Hercules Technology Growth Capital said today it completed a $231 million collateralized loan obligation, the business development company’s first CLO.
The deal, Hercules Capital Funding Trust 2012-1 LLC, has issued $129 million of class A notes rated A2 by Moody’s Investors Service. The notes are backed by $231 million of senior secured loans originated by Hercules.
Guggenheim Securities acted as arranger of the notes, which pay a fixed interest rate of 3.32%, have a stated maturity of Dec. 16, 2017, and an expected weighted average life of 1.15 years. Hercules is the sponsor, originator and servicer for the transaction.
Hercules is a business development company based in Palo Alto, Calif., that specializes in lending to tech companies in various stages of development. BDCs typically lend mezzanine debt, which are subordinate to senior loans in a borrower’s capital structure, but Hercules specializes instead in making senior loans; it also makes some equity investments.
Like some recent CLOs brought to market by other middle market lenders, Hercules inaugural CLO securitizes debt it already held on its balance sheet. Proceeds from the notes provide the firm with capital to make additional loans. The more traditional business model for CLO sponsors is acquire a pool of broadly syndicated loans, either in the primary or secondary loan market.
“This is the first term securitization in our company’s history, and is an important milestone for Hercules,” Manuel A. Henriquez, Hercules’ co-founder, chairman and chief executive officer, said in a press release. “I am pleased with the strong support we received from institutional investors for this transaction – it’s a testament to our business model and our solid and diverse asset base.”
As of Dec. 19, Hercules has closed total loan commitments and renewals of approximately $581.0 million to new and existing portfolio companies
The company raised approximately $250 million of new debt and equity capital in 2012, in addition the CLO.