Having recently bought out the healthcare finance division of Daiwa Securities America, the management of the newly formed entity Healthcare Finance Group plans to grow its healthcare receivables portfolio in excess of $200 million annually, tapping the securitization market on a regular basis going forward.
"We expect to grow the size of the portfolio to over $1 billion, and be in the market for securitization a couple of times a year," said Isaac Soleimani, chairman and chief executive officer of HFG.
The first $100 million securitization, which HFG plans to privately place sometime this year, will likely be managed by Morgan Stanley Dean Witter, whose $200 million line of credit and equity investment helped make the management buyout possible. Morgan Stanley has the right to act as lead underwriter on all future securitizations as well.
Soleimani, who has worked in the industry since the late 1980s, formed National Medical Funding in 1992, the business of which was acquired by Daiwa in 1994, where Soleimani had been until the recent buyout. Out of Daiwa, his group has closed three securitizations.
The most recent deal, called Daiwa Healthco-III, priced in 1998, and was worth $100 million. In all three transactions, Daiwa Securities acted as both issuer and investment bank.
"We stopped doing securitizations because Daiwa wanted to sell the business," Soleimani explained. "But now that we have completed this transaction we are going to start securitizing again."
The company intends to issue out of the Daiwa Healthco-III trust, changing the name of the special purpose vehicle to HFG-IV, though it will be the same legal entity. Soleimani predicts HFG will access the market twice each year.
"Basically, we're expecting to grow our business very rapidly," he said. "We've done this transaction in order to be able to grow our company and become the leading healthcare specialty finance company in the country."