As part of a new initiative, Textron Financial Corp. will be structuring private, unrated securitizations, in the role of investor, for middle-market independent finance companies.
The firm announced last week the formation of Finance Company Services (FCS), which is essentially a lender-to-lenders operation, which will be a division of Textron. In addition to structuring securitizations, FCS will be purchasing receivables from its clients on a whole-loan basis, and providing revolving lines of credit.
Currently, FCS has a financing pipeline in the moderate nine-figure range, the company said. The division was formed in January, but is only in its second or third month of operation.
FCS is being spearheaded by Mark Quinlan, formerly the chief credit and financial officer of RFC Capital Corp., which Textron acquired in 1999.
RFC had been a finance company specializing in the telecom sector, branching off into other asset classes, including internet service providers, deregulated energy providers and hi-tech systems integrators. Similar to what FCS is planning, RFC would structure true-sale, bankruptcy-remote privately placed securitizations for its borrowers, acting as investor, according to Quinlan.
Before being acquired by Textron, and inheriting its balance sheet, RFC had closed two private securitizations to fund its lending activities, the second one being a $30 million, rated transaction in 1998, placed with Sun America. That deal was backed by telecom sector accounts receivables.
Though FCS is in its early stages of development, it's likely that, down the line, the group will have some interesting securitizable assets to bring to market.
"My group is working with a capital markets group of Textron Financial, to potentially put together creative structures, and use our securitization expertise, our backroom servicing capabilities, and our good name in the market to sponsor securitizations," Quinlan said. "It may not be paper we originate, but paper we aggregate."
Meanwhile, earlier this year ASR learned that Textron Financial has been working on a franchise securitization program, although there's no word yet as to the progress therein. The company is known in the market for its equipment lease-backed deals, most recently issuing a $280 million deal.