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Bear Stearns launches mid-market finance group

Bear Stearns Merchant Banking identified a gap in the US middle-market debt financing space, and has launched a new company with Churchill Capital to address the need.

New York-based Bear Stearns Merchant Banking has teamed up with Churchill Capital to form Churchill Financial Holdings, a commercial finance outfit. The new company, which will be based in New York, will focus exclusively on the middle market.

The middle market has historically been a niche where the availability of financing has been heavily influenced by consolidation. When General Electric acquired Heller Financial in 2001, for example, it dried up the debt financing for mid-market acquisitions, and that ultimately opened to door for new entrants such as Antares Capital and CapitalSource.

Recent consolidation in this industry has left many middle market financial sponsors seeking alternative senior lending relationships.

David King, senior managing director, Bear Stearns Merchant Banking

Considering GE Capital’s recent acquisition of Antares Capital this past October, it only makes sense that a new group would emerge to fill in the expected gap.

David King, a senior managing director at Bear Stearns, spoke to this trend in a statement. He said, “The growth of private equity focused on the middle market continues to create strong demand for middle market LBO financing… Recent consolidation in this industry has left many middle market financial sponsors seeking alternative senior lending relationships.”

Churchill Financial will be a senior debt and mezzanine provider, and will specifically target the private equity and merger-and-acquisition landscape. The new firm will initially be backed with over $500 million of committed capital to support its financing activities.

Ken Kencel, who formerly headed Indosuez Capital and led the leveraged finance arm at the Royal Bank of Canada, will serve as CEO of Churchill Financial, while GE/Antares veteran George Kurteson and ex-IBJ Whitehall CFO Alastair Merrick will round out the executive roles at the new firm.

Piper Jaffray & Co. and IXIS Capital Markets advised Churchill Financial on the launch.