Indeed, private credit opportunities are on the rise, since companies are struggling to obtain financing through traditional methods, says Arif Bhalwani, chief executive officer and managing director at Third Eye Capital.

“A lot of these banks are just inclined to seek liquidation as the most straightforward way to mitigate the risk and that’s where we see a significant gap and a major compelling opportunity. For pensions, there’s an opportunity . . . where they can earn a financial return but they can know that their money is being used to instigate some kind of change to businesses that really account for the [gross domestic product] of Canada.”

It’s an established norm now for pension plan sponsors to take private credit seriously as an asset class due to the benefits it brings to a portfolio, he adds, citing its diversification benefits and its positive performance when other asset classes like bonds are struggling.

Institutional investors are increasingly turning to strategies that can be trusted to mitigate risk amid a difficult and uncertain landscape primarily with the role of rising interest rates, says Bhalwani, noting rates are adding a downward pressure on the valuations of all pension fund investments.

“We’re seeing pensions become a lot more discerning in the emphasis around tangible distributions and cash-based outcomes.”

While private debt has largely been dismissed, that thought process is now changing, he says. He points to the U.S. investment market as an example where private debt has a more significant and widespread use. “There’s this cultural perception in Canada that leads to bank financing being the standard route.”

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Third Eye Capital (“TEC” or the “Company”), Canada’s leading provider of asset-based financing solutions to companies that are underserved or overlooked by traditional sources of capital, is pleased to announce the successful exit of its debt and equity holdings in Cricket Energy Holdings Inc. (“Cricket”). This follows the strategic majority sale of Cricket’s subsidiary, Provident Energy Management Inc. (“Provident”), to funds managed by Northleaf Capital Partners. Financial details and terms of the transaction were not disclosed.

In December 2020, TEC provided approximately $150 Million to back the management buyout of Cricket. Following the investment, Cricket re-aligned its business to focus on becoming the leading provider of sub-metering and building automation services to multi-residential buildings. TEC’s investment was structured as a form of asset-based financing, including senior secured term, revolver, and bridge loan facilities, that enabled Cricket to roll interest charges into the principal, delaying repayment until the sale of assets in the future. This allowed Cricket to channel its cash flows back into bolstering growth in its core businesses.

“Third Eye has been an exceptional partner and supported us through our transition as we strengthened our position in the new construction, multi-residential sub-metering market,” said Marco Pisterzi, COO/CFO at Cricket and Provident. “We are grateful for their investment and strategic guidance as we executed our plans.”

“Provident is an impressive energy management platform that has grown significantly in recent years,” said Arif Bhalwani, CEO at Third Eye Capital. “It has been a pleasure to work with the owners and senior leadership team and we wish them continued success in the years ahead.”

The successful exit not only surpassed TEC’s return and timing expectations but also led to the repayment of certain loans made by the Company to support the working capital of OZZ Electric Inc., Canada’s largest multi-residential electrical contractor, and a long-term strategic partner of Cricket and Provident.

“We are thrilled that we’ve been able to successfully execute on our plans and provide a great outcome to Provident and its customers, employees, and stakeholders,” added Steven Muzzo, founder and CEO of both Provident and OZZ. “Third Eye really understands our business and appreciates the synergistic power of OZZ’s deep industry relationships and 1,200 dedicated employees across Canada and the U.S. We look forward to working with them again in the future as we spin-out new sustainable businesses in the electrical energy space.”

About Third Eye Capital

Third Eye Capital is one of Canada’s largest and most experienced private debt firms, specializing in providing capital solutions to companies that are underserved or overlooked by traditional sources of financing, primarily banks. The firm’s strategic approach to asset-based financing empowers businesses to thrive and accelerate growth in their core operations. From navigating through periods of extreme distress to embracing moments of extraordinary change, Third Eye Capital excels at executing opportunities that other lenders simply cannot or will not pursue.

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Third Eye Capital Corporation (“Third Eye Capital”), Canada’s leading provider of asset-based financing solutions to companies that are underserved or overlooked by traditional sources of capital, confirmed today that it has substantially exited its investment in Pieridae Energy Limited. (TSX: PEA). Through Erikson National Energy (“Erikson”), a special purpose entity, Third Eye Capital made a net loan of $200 Million to a subsidiary of Pieridae Energy in October 2019, which was repaid primarily through financing from Prudential Private Capital and Voya Investment Management. Through to today, Erikson has received over $370 Million in cash payments comprising principal, interest, and fees. Erickson will retain a $20 Million short-term, senior secured loan at Pieridae Energy,, and currently owns an approximately 15% stake in the common stock of Pieridae Energy.

Mark Horrox, Principal at Third Eye Capital commented: “We backed Pieridae Energy to complete a transformational acquisition at a time when capital allocation to Canadian oil and natural gas businesses was scarce. Our analysis proved correct and Pieridae has successfully positioned itself as an environmentally conscious market leader in Alberta’s Foothills region, delivering substantial benefits to our investors. We are excited to continue our support for Pieridae’s growth journey.”

Arif Bhalwani, CEO at Third Eye Capital highlighted his firm’s investment approach: “This is another example of how Third Eye Capital can unlock value for asset-rich companies, even when their assets are out of favour or too complex for mainstream lenders. At a time when uncertainty reigns, we can provide critical financing and strategic guidance to help companies solve problems.”

About Third Eye Capital

Founded in 2005, Third Eye Capital is Canada’s leading provider of asset-based financing solutions to companies that are underserved or overlooked by traditional sources of capital. With a proven track record of nearly $5 billion in lending commitments across more than 125 portfolio investments, Third Eye Capital is one of the most experienced private debt firms in Canada. From navigating through periods of extreme distress to embracing moments of extraordinary change, Third Eye Capital excels at executing opportunities that other lenders simply cannot or will not pursue. Third Eye Capital actively engages with a company’s key assets to bridge the gap between their perceived value and actual worth, and provides access to capital and expertise that enables portfolio companies to flourish.

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In cooperation with Universal Investment, Third Eye Capital is pleased to be a part of the Breakfast with Champions Tour Germany 2022: Credit & Markets

5 Sept. Hannover | 6 Sept. Dusseldorf | 7 Sept. Munich

During the special breakfast meetings, Universal Investment and ICF Institutional Capital Forum will gather a cross-section of industry participants to exchange views on current market developments, various credit strategies and their activities in Europe and North America.
Planned topics:

• Private Debt – Key building block for a diversified portfolio
• Senior Secured Loans – Attractive asset class for a diversified liquid credit portfolio
• Infrastructure Debt Capabilities
• Private Debt meets Digital Lending – The perfect symbiosis to complement the investment strategy
•  Canadian Direct Lending Opportunities

5 September 2022
08:30 – 11:45 am
Sheraton Hannover
Pelikan Hotel
Pelikanplatz 31
30177 Hannover

6 September 2022
08:30 – 11:45 am
Steigenberger Parkhotel
Königsallee 1a
40212 Dusseldorf

7 September 2022
08:30 – 11:45 am
Hotel Vier Jahreszeiten Kempinski
Maximilianstr. 17
80539 Munich

Participation in the breakfast seminars is free of charge for representatives of institutional investors, CFOs and corporate treasurers. Advisors to institutional investors are also welcome to attend.

CLICK HERE TO REGISTER NOW

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Third Eye Asset Management Inc. (“TEAM”), an affiliate of Toronto-based alternative capital firm Third Eye Capital (“TEC”), is pleased to announce the initial closing of TEC Credit Income Fund (the “Income Fund) with approximately $201 Million of subscriptions of preferred units.1 TEC and its employees have invested a total of $29 Million, including $23 Million in common shares, which provides first loss protection for investors and the pre-funding of an income reserve. The Income Fund is targeting a total raise of $500 Million, which may be increased due to investor demand.

The Income Fund was formed to transition the Third Eye Capital Alternative Credit Trust (“ACT Fund”), managed by TEAM, into a longer, fixed-term investment vehicle that better aligns with the liquidity profile of the underlying loan investments and to meet demand from institutional and high net worth investors for a more predictable, stable-return exposure to TEC’s special situations credit strategy.

The Income Fund is an Ontario limited partnership that will operate as a “feeder fund” and will invest substantially all of its assets in TEC Credit Income Master Fund (the “Master Fund”), a Cayman Islands limited liability company. The Income Fund, the Master Fund and other entities that invest in the Master Fund or hold investments on their behalf (collectively the “TCI Funds”) are all managed by TEAM. In addition to being open to Canadian accredited investors, the TCI Funds have been structured to attract capital from investors globally.

Some of the significant benefits of the Income Fund include:

• an innovative, efficient investment structure that will provide investors with consistent returns and first loss protection on credit losses;
• the option to participate in gains from the equity kickers and other similar participation interests in portfolio companies granted to the TCI Funds in connection its loan portfolio;
• lower costs than ACT Fund with no management or performance fees charged to investors in the TCI Funds; and
• true alignment of the interests of TEAM with investors through its first loss protection and ongoing maintenance of cash reserves.

Arif N. Bhalwani, CEO of TEC, commented, “We are grateful for the confidence shown by existing ACT Fund investors and new clients in backing our mission to help unloved and overlooked Canadian companies that are undergoing change or complex situations access strategic capital to grow. The Income Fund allows investors to generate attractive fixed returns and the option for equity upside without the volatility and fee drag normally associated with private debt funds.”

Davies Ward Phillips & Vineberg LLP in Toronto and Maples Group in Cayman Islands acted for TEAM in the establishment of the TCI Funds.

About Third Eye Capital

Founded in 2005, Third Eye Capital (“TEC”) is Canada’s leading alternative capital provider to businesses in transition. Through its unique combination of tailored financing and value-added operational expertise, TEC empowers talented management teams to seize opportunities and realize growth potential more quickly and effectively. TEC has made approximately $4 Billion in investments across a diverse set of industries including technology, sustainability, traditional and alternative energy, mining, construction services, and transports.

¹Only “Accredited Investors” (as defined under Canadian securities laws) who are sophisticated investors may subscribe for units of the Income Fund. This press release does not constitute an offer or solicitation to sell or a solicitation of an offer to buy interests in the TCI Funds.

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Through a unique combination of flexible capital and strategic and operational insights, Third Eye empowers growing companies that are underserved and underappreciated by other capital sources. Founded in 2005 by Arif Bhalwani and David Alexander, Third Eye currently manages approximately C$2.8 billion for a diversified client base of primarily Canadian institutional and high net worth investors.

“Kudu’s investment allows us to enhance our already significant alignment with clients and help us launch new funds in the evolving Canadian private credit markets,” said Bhalwani, Third Eye’s CEO. “With our strong track record of helping portfolio companies successfully manage complex change events ranging from extreme distress to hyper growth, Third Eye has become a preferred alternative capital provider for Canadian management teams.”

“We chose to partner with Kudu for several reasons, including its permanent capital structure, shared vision, and a cultural alignment that was clear from the moment we met,” added Bhalwani. “Kudu’s preference for minority positions fully aligns with Third Eye’s growth ambitions, without altering our processes, timelines or continued independence and majority employee ownership.”

“There is so much to admire in Third Eye,” said Rob Jakacki, CEO of Kudu. “Our mission has always been to back extraordinary management teams and provide them the capital and support for their growth. Third Eye has a best-in-class team and a distinctive business model that gives it a unique edge in the expanding alternative credit markets in Canada. We are honored to partner with them.”

With the addition of Third Eye as its first investment in Canada, Kudu now has investments in 16 partner firms (including two managed for a third party) domiciled in the U.S., Canada, the U.K. and Australia. Kudu-affiliated asset and wealth managers collectively invest US$91 billion (C$115 billion) on behalf of individual and institutional investors worldwide in traditional and alternative strategies, as of June 30, 2021. Founded in 2015, Kudu has more than US$650 million (C$823 million) in capital commitments to date.

RBC Capital Markets served as financial advisor and Bennett Jones, LLP was legal counsel to Third Eye. Osler, Hoskin & Harcourt, LLP and Seward & Kissel LLP served as legal advisors to Kudu.

About Third Eye Capital
Based in Toronto, Third Eye Capital is a leading Canadian private credit firm providing tailored financing and value-added operational expertise to its portfolio companies. Since 2005, Third Eye Capital has directly invested more than C$3.5 billion in over 100 financings for non-sponsored companies operating across a diverse set of industries, including the sustainability sector, natural resources, technology, financials, healthcare, media, food and hospitality, transports and construction services. For more information, please visit www.thirdeyecapital.com.

About Kudu Investment Management
Kudu provides long-term capital solutions—including generational ownership transfers, management buyouts, acquisition and growth finance, as well as liquidity for legacy partners—to asset and wealth managers globally. Kudu was founded in 2015 and is backed by capital partner White Mountains Insurance Group, Ltd. (NYSE: WTM). For more information, please visit Kudu’s website.

Media Contacts

For Kudu:
Sarah Lazarus
CL-Media Relations, LLC
M: +1 617-335-7823
sarah@cl-media.com

Richard Chimberg
CL-Media Relations, LLC
M: +1 617-312-4281
rich@cl-media.com

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Looking ahead, access to finance is likely to be a critical factor for SMEs and mid-sized businesses as they adapt and modernise in response to COVID-19 as well as newer trends in customer demand and behaviour.

With traditional bank lending more difficult to secure, private credit works to fill this financing gap.

It is therefore essential to cultivate more sources of capital to support businesses across Canada.

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The post ACC Borrower Guide Canada: Guide to Private Credit for Borrowers and Investors appeared first on Third Eye Capital.

CSE Utility Management Inc., a company controlled by Steven Muzzo, 2158815 Ontario Inc., a company controlled by Douglas Skrepnek, and certain senior management today announced the completion of their acquisition of Cricket Energy Holdings Inc. (“Cricket’), a Canadian provider of smart home energy/metering solutions and consulting services, in a transaction valued at over $200 Million. The transaction was financed by Third Eye Capital.

“We launched Cricket in 2012 and followed up quickly in 2014 with the acquisition of Provident Energy Management (“Provident”) and EQ Building Performance (“EQ”). Through our dedicated staff and relationships with some of Canada’s largest real estate developers and managers, we have become a leading provider of energy sub-metering services, energy management services, home comfort equipment, and building sustainability consulting,” said Steven Muzzo, CEO of Cricket on behalf of the acquisition group. “This transaction allows management to accelerate our business plan and expand Cricket’s offerings into its existing and growing installed base of customers.”

“Cricket is one of the fastest growing companies in this industry and its range of high-quality services help drive energy conservation, reduce emissions, and alleviate stress on power grids. We are excited to partner with Steve, Doug, Marco Pisterzi and the rest of the exceptional people at Cricket to ensure its ongoing success,” commented Arif N. Bhalwani, CEO of Third Eye Capital.

This transaction also aligns ownership interests of Cricket/Provident and OZZ Group Inc. (“OZZ”), allowing the companies to more strategically respond to growing demands in the new construction market. Cricket/Provident/EQ will leverage OZZ’s strong relationships in Vancouver and Seattle to expand beyond their Ontario footprint.

About Cricket Energy

Cricket Energy is a leading home services and smart energy solutions company founded that provides (i) rental water heaters, home heating, ventilation, HVAC and air conditioning systems to new and existing residential markets in Ontario, (ii) multi-residential metering solutions including thermal, gas, electricity, and water metering, and (iii) consulting services to developers and building owners on energy modeling, sustainability and the creation of more resource efficient, comfortable and resilient places to live and work.

About Third Eye Capital

Founded in 2005, Third Eye Capital (“TEC”) is Canada’s leading alternative capital provider to good businesses undergoing change. Through its unique combination of tailored financing and value-added operational expertise, TEC empowers talented management teams to seize opportunities and realize growth potential more quickly and effectively. TEC has made more than $3 Billion in investments across a diverse set of industries including technology, energy, alternative energy, mining, construction services, and transports.

This news release may contain forward-looking statements that are based on Cricket Energy and TEC management’s current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. Cricket Energy and TEC are under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

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