Babson Capital – Company Profile

Mezzanine financing company overview

Mezzanine firm logo:

Babson Capital - mezzanine financing company logo

Headquarters location:

United States

Typical mezzanine financing range:

Undisclosed

Geographic focus:

Global

Industry focus:

Industry agnostic

Company profile

Babson Capital Management (Babson) is a global investment management firm with investment teams on four continents managing more than $200 billion in assets for clients in more than 20 countries around the world. The firm’s experience and expertise in a wide variety of traditional and alternative asset classes, including global high yield loans, structured credit, private debt and real estate, provide visibility and access to investment opportunities for both their institutional and wealth advisory clients.

At Babson, they build strong and enduring partnerships by listening to their clients and leveraging their proven capabilities to meet their unique needs. More than investing, they are invested ‒ invested in creating customized solutions; invested in developing strategies based on a rigorous research process and consistent risk controls; and invested in expanding the investment landscape to help their clients meet their objectives.

History overview

With a legacy spanning nearly 75 years, Babson possesses a unique and compelling history. The firm’s roots trace back to 1940, when David L. Babson created an equity-focused investment management firm, David L. Babson & Co. in Cambridge, Massachusetts. In the decades that followed, David L. Babson & Co. became a highly regarded growth-equity investment manager and was acquired by Massachusetts Mutual Life Insurance Company (MassMutual) in 1995.

MassMutual’s purchase of David L. Babson & Co. sparked a new era in Babson’s history. Through a combination of strategic acquisitions and organic growth during the past 20 years, Babson has evolved into a leading global institutional asset management firm with more than $200 billion in assets under management, operations on four continents and clients in more than 20 countries. The firm was rebranded as Babson Capital Management in 2004.

While the present-day Babson looks very different than its David L. Babson & Co. predecessor, notable elements of the original firm remain, including a rigid adherence to fundamental bottom-up investing, an unwavering focus on client service and a corporate culture with integrity deeply ingrained at its core. Their flagship publication, The Babson Capital Staff Letter ‒ first published in 1940 ‒ remains as the centerpiece of the firm’s thought-leadership platform, providing clients with distinctive investment insights and a window into the thinking of Babson’s senior investment professionals.

Babson is a client-centric investment management firm where client relationships are viewed as partnerships dedicated to building long-term value. This philosophy has guided the firm for nearly 75 years, and remains the foundation of their business today.

Babson has established a global footprint to help uncover and provide access to a superior range of investment opportunities. With offices on four continents, they maintain a local presence in several strategic locations, gaining deep insights and detailed knowledge in these important markets. Their global presence enriches their understanding of market conditions and specific investment opportunities.

Subsidiaries

Babson is part of the MassMutual Financial Group, which includes Baring Asset Management and Oppenheimer Funds. Babson also has two wholly owned asset management subsidiaries: Cornerstone Real Estate Advisers and Wood Creek Capital Management.

Cornerstone Real Estate Advisers

Babson’s wholly owned real estate subsidiary, Cornerstone, is one of the largest and most diverse real estate investment organizations in the world, investing across all four segments of the real estate market – public and private equity and debt – and offering its services through a comprehensive range of investment vehicles.

Headquartered in Hartford, Conn., Cornerstone partners with Babson to provide integrated solutions to meet their clients’ needs. Cornerstone has office locations around the globe, including Amsterdam, Helsinki, London, Stockholm, Rotterdam, Frankfurt, Tokyo, Hong Kong, Los Angeles, Dallas, Chicago and Washington, D.C.

Wood Creek Capital Management

Wood Creek Capital Management is a wholly owned subsidiary of Babson, focused on real asset investments. Wood Creek Capital is a leading asset manager in niche tangible and intangible (real) assets, which includes investments in global agricultural resources, intellectual property, pharma and reinsurance.

Affiliates

Baring Asset Management

Baring Asset Management (Barings) is a global investment management firm with offices, clients and business lines spanning the world’s major markets. Barings provides asset management services in developed and emerging equity and bond markets on behalf of institutional and retail clients worldwide. Like Babson, Barings is an affiliate of MassMutual.

OppenheimerFunds

OppenheimerFunds, Inc. (OFI), also a MassMutual subsidiary, was founded nearly 60 years ago and through its affiliates offers a full range of investment solutions across equity, fixed income and alternative asset classes to institutional clients globally and retail mutual fund investors.

Differentiating factors for Global Private Finance solution (which provides mezzanine capital)

  • Direct Origination: They source global investment opportunities across a spectrum of risk/return profiles. They directly originate and underwrite every deal they invest in and have the ability to create highly customized portfolios to meet various investor needs.
  • Scale and Expertise: Large, global team and 20+ years of experience as a consistent leader in the market all supported by Babson’s global enterprise and corporate infrastructure.
  • Alignment of Interest: They typically invest their own capital alongside their clients.
  • Local Teams with Global Perspective: Access to global deal flow to access potential attractive opportunities.
  • Partnership-based Investment Approach: Long relationships include L.P. commitments to buyout funds and recurring deals with sources.
  • Proven Track Record: Across regions, asset classes and credit cycles.

Investment philosophy/criteria

Within Global Private Finance (with Assets under Management reaching $3.21 billion, as of June 30, 2015), Babson offers mezzanine financing. This product is described in more detail here.

Global Private Finance team of over 40 dedicated investment professionals located in North America, Europe and Asia Pacific is focused on providing investors access to unique opportunities up and down the debt capital structure.

The team believes a solution focused culture, a partnership approach, an ability to source diverse investment opportunities through global networks, and the capability to maximize value through an entire investment life-cycle are the keys to generating attractive risk-adjusted returns in this asset class.

The firm looks for opportunities that possess the following characteristics:

  • EBITDA $5-75 million (and larger for Asia Pacific)
  • Enterprise values of $50-500 million
  • Industry agnostic
  • Geographic focus:
    • North America
    • Europe
    • Asia
    • Australia / New Zealand

Typical financing solution is utilizing one of the following structures:

  • Senior secured loans
  • Second lien
  • Unitranche
  • Mezzanine debt
  • Equity co-investments

Website links

Company Home Page Link:


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