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OPPORTUNITY IN THE BLUE-CHIP MEZZANINE LENDING SPACE

5 MIN WATCH

June 16, 2022

Opportunity in the blue-chip mezzanine lending space

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

Key takeaways

  • Mark Rubenstein, managing director of HPS's mezzanine credit strategy (SIP), describes the basics of mezzanine lending and the opportunity in the space.
  • Mezzanine lending is lending at the junior part of the capital stack (with secondary claims to assets in the event of bankruptcy) and can be fixed or floating loans.
  • These strategies typically have net returns in the low teens with some equity-like upside. If you lend to blue-chip companies, the downside is more protected - and there is a lot of demand from companies with few credit suppliers.
  • Mezzanine lending is attractive to companies seeking creative and flexible long-term capital partners, which could drive growth in the asset class.

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