GE Capital announces expansion after acquisition of Heller Financial

GE Capital has announced that following the acquisition of Heller Financial Inc in October 2001, it is expanding its leveraged finance operations in Europe. Heller Financial’s European Group has been renamed GE Capital European Leveraged Finance and is looking to enter a growth phase, expanding GE Capital’s presence in mid-market European cash flow leveraged transactions. Graham Randell, who continues to lead the team, states that around 90% of the group’s business will be cash flow leveraged transactions, with 10% asset-based transactions. The bulk of the group’s business is expected to come from the private equity sponsor community, with the remainder generated by the investment-banking sector. GE Capital European Leveraged Finance will continue Heller Financial’s ‘one stop shop’ approach to transactions combining senior debt and mezzanine with selective minority equity investments, and also continue its fund investment programme. Any concern that Randell has over being temporarily out of business during the integration with GE, is, he says, allayed by the strong business relationships Heller Financial has built in the industry since its launch in June 2000. Commenting on the air of trepidation that hung over the market in the latter half of 2001, especially over debt providers, Randell suggests that some institutions may have been influenced by portfolio problems that Heller itself had avoided through youth. The team has gone from eight members to 13 since the acquisition by GE Capital, and is looking to hire three more. Based in London 75% of the group’s business is UK-based, with the remainder on the continent. Despite being a larger team with access to greater funds, Randell insists that GE Capital European Leveraged Finance will not migrate upwards for lead arranger roles from mid-market transactions, which he defines as those up to ø300m. As he says, 16 is still a small team size and at this stage he does not want to tie up a lot of resource in seeking to lead larger deals that could take a lifetime to close. This said, the group do see themselves as a good partner for the major investment banks leading the largest deals and will be prepared to commit support up to EUR 300 million. The group has a strong existing client base in the mid-market and at the moment there are around 12 deals being looked at by the team, with two or three at a fairly advanced stage.

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