Rising demand for mezzanine finance
In recent years, we have observed an increasing demand for financing for small and medium-sized companies as an alternative or supplement to banks. In Germany, we generally see the need for mezzanine as an alternative to equity investments, i.e. primarily in growth situations, for example to expand working capital or for investments in fixed assets or add-on acquisitions. The advantage of subordinated loans here is on the one hand the transparent and plannable remuneration and term, but also in particular the independence of the company. This is currently also reflected in the high demand and in our deal pipeline.
BRIGHT CAPITAL is an independent direct lending fund with offices in Frankfurt and Munich. In addition to mezzanine in the form of subordinated loans, we can also invest in unitranche. With our fund, we invest in small to medium-sized companies in German-speaking countries with sales of generally up to EUR 100 million. We invest up to 10 million euros per transaction. With co-investors, even beyond.
Mezzanine financing can be useful in many situations, for example in growth situations and expansion phases, for company successions and shareholder changes, for acquisition financing and for optimizing the financing structure. However, mezzanine primarily makes sense in growth situations. Often as a complement to existing banks.
BRIGHT CAPITAL pursues an entrepreneurial investment approach. Financing is structured individually and in cooperation with management to suit the company’s situation. In this context, we particularly often see companies in growth situations. Typical financing occasions for companies in growth phases are the development of new markets, the introduction of new products or the acquisition of new customers. This usually requires funding beyond existing equity and existing working capital lines. Mezzanine with economic equity character provides the necessary funds for successful expansion and at the same time leads to a strengthening of the balance sheet. With mezzanine in the form of subordinated loans, the shareholders benefit fully from the positive performance of their company.
On transactions, we see a handful of funds in Germany with a comparable investment focus in terms of company size and strategy. The market for direct lending and private debt in German-speaking countries is only just beginning to develop. However, demand on the corporate side has risen steadily in recent years. Currently, the market is still dominated by investors from the Anglo-Saxon region. However, these usually target companies with much higher financing needs and often operate with teams from London in Germany.
Our strengths lie in the individual structuring of financing solutions, the transparency and predictability of our offer, as well as our speed of execution and the entrepreneurial independence of the company. Our investment team looks back on many years of experience as entrepreneurs, advisors and investors. We all have a very mid-market background and bring not only structuring expertise but also an extensive network in the lower mid market. In transactions, we are also supported by experienced industry experts.
About Karsten Batran
Karsten Batran is Managing Partner at BRIGHT CAPITAL. Mr. Batran has worked in investment banking and corporate finance for many years. Before founding BRIGHT CAPITAL, he worked for Berenberg Bank in Frankfurt, among others. Previous stations include Sal. Oppenheim and Horváth & Partners Private Equity & Investors as well as Siemens and Porsche. In the course of his activities, Mr. Batran has assisted a large number of companies in their further growth and financing.
About Bright Capital
In close cooperation with a broad network of banks, investors and industry experts, BRIGHT CAPITAL invests in successful small and medium-sized companies. We provide private debt in the form of subordinated loans, thus offering companies and entrepreneurs an independent financing alternative.