
9.8x
75.0
$18.00 $15.00
-
$103.1
$870.0 $2,875.0
6.6
-
12.1x
125.0
$15.00
LTM EPS
$272.7
$23.00
Note: Dollar amount and shares amount are in millions and exclude overallotment. Source: SNL Financial and William Blair’s market analysis.
Specialty Finance Industry Insights 12 Capital Markets Transactions
Shares
3.4 6.5 4.0 2.4
$150.0 $195.0 $357.8
$51.0
$129.0 $80.0
-
$75.0
0.80x 1.03x
-
1.47x 6.44x 3.10x
-
2.48x
-
5.75x
-
-
-
-
$120.0
-
0.90x
-
$100.0
8.0 5.0
-
22.2x
$100.0
-
-
-
$60.5 $35.4
-
1.11x
-
$200.0
-
1.05x
1.12x
$100.0
$80.0
1.00x
-
14.1x
$130.0
$120.1
6.7
-
$113.6
5.7 6.7
-
LTM Book Value
-
-
3.32x
-
2.35x
-
William Blair
Recent Equity Offerings (cont’d) Follow-On Offerings Market Cap. at Pricing / Pricing Date 03/05/15
Company Apollo Commercial Real Estate Finance, Inc.
11/21/14
New York Mortgage Trust, Inc.
12/19/14 12/01/14 11/21/14 11/20/14 11/12/14 11/04/14 10/27/14 10/23/14 10/07/14 09/30/14 09/18/14 09/05/14 09/05/14 09/04/14 09/04/14 09/03/14 09/02/14 08/20/14 08/14/14 08/12/14 08/12/14 08/05/14 07/29/14 07/17/14 07/16/14 07/16/14 07/11/14 06/19/14 05/13/14 04/30/14 04/29/14 04/25/14 04/23/14 04/23/14 04/09/14 04/08/14 04/08/14 04/03/14 04/02/14 04/01/14 03/26/14 03/19/14 03/11/14 02/27/14 02/20/14 01/29/14 01/16/14 01/14/14
Ally Financial Inc.
AerCap Holdings N.V. TCP Capital Corp.
Walker & Dunlop, Inc.
Newtek Business Services Corp. StoneCastle Financial Corp.
Hannon Armstrong Sustainable Infrastructure Capital, Inc. New Mountain Finance Corporation KCAP Financial, Inc.
Fidus Investment Corporation
Blackstone Mortgage Trust, Inc. AerCap Holdings N.V.
PennantPark Investment Corporation Arlington Asset Investment Corp. NorthStar Realty Finance Corp. Ellington Financial LLC
Santander Consumer USA Holdings Inc. Medley Capital Corporation
Fifth Street Senior Floating Rate Corp. Newcastle Investment Corp.
Triangle Capital Corporation TPG Specialty Lending, Inc. TCP Capital Corp.
Garrison Capital Inc.
Ares Capital Corporation Colony Financial, Inc.
Fifth Street Finance Corp.
Five Oaks Investment Corp.
NorthStar Realty Finance Corp.
Apollo Commercial Real Estate Finance, Inc. ePlus Inc.
New Residential Investment Corp.
Hannon Armstrong Sustainable Infrastructure Capital, Inc. Medley Capital Corporation
New Mountain Finance Corporation Main Street Capital Corporation Starwood Property Trust, Inc.
Western Asset Mortgage Capital Corporation New York Mortgage Trust, Inc.
Blackstone Mortgage Trust, Inc.
PennyMac Financial Services, Inc. Orchid Island Capital, Inc.
Oxford Lane Capital Corp. Colony Financial, Inc.
Kayne Anderson MLP Investment Company New Mountain Finance Corporation Orchid Island Capital, Inc.
Full Circle Capital Corporation
Price $17.00
Shares 10.0
Amount $170.0
$7.94
13.0
$103.2
$23.25 $41.23 $17.05 $15.30 $12.50 $23.00 $13.60 $14.53 $8.02
$17.00 $27.49
54.9 11.2 5.9 2.0 2.2 1.6 4.0 5.0
$1,277.0 $463.1 $100.6 $30.6 $27.5 $36.8 $54.4
$65.1
$18.63 $17.33 $14.50
8.5 8.0
10.0 22.8 39.5 4.3 5.0 5.4 2.0
$479.5 $98.9
$170.6 $115.5 $93.2 $93.6 $29.0
3.5
$38.5
$15.45 $16.35 $50.00
30.0 9.0 1.6
$6.10
25.0
$14.30
3.5
$13.00 $13.25 $31.50
5.0 6.0
$16.50 $12.55 $17.00
5.6 3.2 2.8
Note: Dollar amount and shares amount are in millions and exclude overallotment. Source: SNL Financial and William Blair’s market analysis.
7.9x 9.9x
12.8x
-
11.4x 5.2x
15.3x
$491.0
12.2x
$50.0
$190.7 $221.8 $91.7 $40.2
10.5x 14.0x
-
8.8x
-
5.3x
-
$47.6
18.1x
$34.2
17.5x
$22.5
1.7
10.2x
$79.5
1.8
$7.13
10.5x
-
$152.5
$12.50
2.3
11.2x
$65.0
$78.7
$284.7
$14.70
15.8x
10.4x
13.0 8.0
12.9x
$147.2
$21.90 $37.05
12.0x
-
$98.7
8.0
$7.59
13.0
-
$463.5
$131.8
13.0
$27.72
$14.67
7.9x
17.7x
$126.0
22.0
6.4x
$332.1
4.0
$22.32
29.4x
-
$11.00
13.3
16.8x
$294.3
$187.7
$224.5
15.0
11.3x
11.2x
13.5
$9.95
-
$191.4
$16.63 $22.14
-
$75.9
5.0
$26.85
16.5x
2.8
$13.02 $4.32
11.0x
21.7x
$34.0
$828.0
$12.91
11.4x
$219.9
2.0
$24.1
45.0
$18.68
6.1x
8.0
3.0
$18.40 $23.92
15.1x
10.0x
10.2
$27.61
10.4x
$72.7
$47.10 $11.63
LTM EPS 10.3x
$296.4 $11.8
23.1x 31.6x
-
LTM Book Value 0.92x 0.74x 1.18x 1.01x 1.03x 1.25x 1.55x 1.00x 1.37x 1.08x 1.12x 1.29x 1.05x 1.38x 1.14x 0.87x 1.25x 1.24x 2.14x 1.14x 3.61x 1.95x 1.95x 1.13x 1.04x 0.94x 1.07x 0.85x 1.09x 0.76x 2.24x 0.88x 1.51x 1.00x 1.48x 1.17x 1.05x 1.75x 1.38x 1.02x 1.19x 1.11x 0.55x 2.43x 2.37x 1.26x
-
2.15x
-
0.85x
Specialty Finance Industry Insights Capital Markets Transactions 13
William Blair
Recent Debt Offerings Date
Company
Offering Description
03/05/15
John Deere Capital Corporation
2.050% Series F medium-term unsecured notes, due Mar 10, 2020
$500.0
03/10/20
03/02/15
Discover Financial Services
3.750% Senior unsecured notes, due Mar 4, 2025
$500.0
03/04/25
03/03/15 02/24/15 02/17/15 02/03/15 02/03/15 01/26/15 01/22/15 01/20/15 01/15/15 01/13/15 01/12/15 01/07/15 01/07/15 01/07/15 01/06/15 12/08/14 12/08/14 12/02/14 11/25/14 11/25/14 11/19/14 11/18/14 11/18/14 11/12/14 11/03/14 10/31/14 10/28/14 10/23/14 10/02/14 10/01/14 09/25/14 09/24/14 09/24/14 09/22/14 09/16/14 09/10/14 09/09/14 09/04/14 09/04/14
PACCAR Financial Corp.
Apollo Investment Corporation Ryder System, Inc. GATX Corporation
Triangle Capital Corporation Synchrony Financial
Harvest Capital Credit Corporation
National Rural Utilities Cooperative Finance Corporation Freddie Mac
John Deere Capital Corporation Aircastle Limited
Air Lease Corporation
General Motors Financial Company, Inc. Resource Capital Corp.
Ford Motor Credit Company LLC
American Honda Finance Corporation General Electric Capital Corporation American Express Company FS Investment Corporation
Springleaf Finance Corporation
1.450% Series N medium-term notes, due Mar 9, 2018 5.250% Senior unsecured notes, due Mar 3, 2025
2.650% Unsecured medium-term notes, due Mar 2, 2020 3.250% Senior unsecured notes, due Mar 30, 2025 6.375% Senior unsecured notes, due Mar 15, 2022
0.500% Reference Notes, due Jan 27, 2017
1.350% Series F medium-term notes, due Jan 16, 2018 5.500% Senior unsecured notes, due Feb 15, 2022 3.750% Senior unsecured notes, due Feb 1, 2022
3.150% Senior unsecured notes, due Jan 15, 2020
8.000% Convertible senior unsecured notes, due Jan 15, 2020 2.145% Senior unsecured notes, due Jan 9, 2018
1.550% Series A unsecured medium-term notes, due Dec 11, 2017
Floating rate series A senior unsecured global medium-term notes, due Dec 15, 2054
Starwood Property Trust, Inc. Freddie Mac
National Rural Utilities Cooperative Finance Corporation AerCap Ireland Capial Limited Ally Financial Inc.
General Motors Financial Company, Inc. PennantPark Investment Corporation John Deere Capital Corporation Air Lease Corporation
American Honda Finance Corporation Fannie Mae
$25.0
$4,000.0 $500.0 $500.0 $600.0
$1,000.0 $100.0 $750.0
$1,000.0 $78.5
$600.0
5.250% Senior unsecured notes, due Dec 15, 2019
$700.0
4.250% Senior unsecured notes, due Jan 15, 2020
5.625% Senior convertible unsecured notes, due Nov 15, 2019 5.875% Senior unsecured notes, due Oct 25, 2024 4.500% Senior unsecured notes, due Dec 1, 2019
2.597% Senior unsecured notes, due Nov 4, 2019
Floating rate series B medium term notes, due Oct 29, 2015
3.750% Convertible senior unsecured notes, due Oct 15, 2017 1.000% Reference Notes, due July 28, 2017
Floating rate series C senior unsecured medium-term notes, due May 12, 2017 5.000% Senior unsecured notes, due Oct 1, 2021
5.125% Senior unsecured notes, due Sept 30, 2024 4.375% Senior unsecured notes, due Sept 25, 2021 4.500% Senior unsecured notes, due Oct 1, 2019
2.300% Series F senior medium term notes, due Sept 16, 2019 4.250% Senior unsecured notes, due Sept 15, 2024
2.250% Series A unsecured medium-term notes, due Aug 15, 2019 2.625% Benchmark notes, due Sept 6, 2024
Note: Dollar amount in millions and excludes overallotment. Source: SNL Financial and William Blair’s market analysis.
Specialty Finance Industry Insights 14 Capital Markets Transactions
$75.0
3.625% Subordinated unsecured notes, due Dec 5, 2024
1.400% Series N medium-term notes, due Nov 17, 2017
Toyota Motor Credit Corporation
$300.0
$500.0
PACCAR Financial Corp. Ford Motor Credit Company LLC
$400.0
2.850% Collateral trust bonds, due Jan 27, 2025
7.000% Senior unsecured notes, due Jan 16, 2020
3.875% Senior unsecured notes, due Jan 15, 2020
Main Street Capital Corporation
$350.0
$750.0
Ares Capital Corporation Navient Corporation
$500.0
2.700% Senior unsecured notes, due Feb 3, 2020
Caterpillar Financial Services Corporation 3.400% Series 84 senior notes, due Nov 25, 2017 RWT Holdings, Inc.
Amount
$325.0 $1,000.0 $400.0 $200.0 $300.0 $500.0 $175.0
$1,250.0 $1,250.0 $375.0 $500.0 $25.0
$800.0 $700.0
$1,250.0 $250.0 $500.0 $500.0
$1,000.0 $4,500.0
Maturity Date 03/09/18 03/03/25 03/02/20 03/30/25 03/15/22 02/03/20 01/16/20 01/27/25 01/27/17 01/16/18 02/15/22 02/01/22 01/15/20 01/15/20 01/09/18 12/11/17 12/15/54 12/05/24 01/15/20 12/15/19 11/25/17 01/15/20 11/15/19 11/17/17 10/25/24 12/01/19 11/04/19 10/29/15 10/15/17 07/28/17 05/12/17 10/01/21 09/30/24 09/25/21 10/01/19 09/16/19 09/15/24 08/15/19 09/06/24
William Blair
Recent Preferred Equity Offerings Date 02/25/15
Company American Express Company
Amount $850.0
Call Date 03/15/20
11/05/14
American Express Company
$750.0
11/15/19
12/04/14 11/20/14 11/05/14 10/13/14 09/04/14 06/17/14 06/12/14 06/03/14 05/29/14 05/21/14 05/13/14 05/12/14 05/05/14 03/20/14 02/26/14 12/18/13 12/10/13 11/13/13 07/16/13 06/13/13 05/29/13 05/28/13 05/08/13 05/06/13 04/23/13 04/15/13 04/11/13 04/08/13 04/03/13 03/12/13 02/07/13 01/29/13 01/29/13 01/14/13 01/10/13 11/19/12 10/09/12 10/03/12 09/25/12 09/20/12 09/13/12 09/06/12 08/16/12 07/27/12 07/27/12 07/25/12 07/25/12 07/24/12 07/19/12 07/10/12
Wells Fargo Real Estate Investment Corp. Oxford Lane Capital Corp.
Gladstone Investment Corporation
Kayne Anderson MLP Investment Company
$240.0 $25.0 $36.0 $25.0
Invesco Mortgage Capital Inc.
$150.0
Resource Capital Corp.
$110.0
Federal Agricultural Mortgage Corporation Colony Financial, Inc.
Oxford Lane Capital Corp.
Five Oaks Investment Corp.
Gladstone Capital Corporation
$75.0 $75.0 $28.0 $15.0 $55.0
NorthStar Realty Finance Corp.
$225.0
Element Financial Corporation
$125.0
American Capital Agency Corp.
Federal Agricultural Mortgage Corporation Five Oaks Investment Corp.
Element Financial Corporation Oxford Lane Capital Corp.
Farm Credit Bank of Texas Oxford Lane Capital Corp.
General Electric Capital Corporation New York Mortgage Trust, Inc.
Capstead Mortgage Corporation Arbor Realty Trust, Inc. CYS Investments, Inc. CoBank, ACB
Dynex Capital, Inc.
MFA Financial, Inc.
NorthStar Realty Finance Corp. iStar Financial Inc.
ARMOUR Residential REIT, Inc. Arbor Realty Trust, Inc.
MuniMae TE Bond Subsidiary, LLC
Federal Agricultural Mortgage Corporation
$175.0 $75.0 $20.0
$100.0 $36.6
$300.0 $20.0
$1,000.0 $75.0
$150.0 $30.0
$200.0 $200.0 $50.0
$175.0 $175.0 $175.0 $135.0 $35.0 $74.0 $60.0
KKR Financial Holdings LLC
$325.0
NorthStar Realty Finance Corp.
$125.0
Oxford Lane Capital Corp.
Discover Financial Services Resource Capital Corp.
AG Mortgage Investment Trust, Inc. Apollo Residential Mortgage, Inc. Annaly Capital Management, Inc. Hatteras Financial Corp. CYS Investments, Inc.
AG Mortgage Investment Trust, Inc. Dynex Capital, Inc.
Apollo Commercial Real Estate Finance, Inc. General Electric Capital Corporation Invesco Mortgage Capital Inc. Colony Financial, Inc.
07/09/12 NorthStar Realty Finance Corp. Note: Dollar amount in millions and excludes overallotment. Source: SNL Financial and William Blair’s market analysis.
$15.0
$500.0 $25.0
$100.0 $150.0 $400.0 $250.0 $75.0 $45.0 $50.0 $75.0
$1,750.0 $135.0 $102.7 $63.3
12/11/19 06/30/17 12/31/17 02/09/17 12/27/24 07/18/24 06/19/19 07/30/24 06/30/17 12/23/18 06/30/17 05/15/19 05/08/19 04/17/19 06/30/19 12/23/18 12/31/18 06/30/16 09/15/23 06/30/16 06/15/23 06/04/18 05/13/18 05/09/18 04/30/18 07/01/18 04/30/18 04/15/18 04/10/18 03/15/18 02/12/18 02/01/18 04/30/28 01/17/18 01/15/18 12/31/14 12/01/17 10/11/17 10/02/17 09/27/17 09/20/17 09/13/17 08/27/17 08/03/17 08/03/17 07/31/17 08/01/17 12/15/22 07/26/17 03/20/17 02/07/12
Dividend Rate (%) 4.9% 6.4% 8.1% 5.2% 6.8% 3.9% 7.8% 6.0% 7.5% 8.6% 8.1% 8.8% 6.8% 8.8% 7.8% 6.9% 6.5% 8.8% 6.6% 7.5% 6.8% 7.5% 5.3% 7.8% 7.5% 7.8% 7.5% 6.1% 7.6% 7.5% 8.5% 4.5% 7.9% 8.3% 5.0% 5.9% 7.4% 8.5% 6.5% 8.9% 8.3% 8.0% 8.0% 7.5% 7.6% 7.8% 8.3% 8.5% 8.6% 6.3% 7.8% 8.5% 8.3%
Specialty Finance Industry Insights Capital Markets Transactions 15
William Blair
Financial Services & Technology Analysts and Coverage Insurance Brokers and Property and Casualty Insurance Adam Klauber, CFA • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
Allstate Corporation (The) (ALL) American International Group, Inc. (AIG) AmTrust Financial Services, Inc. (AFSI) Aon plc (AON) Argo Group International Holdings. Ltd. (AGII) Arthur J. Gallagher & Co. (AJG) Benefitfocus, Inc. (BNFT) Brown & Brown, Inc. (BRO) Chubb Corporation (The) (CB) CNA Financial Corporation (CNA) Connecture, Inc. (CNXR) Crawford & Company (CRD.A) Crawford & Company (CRD.B) eHealth, Inc. (EHTH) Erie Indemnity Company (ERIE) Federated National Holding Company (FNHC) HCC Insurance Holdings, Inc. (HCC) Kemper Corporation (KMPR) Markel Corporation (MKL) Marsh & McLennan Companies, Inc. (MMC) National General Holdings Corp. (NGHC) National Interstate Corporation (NATL) Navigators Group, Inc. (The) (NAVG) Patriot National, Inc. (PN) Progressive Corporation (The) (PGR) RLI Corp. (RLI) Travelers Companies, Inc. (The) (TRV) WebMD Health Corp. (WBMD) Willis Group Holdings Public Limited Company (WSH)
Financial Technology and Specialty Finance Robert Napoli • • • • • • • • • • • • • • • • • • • • • • • • •
Alliance Data Systems Corporation (ADS) American Express Company (AXP) Bottomline Technologies, Inc. (EPAY) CAI International, Inc. (CAP) Capital One Financial Corporation (COF) Cardtronics, Inc. (CATM) Discover Financial Services (DFS) Encore Capital Group, Inc. (ECPG) EVERTEC, Inc. (EVTC) Financial Engines, Inc. (FNGN) Garrison Capital Inc. (GARS) Green Dot Corporation (GDOT) Harvest Capital Credit Corporation (HCAP) Independence Realty Trust, Inc. (IRT) Marlin Business Services Corp. (MRLN) MasterCard Incorporated (MA) MoneyGram International, Inc. (MGI) Monroe Capital Corporation (MRCC) Performant Financial Corporation (PFMT) PRA Group (PRAA) QIWI plc (QIWI) Visa Inc. (V) WageWorks, Inc. (WAGE) Western Union Company (The) (WU) WEX Inc. (WEX)
Specialty Finance Industry Insights 16 Financial Services & Technology Analysts and Coverage
Asset Management and Financial Technology Chris Shutler, CFA • • • • • • • • • • • • • • • • • • •
Affiliated Managers Group, Inc. (AMG) Artisan Partners Asset Management Inc. (APAM) Charles Schwab Corporation (The) (SCHW) Eaton Vance Corp. (EV) Envestnet, Inc. (ENV) Euronet Worldwide, Inc. (EEFT) Fiserv, Inc. (FISV) Global Payments, Inc. (GPN) Heartland Payment Systems, Inc. (HPY) Invesco Ltd. (IVZ) LPL Financial Holdings Inc. (LPLA) MSCI Inc. (MSCI) SEI Investments Company (SEIC) SS&C Technologies Holdings, Inc. (SSNC) T. Rowe Price Group, Inc. (TROW) TD Ameritrade Holding Corporation (AMTD) Vantiv, Inc. (VNTV) Waddell & Reed Financial, Inc. (WDR) WisdomTree Investments, Inc. (WETF)
William Blair
Investment Banking Team Biographies William Blair & Company Financial Services Investment Banking Robert Metzger, Managing Director and Head of Financial Services Investment Banking, joined William Blair in 1999. While at William Blair and in his prior position at ABN AMRO, he focused on the corporate finance needs of insurance, financial technology, and specialty finance companies. Mr. Metzger graduated in 1989 with highest honors from the University of Illinois, receiving a B.S. in accountancy. In 1995, he graduated with distinction from Northwestern University’s J.L. Kellogg Graduate School of Management, receiving an M.B.A. in finance and strategy. He is a Certified Public Accountant.
[email protected] +1 312 364 8517
J.P. Young, Managing Director, is a member of the financial services industry group, where he focuses on the corporate finance needs of banks, broker-dealers, and specialty finance companies. Mr. Young joined William Blair’s investment banking group in 2009 from Macquarie Capital and began his investment banking career in 2000 at Piper Jaffray. He has extensive experience providing M&A advisory services and raising public and private-equity capital for clients. Mr. Young received a B.S. from Lehigh University and an M.S. from the University of Chicago.
[email protected] +1 312 364 8160
Kegan Greene, Vice President, joined William Blair in 2010. Before joining William Blair, Mr. Greene worked at Babcock & Brown, Goldman Sachs, and Deloitte’s transaction services department. He holds an M.B.A. in finance and entrepreneurship from the University of Chicago, a J.D. from DePaul University, and a B.A. in English from DePauw University.
[email protected] +1 312 364 8113
Specialty Finance Industry Insights Investment Banking Team Biographies 17
William Blair
Select William Blair Transactions $27,500,000
£158,000,000
$70,000,000
$100,000,000
$29,000,000
$76,475,000
has been acquired by Direct Unsecured Notes
Arrow Global
Senior Notes
Senior Unsecured Notes
Follow-on Offering
Follow-on Offering
$1,285,000,000
Not Disclosed
$60,000,000
$151,800,000
$161,000,000
$66,815,000
Milestone Partners
Debt Placement
Follow-on Offering
Convertible Bond Offering
Follow-on Offering
$100,000,000
Not Disclosed
$50,000,000
Not Disclosed
$34,000,000
has been acquired by Portfolio Recovery Associates
Not Disclosed
has been acquired by
NORTH STATE ACCEPTANCE
has been recapitalized by
has acquired
Pine Tree Equity Management
Senior Credit Facility Debt Placement
Persian Acceptance Corporation
$287,500,000
$75,000,000
$18,750,000
has acquired
Follow-on Offering
$438,600,000
Initial Public Offering
$51,000,000
£525,000,000 has been acquired by
has been acquired by
Convertible Senior, Unsecured Notes
Follow-on Offering
Junior Unsecured Notes
$42,000,000
$78,000,000
$92,000,010
$97,980,000
$35,000,000
$75,000,000
Baby Bond Offering
Follow-on Offering
Initial Public Offering
Follow-on Offering
Senior Subordinated Notes Preferred Equity
Initial Public Offering
$125,000,000
$230,000,000
$74,000,000
Not Disclosed
$30,000,000
$102,212,920
Senior Secured Credit Facility
Convertible Offering
Senior Credit Facility & Subordinated Notes
Manheim
Second Lien Loan
Initial Public Offering
$75,469,000
188,893,000
$228,433,000
$15,000,000
£28,000,000
$271,860,000
Initial Public Offering
has been acquired by
CFSI
COLLINS FINANCIAL SERVICES, INC.
INNOVATION
Follow-on Offering
Follow-on Offering
Specialty Finance Industry Insights 18 Select William Blair Transactions
Follow-on Offering
COMPLIANCE
INTEGRITY
Second Lien Term Loan
has sold a minority stake to Investcorp
Follow-on Offering
William Blair
Notes
Specialty Finance Industry Insights Notes 19
William Blair
Disclosures
William Blair is a trade name for William Blair & Company, L.L.C. and William Blair International, Limited. William Blair & Company, L.L.C., is a Delaware company and is regulated by the Securities and Exchange Commission, The Financial Industry Regulatory Authority, and other principal exchanges. William Blair International Limited is authorised and regulated by the Financial Conduct Authority ("FCA") in the United Kingdom. William Blair & Company® only offers products and services where it is permitted to do so. Some of these products and services are only offered to persons or institutions situated within the United States and are not offered to persons or institutions outside of the United States. This material has been approved for distribution in the United Kingdom by William Blair International Limited, Regulated by the Financial Conduct Authority (FCA), and is directed only at, and is only made available to, persons falling within COB 3.5 and 3.6 of the FCA Handbook (being “Eligible Counterparties” and Professional Clients). This Document is not to be distributed or passed on to any “Retail Clients.” No persons other than persons to whom this document is directed should rely on it or its contents or use it as the basis to make an investment decision. William Blair & Company | 222 West Adams Street | Chicago, Illinois 60606 | +1 312 236 1600 | williamblair.com
Specialty Finance Industry Insights 20 Disclosures
March 18, 2014
About William Blair Investment Banking
William Blair’s investment banking group combines significant transaction experience, rich industry knowledge, and deep relationships to deliver successful advisory and financing solutions to our global base of corporate clients. We serve both publicly traded and privately held companies, executing mergers and acquisitions, growth financing, financial restructuring, and general advisory projects. This comprehensive suite of services allows us to be a long-term partner to our clients as they grow and evolve. From 2010-2014, the investment banking group completed more than 330 merger-andacquisition transactions worth $73 billion in value, involving parties in 36 countries and five continents, was an underwriter on more than 20% of all U.S. initial public offerings, and raised nearly $100 billion in public and private financing.