|
 |
Welcome,
Greetings from the Pasadena Private Lending (PPL) team! As we roll towards early Summer, we're excited to present our third issue of Private Credit Insights as we offer timely and relevant information. Let's dive into some intriguing facets of the fascinating world of private lending:
We're thrilled to continue this journey with you, nurturing significant conversations in the private credit sphere. We invite you to review this edition for more insights and watch for future volumes designed to enlighten, motivate and enable you.
We appreciate your being part of the Private Credit Insights community and welcome your feedback and insights the same. Until our next edition, stay well and financially nimble.
Thank you, |
|
|
|
|
|
|
|
|
|
|
 |
State of the Economy | Inflation Rebound: After cooling in late 2023, inflation rebounded due to wage increases, rising gasoline prices and supply cuts by OPEC+.
Household Finances: While average households fare well, low-income households face budget pressures. Homeowners and affluent Americans drive consumer demand. |
| |
|
|
|
|
|
|
|
|
Resilience Amid Uncertainty: Private credit remains stable, even during economic downturns. Borrowers and lenders adapt to rising interest rates.
Consumer Sentiment: The LSEG/Ipsos Primary Consumer Sentiment Index for January 2024 is 52.9, showing an uptick in consumer confidence, with the Current, Investment, and Jobs sub-indices increasing, while the Expectations index remains stable. |
|
|
|
|
|
|
|
|
|
Lending Conditions | M&A Activity Heating Up
After a somewhat chilled 2023, M&A activity is likely to warm up. Public market uncertainty further fuels private markets.
Borrowers Enjoy More Choices
The private credit boom has resulted in a greater number and variety of lower middle market lenders. While rates are higher, borrowers enjoy the ability to choose from a broad range of potential lenders.
Resilience Amid Rising Interest Rates
Despite sustained high interest rates, the lower middle market direct lending asset class remains well positioned. The private debt market is projected to outperform the broadly syndicated loan (BSL) market in 2024, with lower defaults and loss rates. |
| |
|
|
|
|
|
|
|
|
Educational Definitions | Bridge Loans and
Enterprise ValueHow businesses can increase enterprise value with bridge loans. |
| |
|
|
|
|
|
|
|
|
Bridge Loans
Short-term loans used to bridge a financing gap (e.g., between property purchase and sale proceeds).
Increasing Enterprise Value Bridge loans allow businesses to act swiftly (e.g., acquisitions, expansions) without waiting for long-term financing, allowing companies to capitalize on value creation. | Debt vs. Equity |
|
|
|
|
|
|
|
|
|
Debt
Debt is typically more appropriate for short-term needs (e.g., working capital, equipment purchase) that can be met through loans or bonds.
Carries fixed interest payments and requires timely repayment.
Generally cheaper than equity with tax benefits (interest may be tax deductible). |
| Equity
Equity is more appropriate for long-term investments (e.g., expansion, R&D), equity financing provides permanent capital without repayment obligations.
Dilutes ownership as equity investors share profits.
Higher cost due to expected returns, but without repayment requirements. |
|
|
|
|
|
|
|
|
|
| Working with Private Lenders | When is the “right” time?
Leveraging private credit may be an opportunity in several situations: Businesses looking for financing solutions from a flexible partner. Complex and timely opportunities necessitating faster loan approvals than traditional banks. Simplified documentation requirements make private lending accessible to businesses in need.
As vested partners in your success, we invite you to contact us with your special circumstances and explore what's possible. | |
|
|
|
|
|
|
|
|
|
Borrower Spotlight | Fleet Telematics Business
Initially a $2.5MM loan.
Later increased to $4.3MM. Fleet telematics is currently in its early growth years Loan was made to a growing but cash-consuming tech development affiliate Both the fleet telematics business and development affiliate are owned by an Ultra High Net Worth (UHNW) family PPL was able to provide a loan structure that would be considered an "exception" by a traditional bank Yet, the UHNW family makes PPL comfortable with the overall risk profile of the otherwise non-traditional loan
|
| |
|
|
|
|
|
|
|
|
Have a unique situation you’d like help with? Connect with our experts and explore what’s possible. | |
|
|
|
|
|
|
|
|
|
 | Staff Spotlight
Shasha Qi Senior Credit Analyst Pasadena Private Lending
Ms. Qi joined PPL in mid-2022 as its first entrant in its credit analyst program.
She previously co-founded an investigative research company and was a senior credit analyst for a private law office.
A Certified Fraud Examiner, she obtained a BA from China University of Petroleum and an MBA, Finance from University of the West.
Her prior experience has tremendously helped PPL as an organization and we are thrilled to have her as part of our team! | |
|  | Our Virtuous Cycle
Envision teaming up with a lender who values personal connections, always standing by to help you conquer obstacles rather than adding to them. Our commitment goes beyond financial support:
We are dedicated to fueling your business's growth and boosting your operational confidence
Should the need arise, we are ready to introduce you to financial, operating, marketing and other specialists who can tackle challenges and propel your enterprise to new heights.
Explore how our team of experts can support your near and long-term goals. | |
|
|
|
|
|
|
|
|
|
 | Creative Lending for Successful Entrepreneurs |
| |
|
|
|
|
|
|
|
|
 |
|
