April 20, 2021
Newly formed Briarcliffe Credit Partners has hired four new members to amp up its team in order to prepare for an imminent boom in private credit fundraising, according to Jess Larsen, the founder and chief executive of the New York-based placement agent.
Robert Molina, who joined as a managing director, will focus on project management, helping the firm source new general partner relationships. He was previously a partner of capital-raising firm Langschiff Capital Partners, providing fundraising advisory to GPs. Before that, he was the strategy head at UBP Asset Management, leading private market investments including private credit funds.
On the sales side, Jennie Park joined Briarcliffe as a managing director after a four-year stint at $5bninfrastructure specialist Vantage Infrastructure. She has years of experience in business development and investor relations, and had spent time at Apollo Global Management, Anchorage Capital, as well as Goldman Sachs’ alternative investments and leveraged finance groups.
Also joining is Laura Morales, who previously worked at First Avenue with Larsen. She is now the head of infrastructure at Briarcliffe, in charge of the firm’s operations.
Besides the senior hires, Briarcliffe also Dax O’Gorman, a senior data specialist at Preqin, as an associate on its project management team.
The move comes at a time when Briarcliffe is bracing for the rapid growth of private debt, a market that is projected to hit $1.5trn in the next few years, according to Larsen.
He also points out there will likely be more niche private debt strategies as the global health crisis has accelerated institutional investors’ need to diversify their holdings beyond the traditional direct lending strategy. Investors are looking at other alternative solutions that are less dependent on corporate profitability, such as private asset-based financing, secured debt, litigation finance or life settlements.
One new strategy that emerged in response to the Covid-19 induced economic disruption is providing debt to sports leagues against their contractual royalty payments, according to Larsen.
Briarcliffe is helping raise fresh capital for a private debt manager that looks to launch a fund to extend secured debt to European soccer clubs. Instead of backing those loans by the clubs’ revenues, the manager will take royalty payments from the debtors’ vendors or TV broadcasters as collaterals. The exotic strategy is expected to have a growing demand as the pandemic has taken its toll on sports ticket sales and clubs need funding to sustain operations throughout the year. While the more common strategy uses projected ticket sales as collateral to back loans, royalty streams is relatively more predictable and less impacted by the pandemic, according to Larsen.
Similarly, Briarcliffe is also assisting in the launch of a music royalty fund targeting streaming music royalties, an asset class that has also gained growing traction from investors during the pandemic, Lassen said.
Meanwhile, venture debt that targets early stage businesses in the TMT industry is another sector Briarcliffe sees more opportunities. The strategy allows lenders to provide debt financing to startups against their intellectual properties or personal assets of the company’s executives, and take equity warrants to compensate the additional risk lenders take on. Briarcliffe is raising a $250m-$300m fund targeting those asset classes.
The firm’s mandate also covers fundraising for funds of large sizes, including a sector specialist credit opportunistic fund, which targets $1bn, and a credit fund that focused on special situations and distressed debt, with a target fund size of $750m, PCFI has learned.
While pension funds have expressed interests in new and niche strategies, they are constrained by the limits on allocation size, Larsen noted. There is a requirement around the size of the cheque those investors can offer to GPs. As a result, pension managers, sometimes, may miss out the opportunity to invest in smaller-size funds even if they target interesting niche strategies and meet the investors’ needs for diversification.