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HPS' CREATIVE MEZZANINE LENDING TO BLUE-CHIP COMPANIES

5 MIN WATCH

June 15, 2022

HPS' creative mezzanine lending to blue-chip companies

Mark Rubenstein - Head of Strategic Investment Partners at HPS
Private Credit

Key takeaways

  • Mark Rubenstein, managing director at HPS, describes the mezzanine lending strategy of their Strategic Investment Partners fund family.
  • They lend in the junior part of the capital stack (so the higher-returning, higher-risk debt) to blue-chip, anti-cyclical companies that they believe to be recession proof.
  • They target 11-14% net IRRs - predominantly from income, with some equity upside - for these funds and historically have reached that target.
  • They are one of the largest players in this market so can structure loans to protect their downside and get good deal flow. Their main competition is the high yield market, but they're a more flexible capital provider.

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