SAN MATEO, Calif.--(BUSINESS WIRE)--Lateral Investment Management, which provides growth financing to small and medium-sized owner-operated or family owned businesses, today announced a strategic partnership with The Leo Group, LLC, the New Jersey-based wealth management firm serving family offices, institutions and endowments.
As part of the partnership, Lateral will advise The Leo Group on a private debt portfolio of $55 million. Lateral’s principals, Kenneth Masters and Richard de Silva, will act as co-portfolio managers of the portfolio.
“Lateral delivers a high-yield private debt product which is differentiated in today’s low-rate environment,” said Matthew Allain, CEO of Leo Group, which has reported assets under management of $1.3 billion. “Lateral’s principals have a great track record of creating value for middle-market portfolio companies. We are excited to tap into their capabilities on behalf of our investors.”
Lateral focuses on collateralized credit financing for profitable North American businesses that have sales of $10 million to $100 million and require a significant short-term capital investment to pursue a well-defined growth opportunity.
For its portfolio companies, Lateral addresses a structural market disruption in the United States that has caused the supply of growth capital to small and medium-sized businesses to fall significantly short of the demand. This imbalance is the result of multiple factors. The consolidation of commercial banks has reduced the number of lenders serving smaller businesses. Federal legislation such as Dodd-Frank and bank policy standards set by Basel-III after the 2007 financial crisis have pushed commercial banks to move bespoke assets off their balance sheets and to focus their loan-origination efforts on standardized products such as mortgages that can be securitized.
Lateral is led by a team with expertise in both credit and private equity investments in lower middle-market companies. Ken Masters, Lateral’s Chief Investment Officer and Managing Partner, co-founded and co-managed White Oak Global Advisors, a direct-lending firm based in San Francisco with reported assets under management of $1.5 billion. Ken previously originated direct loans totaling more than $2 billion at KKR Financial (KFN), the credit arm of private equity firm KKR and advised on a multi-billion dollar high yield debt portfolio at Franklin Templeton. Richard de Silva, Managing Partner, served as General Partner of Highland Capital Partners, the Boston-based private investment firm and has deep operational experience in managing growth businesses.
“We believe private credit risk in the United States is priced at a significant premium over public debt with comparable risk,” said Masters. “We address the very low end of the middle market, which includes more than 350,000 businesses and is massively underserved by both debt and growth equity firms. We work closely with a select group of business owners to meet their needs for growth capital.”
About Lateral Investment Management, LLC
Based in San Mateo, California, Lateral Investment Management is an innovative commercial finance company that provides growth funding and help for leading asset-based companies in the United States. Lateral’s investment focus is on short-term collateralized senior loans for growing, independent lower middle-market firms. The firm’s principals have invested more than $1 billion in lower middle-market companies over the past decade. For more information, go to: http://www.lateralim.com/.
About The Leo Group, LLC
Leo Group is an exclusive financial advisory firm based in New Jersey with offices in New York City, Boston, and Switzerland. The firm provides comprehensive wealth management, tax strategies, capital markets, and asset management solutions on a bespoke level to wealthy individuals & families, institutions and endowments globally. For more information, go to: http://www.leogroupllc.com/.