CORPORATE FINANCE ®
MERGERS & ACQUISITIONS
US Capital Global provides buy-side, sell-side, and divestiture financing and advisory for mergers and acquisitions (M&A),
specifically for the emerging growth and middle market arena ($5 million to $150 million in revenue or enterprise value).
Business acquisition and business sale services with financing at the firm are provided by US Capital Global Securities, LLC,
a registered broker-dealer and member of FINRA and SIPC.
US Capital Global’s team of seasoned senior bankers have significant M&A experience in the middle market, having
successfully completed numerous transactions in that market across a wide range of industries. The firm offers clients
a personalized service, creative solutions, and the ability to close transactions quickly and on the best possible terms.
Sell-Side M&A Representation Buy-Side Services for Private Equity Groups
& Corporate Development
US Capital Global utilizes its wide network of economic,
strategic, and private equity buyers to bring clients the US Capital Global generates deal flow through an in-house
highest market valuation. team of experienced research professionals focused on
meeting the client’s specific investment criteria.
The firm has experience with a wide range of sellers,
having represented: US Capital Global buy-side services offer the firm’s private
• Family-owned and founder-owned companies in equity and corporate acquirers:
• Superior deal flow
obtaining liquidity • Proactive representation in the “search environment”
• Owners implementing an exit strategy • Leverage of large proprietary database
• Companies obtaining growth capital • Financially qualified targets
• Public companies going private • Analytical support for business valuation and deal structuring
• Corporations divesting a division or product line • Completion on the best possible terms
• Shareholders in facilitating management buyouts
TEAM ATTRIBUTIONS www.uscapglobal.com
Tel +1 415 889 1010
WHAM-O MARKETING, INC. WASTE MANGEMENT COMPANY TECTURA CORPORATION BIO FUELS MANUFACTURER AGPRO EXCHANGE, LLC
BRIDGE TO MULTI-MILLION BRIDGE FOR $40 MILLION $21 MILLION $24 MILLION ADVISORY ON
DOLLAR TRANSACTION ACQUISITION PROGRAM ADVISORY FINANCING MULTI-MILLION DOLLAR EQUITY
TRANSACTION
AIRSIGN DIGITAL ENTERTAINMENT IRON ORE COMPANY FIRST CAPITAL REAL ESTATE
COMPANY INVESTMENTS, LLC
M&A ADVISORY ON SELL SIDE
ACQUISITION OF VAN WAGNER BUY SIDE ADVISORY BUY SIDE
ADVISORY ADVISORY
Patrick Steele
Partner, Asset Management
Mr. Steele is responsible for all aspects of US Capital Global’s wealth management services,
investment advisory services, and client relationship management. Mr. Steele is a financial
services professional with more than 30 years of experience. Before joining US Capital
Global, Mr. Steele was a Managing Director at First Republic Bank’s investment management
group. He also held positions as a Senior Vice President at Bernzott Capital Advisors and as
a Regional Officer at The AYCO Company, a Goldman Sachs subsidiary.
REAL ESTATE ®
REFINANCING, ACQUISITION FINANCE, PROJECT FINANCE, EQUITY & DEBT
Real estate and construction are increasingly offering growth opportunities, but they also require significantly higher levels
of capital expenditure. Structuring and securing the right business financing is therefore essential.
US Capital Global’s real estate finance team understands the industry and the challenges owners and CFOs face. The firm
has deep experience in financing businesses across a wide range of real estate sectors, including residential, commercial,
and industrial, and also in the hospitality industry.
US Capital Global RE Financing Solutions
• Commercial Real Estate
o Hotels and Hospitality
o Shopping Malls
o Offices and Storage
o Project Development Financing
n Debt and Equity
n Construction and Development
n Bridge Loans
n Refinancing
• Residential Real Estate
o Residential Income
o Residential Fix and Flip
Typical Structures for Senior or Subordinated Loans:
• Senior Loan Size: $1,000,000 to $250,000,000
• Subordinate/Junior Loan Size: $1,000,000 to $50,000,000
• Company Type: Private companies or publicly traded
• Location: US and select worldwide locations
US Capital Global has a reputation for being an innovator in
the real estate and construction financing space. Over the past
24 months, the group has already provided well over $500
million in financing or advisory for small to lower middle market
businesses that serve the North American real estate and
construction industries.
The US Capital Global group has a history of successful closings
in the commercial and residential real estate sectors. In most
cases, we are able to structure and provide financing from our
own balance sheet, through our business credit fund and our
real estate credit fund, offering flexibility and efficiency in all our
transactions.
REAL ESTATE www.uscapglobal.com
Tel +1 415 889 1010
Example Transactions
Visit our ‘Transactions’ website page and click on the tombstones below for further details about these selected transactions.
LUXURY HOME BLUE TIDE PARTNERS SAVA HOLDINGS, LTD. 1313 FRANKLIN, LLC LA QUINTA INNS & SUITES
DEVELOPER HAMILTON, LLC
$55 MILLION $21 MILLION $7 MILLION
$17.8 MILLION $25.5 MILLION ADVISORY ADVISORY ADVISORY
REFINANCING FINANCING
PAUL RYAN TORA VENTURES STEVEN COUNTS, INC. CAPRIATI CHELLINO CRANE, INC.
ASSOCIATES, INC. CONSTRUCTION CORP.
FOLLOW-ON $4 MILLION $500,000
$10.6 MILLION FINANCING REFINANCING $3.25 MILLION FINANCING
ADVISORY ADVISORY
Experienced Management Team
Jeffrey Sweeney Charles Towle Ish Spencer Terresa Grobecker
Chairman & CEO Managing Partner Partner, Corporate Finance Senior Vice President
EXECUTIVE MANAGEMENT
JEFFREY SWEENEY CHARLES TOWLE
CHAIRMAN & CEO MANAGING PARTNER
The founder of US Capital Global, Mr. Towle has helped grow US Capital
Mr. Sweeney has a strong entrep- Global into a leading private financial
reneurial approach, which he has group for small and medium-sized
applied in the investment banking businesses in the U.S. A structured
and equipment leasing arena for funding and corporate finance specialist,
over 20 years. In 1998, Mr. Sweeney purchased the Mr. Towle has over 15 years of business development,
assets of US Capital Corporation, a small equipment asset management, corporate finance, capital markets,
leasing company. Changing the focus of the company and general business management experience. Prior
to asset-based lending and investment banking, to US Capital Global, Mr. Towle gained extensive
Mr. Sweeney grew the business to over $4 billion in entrepreneurial and investment experience, serving as a
funding opportunities each year. Today, he oversees limited partner, financial officer, or board member of various
a growing network of affiliated companies under the investment and endowment funds and small and medium-
US Capital Global flagship brand. sized businesses, both in the U.S. and abroad.
JAMES BATY, PH.D. TERESA GROBECKER
PARTNER PARTNER, REAL ESTATE
Dr. Baty is a specialist in the design, Teresa Grobecker is a Partner at US
implementation, and management of large- Capital Global. Coming to the firm
scale distributed information technology. with a wealth of financial and real
With 20 years in the industry, Dr. Baty has estate expertise, Ms. Grobecker has
served as the lead architect for multiple brokered hundreds of transactions
national ISP systems and for a major internet stock brokerage for her clients and agents, which have included traditional,
system. He has also architected several global messaging probate, bankruptcy, short sales, and foreclosure situations.
networks for international banks, as well as the reliability Deeply interested in real estate, FinTech, investments, and
design of a multi-continent international financial trading leadership in every form, Ms. Grobecker skillfully navigates
system for international financial institutions. He has provided the challenges of the industry to support both her clients
performance and capacity consulting for some of the Internet’s and her team in achieving successful transactions and the
highest volume transaction systems. fulfillment of personal goals.
ISH SPENCER PATRICK STEELE
PARTNER, CORPORATE FINANCE PARTNER, ASSET MANAGEMENT
Mr. Spencer is responsible for directing Mr. Steele is responsible for all aspects of
all aspects of US Capital Global’s US Capital Global’s wealth management
nationwide Corporate Finance business services, investment advisory services, and
origination program, business development, client relationship management. Mr. Steele
underwriting of commercial loans, and is a financial services professional with
client relationships. Mr. Spencer brings extensive multi- more than 30 years of experience. Before joining US Capital
disciplinary experience to US Capital Global, including special Global, Mr. Steele was a Managing Director at First Republic
expertise in particular verticals, such as healthcare, technology, Bank’s investment management group. He also held positions
and manufacturing. He oversees US Capital Global’s deal as a Senior Vice President at Bernzott Capital Advisors and as
teams at the group’s San Francisco headquarters, made up of a Regional Officer at The AYCO Company, a Goldman Sachs
banking professionals, business analysts, and underwriters. subsidiary.
®
US CAPITAL GLOBAL
IN THE MEDIA
US Capital has been quoted and featured in
leading publications including:
If you would like to know more about how your business can secure the funding it needs, visit
www.uscapglobal.com or call +1 415 889 1010
Follow us /uscapglobal
US Capital Global provides sophisticated debt, equity, and
investment products to lower middle market companies and
® investors, using the latest FinTech and RegTech innovation.
MANIFESTO HOLDING PLC EXAMPLE TRANSACTION
OF THE FUND
£5 MILLION
TERM LOAN MANIFESTO HOLDING PLC
Events and venues company
COMPANY OVERVIEW
Manifesto brings an innovative and unique perspective to the events, club and venue entertainment sector with a focus on
lifestyle, culture and creativity. In operation since 2008, Manifesto has built a loyal brand following, coupled with a long-standing
reputation for its venues in Paris’s entertainment sector. With a view to consolidating existing venues and creating a holistic
hospitality brand, Manifesto Holding Plc was created in 2017. The consolidated parent company consists of entertainment
venues, Wanderlust, White Horse (NF 34) and members only club, Silencio. The group also has ownership of two additional
multi-entertainment venues, L’Entrepôt & Co, which includes Pressensé, and Saint Germain, both from which it receives
management fees as a percentage of each venue’s revenues. L’Entrepôt & Co and Pressensé are a cinema, restaurant and
concert venue in Paris. The venue opened in 1975 and has a strong reputation with a loyal client base; the venue comprises
three cinemas and a 200-seat restaurant. Saint Germain includes a 200-seat cinema, a restaurant and an event space.
EXPANSION FOCUS
1. Venue Investments – Enhancing & Expanding existing venues
Make investments to expand and enhance current venues to increase capacity and entertainment variety, for example
through the extension of the rooftop and addition of creative work, event and restaurant spaces.
2. Acquisition & Development of venues
Manifesto plans to acquire and develop hotels in urban and countryside areas in line with its theme of culture and creative
arts. The group has identified target acquisitions and is under discussions.
3. Lifestyle Entertainment - Creation of a unique hospitality group
Manifesto is looking to build on its successful portfolio to create a unique, holistic entertainment group focused on media,
lifestyle and the creative arts, similar to notable brand SBE Entertainment Group.
ADDRESSABLE MARKET & TRENDS
Changing demands in the entertainment industry have resulted to a shift
in global trends to include the Third Space and Experimental Nightlife.
The former bridges the gap between bar and club by combining multiple
venues – restaurants, bars, clubs - into one. Manifesto’s enhancement
of Wanderlust through the rooftop extension, enhancement of White
Horse (NF 34) and addition of a restaurant and concert hall will put the
company in a position to meet this growing trend. The latter changes
the way in which traditional nightlife is typically viewed by holding
branded and themed events. Manifesto’s focus on a specific theme –
Arts & Culture enables it to meet this increasing trend.
Silencio Member’s Club
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555 Montgomery Street, Suite 1501 F +1 415 358 5665
San Francisco, CA 94111 uscapglobal.com
WWW.USCAPGLOBAL.COM
® TEL +1 415 889 1010
EXAMPLE TRANSACTION OF THE FUND
Transaction Description: Manifesto Holding PLC is Seeking a £5,000,000 Term Loan for 36 Months at 12.5% to expand the
brand with the enhancement, expansion and addition of venues and entertainment areas and with a view to adding hotels
to its portfolio in the future.
CURRENT OVERVIEW & STATUS OUTLINE OF USES
Manifesto has experienced significant growth and Wanderlust Rooftop Extension –
stability, with the following key achievements: Installation and extension of rooftop to increase capacity
YoY revenue growth of 40% and YoY EBITDA growth of and ability to entertain guests during the winter season.
over 70% for Wanderlust from 2017 to 2018. White Horse (NF 34) –
Extension and upgrade of the current electronic club
Strong brand in place with stable and increasing historic located within Wanderlust to increase capacity
and projected revenues for Silencio at £2M-£3M per year. Le Dada –
Construction of a Concert Hall adjacent to Wanderlust, in
The company expects growing success through its response to demand for this in the area
existing profitable venues, leveraging its unique market La Cantine –
position to further develop the Wanderlust site and Construction of a restaurant with a terrace
expand the Manifesto brand.
Expected EBITDA at year 3 is forecast at £3.98M.
MANAGEMENT Silencio Member’s Club
Arnaud Frisch – Chief Executive Officer
Antoine Caton – Director of Operations & Co-Founder
Coralie Gauthier – Artistic Director
Nathalie Thépot – Chief Financial Officer
MANIFESTO VENUES White Horse (NF 34), in adjacent locations, are on the River
Seine and Silencio is a members-only club.
Manifesto’s venues are profitable and popular in Paris, with
over 600,000 visitors having attended the group of venues in The group targets the arts & creative customer base, for which it
the past twelve months. has developed brands and concepts recognized internationally
and which value luxury and the French art of living.
All venues are under the control of Manifesto Holding plc.
Each place created, developed or managed by Manifesto meets
A leading player in the French hospitality industry, Manifesto a specific type of cultural vocation, for which the group works in
adopts an unconventional and unique approach to the events, collaboration with institutions of the world of contemporary art
club and venue experience with locations being designed with including: V&A in London; PS1 in New York; MuseumModern
creativity and culture as the central theme. In addition to this, Art; Palais de Tokyo FIAC; Nuit Blanche in Paris, Fashion (Galliéra
Manifesto hosts a range of arts and culture focused events – Museum, Fashion Week); Cinema (Cinémathèque, mk2);
from concerts, galas, fashion shows, art galleries and cinema Photography (Photo, MEP); Design (Museum of Decorative Arts,
premieres to yoga classes. • Designer’s Days, Design Week).
Currently, Wanderlust, White Horse (NF 34)and Silencio are
within the consolidated parent company. Wanderlust and
If you would like to know more about how your business can secure the funding it needs, visit
www.uscapglobal.com or call +1 415 889 1010
Follow us /uscapglobal
US Capital Global provides sophisticated debt, equity, and
investment products to lower middle market companies and
® investors, using the latest FinTech and RegTech innovation.
FULHAM CO., INC. EXAMPLE TRANSACTION
OF THE FUND
$8 MILLION
UNITRANCHE FULHAM CO., INC.
Electronic Power Supplies
COMPANY DESCRIPTION
Fulham Co., Inc. engages in the design and sales of electronic power supplies and LED components serving lighting fixture
manufacturers and other businesses. The Company’s products are intended for commercial and industrial use and are
typically used in applications such as refrigeration and freezer units, emergency backup lighting subsystems, retail displays,
and UV light systems. The Company sells products through electrical distribution channels and OEMs to North America
customers. Since the Industry has shifted towards more “connected and intelligent” lighting products, Fulham Co., Inc.
management team has announced the attempt to improve product offerings by offering WiFi connectivity and other
technological improvements.
INDUSTRY OVERVIEW
Freedonia reports that the lighting industry generates $22.4 billion in revenue per year. Consumer demand for lighting
fixtures is expected to grow industry revenue by 7.7% annually to reach $32.5 billion in 2018.
According to the 2016 Global LED Lighting Market Trends Report by market research firm, LEDinside, the LED lighting market
is growing steadily. The penetration rate of LED lighting is projected to climb from 31% in 2015 to 36% in 2016.
The U.S. lighting market showed relatively strong demand in 2015, with growth residing in commercial and industrial,
horticultural, and marine lighting.
THE OPPORTUNITY
LED Market
According to the 2016 Global LED Lighting Market Trends Report by
market research firm, LEDinside, the LED lighting market, is growing
steadily, with global 2015 revenues estimated to be $25.7 billion and
2016 revenues to expand to $30.5 billion. In addition, the penetration
rate of LED lighting is projected to climb from 31% in 2015 to 36% in
2016. In the lighting technology market, LED light bulbs are the fastest
growing market. LED light bulbs had a compound annual growth rate
of 14.9% from 2011 to 2016. This technology is becoming popular
due to the growing applications of LED lighting in decorations,
residential use, display backlighting, and signal indicators. Other
features contributing to its growth rate are features such as high
energy-efficiency and strong weather resistant design.
US Capital Global T +1 415 889 1010
555 Montgomery Street, Suite 1501 F +1 415 358 5665
San Francisco, CA 94111 uscapglobal.com
WWW.USCAPGLOBAL.COM
® TEL +1 415 889 1010
EXAMPLE TRANSACTION OF THE FUND
Transaction Description: Fulham Co., Inc is seeking to raise $8,000,000 to provide debt refinancing, capital for a strategic
acquisition and additional working capital for the Company’s current and future needs.
DEAL HIGHLIGHTS Fulham Co., Inc. (the “Fulham, Company or Borrower”).
12705 South Van Ness Ave.Hawthorne, CA 90250
Company/Borrower: 1994
Company Headquarters: 3 years/Interest only payments.
Company Founded: $8,000,000 AR, Inventory and Term Loan Facility
Tenor/Amortization: Senior lien in pari-passu with Ares Facility on all the Company’s AR, inventory, and all other
Facility: corporate assets. And 100% stock pledge security on Fulham Netherlands.
Primary Collateral to 12% interest + 2.4% annual collateral management fee.
Participant:
Internal Rate of Return = 14.62% (for further details see Investment Return Analysis).
Nominal Interest Rate
to Participant: 0.50%
Expected Unlevered ROI 1.11x (for further details see Exit Strategy Analysis).
to Participant:
One-time Facility Fee at
closing to Participant:
Exit Ratio Assumption:
MANAGEMENT SALES CYCLE
Bob Howard-Anderson – Chief Executive Officer 90% of the products that Fulham Co., Inc. purchases are
James Cook – Chief Financial Officer from Fulham Electronics Co. Ltd. (Fulham China). The other
Harry Libby – Chief Operating Officer 10% is direct order to third party suppliers. For high volume
Mike Bauer – Vice President of Global Sales items, and products for certain customers, inventory is held
Johnson Liu – Vice President of Engineering at the Company’s warehouse. In this case goods can be
shipped from the Company to the customer within days of
receiving the customer order.If the Company does not have
the items in stock, then it places an order on Fulham China.
DEAL STRENGTHS & RISKS
Key Strengths: Key Risks:
• Seasoned management team with extensive industry experience. • Technological Trends: The majority of the Company’s goods are used to produce lighting
• No customer concentration and strong relationship with top tier customers. Top 10 accounts
solutions. These finished goods are subject to continuous changes in technology, hence if the
represent 39% of AR (top customer represent 12% and rest is 27%). company is not able to adapt its solutions to newer technology developments, salvage values
• The Company acknowledged an Industry shift towards more “connected and intelligent” can be reduced significantly.
• Customer Relationships: Loss of a major customer could reduce sales and potentially
lighting products and since transitioning, the Company has emerged as a global supplier of affect the composition of distribution channels.
new LED lighting solutions. • Industry prices and purchasing costs: The Company would need to increase selling prices
• The Company has demonstrated the ability to implement key turnaround strategies (cost to compensate for any increases in COGS and vice versa.
reduction, improved efficiencies in the production process, inventory levels management) • Manufacturing: The Company purchases approx. 80% of products from Fulham China (Co-
during business plan transition from induction lighting fixtures to LED solutions. Subsidiary).
• Ares Facility provides more availability to Company’s working capital than Current availability • Cash flow from financing activities: The Company depends on financial strength of
with Comerica, hence supporting working capital and sales growth. vendor related party (Fulham China).
• Loan will be guaranteed by Fulham Company Ltd. (the “Parent”) and a Pledge Agreement
granting a security interest in 100% of the stock and ownership interests in Fulham Company
B.V. (the “Fulham Netherlands”).
If you would like to know more about how your business can secure the funding it needs, visit
www.uscapglobal.com or call +1 415 889 1010
Follow us /uscapglobal
US Capital Global provides sophisticated debt, equity, and
investment products to lower middle market companies and
® investors, using the latest FinTech and RegTech innovation.
LIST OF CURRENT DEALS
Telecom wireless distribution company A Norwegian Real estate company
Type: Debt Type: Debt
Asset class: Account receivables Asset class: Original Issue Discount Note
Industry: Telecommunications Industry: Real Estate
Region: Latin America Region: Norway, Europe
Yield: 15% -17% Yield: 14%*
Term: 24 months Term: 9 months
Size: $47M Line of Credit, interest only repayment with balloon. Size: €10M Bridge Loan
Sales marketing software platform for retailers Smart city developer with inhouse technology and
Type: Debt solutions and world’s first energy positive hotel
Asset class: Account receivables Type: Debt and Equity
Industry: Marketing Industry: Renewable energy
Region: USA Region: Norway, Europe
Yield: 13% Size: $100M Convertible Note
Term: 60 months
Size: $15M Term loan and Line of Credit UK holding company that owns and controls event
venues in Paris, France
Technology-powered supply-chain platform Type: Debt
Type: Debt & Equity Yield: 12.5%
Regions: South America, Eastern Europe, Middle East and Africa. Term: 60 months
Industry: Alcohol production-to-consumption Size: £4.8M Term Loan
Yield: 15%
Size: $20M Convertible note Luxury spec homes in Beverly Hills, CA
Type: Debt
Leading wholesale distributor of perfumes and Industry: Real Estate
fragrances Region: USA
Type: Debt Yield: 8.75%*
Asset class: Account Receivables and Inventory Term: 24 months
Industry: Consumer goods Size: $22M Term Loan
Region: USA
Yield: 12%*
Term: 24 months
Size: $43M Line of Credit and Term Loan
US Capital Global uscapglobalsecurities.com
555 Montgomery Street, Suite 1501, San Francisco, CA 94111 Securities offered through
T +1 415 889 1010
F +1 415 358 5665 US Capital Global Securities, LLC,
member FINRA, SIPC.
WWW.USCAPGLOBALSECURITIES.COM
® TEL +1 415 889 1010
LIST OF CURRENT DEALS 480-unit multifamily development project located
in Yuba City, CA.
240-unit luxury community in Elizabeth, New Jersey Type: Debt and Equity
Type: Debt Industry: Real Estate
Industry: Real Estate Asset class: Alternative
Region: USA Region: USA
Yield: 7.3%* Yield: 9.50%
Term: 24 months Term: 18 months
Size: $56M LOC Size: $28M Term Loan and Preferred Equity
115-unit assisted living and memory care facility in Portfolio of 13 franchised hotels in Ohio, Minnesota
Powell, Ohio and Wisconsin
Type: Debt Type: Debt and Mezzanine/Preferred Equity
Industry: Real Estate / Assisted Living Asset class: Alternative
Yield: 8%* Industry: Real Estate
Term: 36 months Region: USA
Size: $28.5M Term Loan Yield: 12.5%*
Term: 84 months
Public holding company looking to expand its small Size: $95M Term Loan and Mezz/Pref Equity
business loan portfolio
Type: Debt Modernization, network engineering, and advisory
Industry: small business loan financing services Company
Region: USA Type: Debt
Yield: 13%* Industry: Information Technology
Term: 48 months Region: USA
Size: $30M Line of Credit Yield: 14.5%*; Warrants 5%
Term: 60 months
Oil exploration and production company Size: $16.5M Term Loan
Type: Debt
Industry: Oil E&P 6-acre site in Elizabeth, New Jersey, located to be
Region: Canada developed into a luxury community
Yield: 14% Type: Debt
Term: 60 months Industry: Real Estate
Size: $40M Term Loan Region: USA
Yield: 8.99%
Global physical precious metals trading firm Term: 18 months
Type: Debt Size: $55M Term Loan
Asset class: Alternative Fixed Income
Industry: Precious Metals
Region: Cayman Islands
Yield: 8%
Term: 60 months
Size: $150M Gold-backed Note
US Capital Global uscapglobalsecurities.com
555 Montgomery Street, Suite 1501, San Francisco, CA 94111 Securities offered through
T +1 415 889 1010
F +1 415 358 5665 US Capital Global Securities, LLC,
member FINRA, SIPC.
® WWW.USCAPGLOBALSECURITIES.COM
TEL +1 415 889 1010
LIST OF CURRENT DEALS
Software solutions and tech enabled services
Company
Type: Debt
Asset class: Fixed income
Industry: Digital Advertising
Region: USA
Yield: 7.75%*
Term: 60 months
Size: $10M Line of credit and Term Loan
Medical staff provider
Type: Debt
Asset class: Fixed income
Industry: medical staffing
Region: USA
Yield: 7.75%*
Term: 120 months
Structure: $2.5M Term loan
Acquisition of a portfolio of 6 businesses located in
Miami, Florida
Type: Debt
Asset class: Fixed income
Industry: Food & Beverage
Region: USA
Yield: 8.35%*
Term: 120 months
Structure: $7.75M Term loan
* Interest rates will fluctuate over time in line with prevailing
interest rates such as Libor and Prime Rate.
US Capital Global uscapglobalsecurities.com
555 Montgomery Street, Suite 1501, San Francisco, CA 94111 Securities offered through
T +1 415 889 1010
F +1 415 358 5665 US Capital Global Securities, LLC,
member FINRA, SIPC.
US Capital Global provides sophisticated debt, equity, and
investment products to lower middle market companies and
® investors, using the latest FinTech and RegTech innovation.
DUE DILIGENCE DOCUMENT
BREAKWATER STRUCTURED GROWTH OPPORTUNITIES FUND, LP
Until September 2014, Jeffrey Sweeney served as a Managing played a key role in approving all debt investments of the First
Partner at Breakwater Investment Management, LLC, a Los Credit Fund and also brought in a majority of its investors.
Angeles-based private investment firm that is the General
Partner of Breakwater Structured Growth Opportunities The First Credit Fund developed an impressive five-year track
Fund, LP (the “First Credit Fund”).1 The investment objective record from its inception in early 2009, despite the slow and
of the First Credit Fund is to generate both current income drawn-out economic recovery and ongoing turbulence in the
and capital appreciation through direct debt investments global markets. During Mr. Sweeney’s tenure as Managing
accompanied with equity participation rights, primarily in Partner from inception to September 30, 2014, the First Credit
growth-oriented companies in the United States. In 2009, Fund delivered a fund-level net internal rate of return on
as a Managing Partner, Mr. Sweeney established the First realized and unrealized investments of 25.9%, with no down
Credit Fund and was primarily responsible for architecting its quarters. The average annual net realized return of the First
structure, strategy, and portfolio management techniques. Credit Fund during this period was 17.41%.
A lead member of the Investment Committee, Mr. Sweeney
Cumulative ROI (2009–2014)
260% Breakwater *
240%
220%
200%
180% NASDAQ **
160%
140% S&P 500 **
120% Dow Jones
100% Industrial **
80%
60%
40% Barclays Capital
20% US Aggregate
Bond Index
0%
-20%
-40%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2009 2010 2011 2012 2013 2014
* Net of management fees and expenses ** Price return
1. On November 12, 2014, Breakwater Structured Growth Opportunities Fund, LP changed its name to Breakwater Credit Opportunities Fund, LP.
®
US CAPITAL GLOBAL BUSINESS
CREDIT INCOME FUND, LP
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM
US Capital Global Investment Management, LLC October 1, 2019
555 Montgomery Street, Suite 1501
San Francisco, CA 94111
T +1 415 889 1010
F +1 415 358 5665
www.uscapglobalim.com
US CAPITAL GLOBAL BUSINESS
CREDIT INCOME FUND, LP
Aggregate Offering Proceeds: Up to $250,000,000
Minimum Investment: $250,000
PRIVATE PLACEMENT OFFERING OF
LIMITED PARTNERSHIP INTERESTS
®
This Confidential Private Offering Memorandum (“Memorandum”) has been prepared solely for the benefit of
prospective interested investors in the proposed private placement of limited partnership interests (the “Interests”)
in US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP, a Delaware limited partnership (the “Fund” or the
“Partnership”), which will be managed by US Capital Global Investment Management, LLC (the “General Partner”).
This Memorandum is being furnished to prospective investors on a confidential basis so that they may consider an
investment in the Fund (described herein). By accepting this Memorandum, the recipient acknowledges and agrees
that it (a) will maintain the information and data contained herein in the strictest of confidence and will not, in any
circumstance whatsoever, reproduce this Memorandum or disclose any of the contents hereof to any other person
and (b) will return this Memorandum to the General Partner if so requested by the Fund or if the recipient does not
wish to pursue an investment in the securities offered hereby and will return to the Fund any other material that the
recipient may have received from the Fund in the course of reviewing such investment.
Important Notices
THE INTERESTS OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), NOR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THE SECURITIES OFFERED HEREBY
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
REGULATORY AUTHORITY OF ANY STATE, NOR HAS THE COMMISSIONER OF ANY SUCH AUTHORITY PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THIS
MEMORANDUM DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR IN ANY OTHER JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED. EACH PURCHASER OF THE INTERESTS OFFERED HEREBY
MUST MEET CERTAIN QUALIFICATIONS SET FORTH BY THE GENERAL PARTNER AND MUST BE BOTH AN ACCREDITED
INVESTOR (WITHIN THE MEANING OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT) AND A QUALIFIED
CLIENT (WITHIN THE MEANING OF THE INVESTMENT ADVISERS ACT OF 1940).
AN INVESTMENT IN THE INTERESTS WILL INVOLVE SIGNIFICANT RISKS DUE TO, AMONG OTHER THINGS, THE NATURE
OF THE FUND’S INVESTMENTS, WHICH WILL BE CHARACTERIZED BY A HIGH DEGREE OF RISK, VOLATILITY AND
ILLIQUIDITY. INVESTORS SHOULD HAVE THE FINANCIAL ABILITY AND WILLINGNESS TO ACCEPT THE RISKS AND LACK
OF LIQUIDITY THAT ARE CHARACTERISTIC OF THE INVESTMENT DESCRIBED HEREIN (SEE “RISK FACTORS”). INVESTORS
MUST BE ABLE TO WITHSTAND A TOTAL LOSS OF THEIR INVESTMENT. THERE WILL BE NO PUBLIC MARKET FOR THE
INTERESTS, AND THE INTERESTS, SUBJECT TO CERTAIN LIMITED EXCEPTIONS, WILL NOT BE TRANSFERABLE.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN COUNSEL, ACCOUNTANTS AND OTHER ADVISORS AS
TO LEGAL, TAX, BUSINESS, FINANCIAL, INVESTMENT, ERISA AND RELATED MATTERS CONCERNING AN INVESTMENT
IN THE INTERESTS.
NO REPRESENTATIONS OR WARRANTIES OF ANY KIND ARE INTENDED OR SHOULD BE INFERRED WITH RESPECT TO
THE ECONOMIC RETURN FROM OR THE TAX OR LEGAL CONSEQUENCES OF AN INVESTMENT IN THE PARTNERSHIP.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 55
NO ASSURANCE CAN BE GIVEN THAT EXISTING LAWS WILL NOT BE CHANGED OR INTERPRETED ADVERSELY, OR
THAT INTERESTS CONSTITUTE A LEGAL INVESTMENT FOR ANY INVESTOR.
EXCEPT FOR THE GENERAL PARTNER AND CERTAIN OTHER IDENTIFIED REPRESENTATIVES OF THE FUND, NO
PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION RELATING TO
THE FUND OR THE SECURITIES OFFERED HEREBY. EACH PROSPECTIVE INVESTOR WILL BE AFFORDED THE
REASONABLE OPPORTUNITY TO (A) OBTAIN ALL ADDITIONAL INFORMATION WHICH IT MAY REASONABLY REQUEST
RELATING TO THE FUND OR THIS OFFERING AND (B) ASK QUESTIONS OF THE GENERAL PARTNER CONCERNING
THE TERMS AND CONDITIONS OF THE SECURITIES OFFERED HEREBY, ANY INFORMATION SET FORTH IN THIS
MEMORANDUM, AND ANY SUPPLEMENTAL INFORMATION THAT MAY BE PROVIDED TO PROSPECTIVE INVESTORS BY
THE GENERAL PARTNER.
THE INTERESTS ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM, AND EXCEPT AS PERMITTED PURSUANT TO THE TERMS
OF THE FUND’S LIMITED PARTNERSHIP AGREEMENT. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED
TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THIS MEMORANDUM DOES NOT PURPORT TO BE ALL-INCLUSIVE NOR TO CONTAIN ALL THE INFORMATION THAT
A PROSPECTIVE INVESTOR MAY DESIRE IN INVESTIGATING THE FUND. EACH INVESTOR MUST CONDUCT AND RELY
ON ITS OWN INVESTIGATION AND EVALUATION OF THE FUND AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED, IN MAKING AN INVESTMENT DECISION WITH RESPECT TO THE INTERESTS. SEE “RISK
FACTORS” FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE
PURCHASE OF THE INTERESTS.
THE FUND CURRENTLY DOES NOT INTEND TO BE REGISTERED AS AN INVESTMENT COMPANY UNDER THE COMPANY
ACT OF 1940 AND THE GENERAL PARTNER AND THE MANAGEMENT COMPANY FOR THE FUND ARE NOT AND DO
NOT INTEND TO BE REGISTERED AS INVESTMENT ADVISERS UNDER THE INVESTMENT ADVISERS ACT OF 1940, AS
AMENDED, OR UNDER THE LAWS OF ANY STATE OR FOREIGN JURISDICTION. CONSEQUENTLY, INVESTORS WILL NOT
BE AFFORDED THE PROTECTIONS OF SUCH ACTS.
EXCEPT AS OTHERWISE INDICATED, THIS MEMORANDUM SPEAKS AS OF THE DATE HEREOF. NEITHER THE DELIVERY
OF THIS MEMORANDUM NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE FUND AFTER THE DATE HEREOF. THE
INFORMATION CONTAINED IN THIS MEMORANDUM HAS BEEN COMPILED FROM SOURCES BELIEVED RELIABLE.
ALL PERFORMANCE FIGURES ARE HISTORICAL AND PAST PERFORMANCE OF THE GP MANAGING MEMBERS, THE
GENERAL PARTNER OR ITS AFFILIATES IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS OF THE FUND.
THIS MEMORANDUM IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FUND’S LIMITED PARTNERSHIP
AGREEMENT. IN ORDER TO EFFECTUATE THE PURCHASE OF THE INTERESTS, A PROSPECTIVE INVESTOR WILL BE
REQUIRED TO EXECUTE A LIMITED PARTNERSHIP AGREEMENT AND OTHER SUBSCRIPTION DOCUMENTS. IN THE
EVENT THAT ANY OF THE TERMS, CONDITIONS OR OTHER PROVISIONS OF SUCH AGREEMENTS ARE INCONSISTENT
OR CONTRARY TO THE DESCRIPTIONS AND TERMS IN THIS MEMORANDUM, SUCH AGREEMENTS SHALL CONTROL.
PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS MEMORANDUM OR ANY PRIOR OR
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 56
SUBSEQUENT COMMUNICATION FROM THE GENERAL PARTNER, THE GENERAL PARTNER MANAGING MEMBERS,
THE FUND OR ANY OF THEIR RESPECTIVE AFFILIATES, OR ANY PROFESSIONAL ASSOCIATED WITH THIS OFFERING
AS LEGAL, TAX, OR INVESTMENT ADVICE. PRIOR TO ACQUIRING AN INTEREST, EACH INVESTOR SHOULD CONSULT
WITH AND RELY ON ITS OWN LEGAL, INVESTMENT, TAX, ACCOUNTING OR OTHER ADVISORS AS TO LEGAL, TAX, AND
ECONOMIC IMPLICATIONS OF THE INVESTMENT DESCRIBED HEREIN AND ITS SUITABILITY FOR SUCH INVESTOR
.
CERTAIN INFORMATION IN THIS MEMORANDUM (INCLUDING FINANCIAL INFORMATION AND INFORMATION
CONCERNING PORTFOLIO COMPANIES) HAS BEEN OBTAINED FROM PUBLISHED AND NON-PUBLISHED SOURCES.
WHILE SUCH INFORMATION IS BELIEVED TO BE ACCURATE, IT HAS NOT BEEN INDEPENDENTLY VERIFIED BY THE
GENERAL PARTNER. NEITHER THE GENERAL PARTNER NOR ANY OF ITS AFFILIATES MAKE ANY REPRESENTATIONS OR
WARRANTIES, AND NOTHING CONTAINED HEREIN IS, OR SHALL BE RELIED ON AS, A PROMISE OR REPRESENTATION
AS TO THE FUTURE PERFORMANCE OF THE FUND.
THE FUND INTENDS TO COMPLY WITH APPLICABLE ANTI-MONEY LAUNDERING REGULATIONS. IN ADDITION, MANY
JURISDICTIONS ARE IN THE PROCESS OF CHANGING OR CREATING ANTI-MONEY LAUNDERING, EMBARGO AND
TRADE SANCTIONS, OR SIMILAR LAWS, REGULATIONS, REQUIREMENTS (WHETHER OR NOT WITH FORCE OF LAW) OR
REGULATORY POLICIES AND MANY FINANCIAL INTERMEDIARIES ARE IN THE PROCESS OF CHANGING OR CREATING
RESPONSIVE DISCLOSURE AND COMPLIANCE POLICIES (COLLECTIVELY “REQUIREMENTS”) AND THE FUND COULD
BE REQUESTED OR REQUIRED TO OBTAIN CERTAIN ASSURANCES FROM APPLICANTS SUBSCRIBING FOR INTERESTS,
DISCLOSE INFORMATION PERTAINING TO THEM TO GOVERNMENTAL, REGULATORY OR OTHER AUTHORITIES OR
TO FINANCIAL INTERMEDIARIES OR ENGAGE IN DUE DILIGENCE OR TAKE OTHER RELATED ACTIONS IN THE FUTURE.
IT IS THE FUND’S POLICY TO COMPLY WITH REQUIREMENTS TO WHICH IT IS OR MAY BECOME SUBJECT TO AND
TO INTERPRET THEM BROADLY IN FAVOUR OF DISCLOSURE. EACH APPLICANT WILL BE REQUIRED TO AGREE IN
THE SUBSCRIPTION AGREEMENT, AND WILL BE DEEMED TO HAVE AGREED BY REASON OF OWNING ANY LIMITED
PARTNERSHIP INTERESTS, THAT IT WILL PROVIDE ADDITIONAL INFORMATION OR TAKE SUCH OTHER ACTIONS
AS MAY BE NECESSARY OR ADVISABLE FOR THE FUND (IN THE SOLE JUDGMENT OF THE GENERAL PARTNER) TO
COMPLY WITH ANY REQUIREMENTS, RELATED LEGAL PROCESS OR APPROPRIATE REQUESTS (WHETHER FORMAL
OR INFORMAL) OR OTHERWISE. EACH APPLICANT BY EXECUTING THE SUBSCRIPTION AGREEMENT AND BY OWNING
INTERESTS IS DEEMED TO HAVE CONSENTED, TO DISCLOSURE BY THE FUND AND ITS AGENTS TO RELEVANT THIRD
PARTIES OF INFORMATION PERTAINING TO IT IN RESPECT OF REQUIREMENTS OR INFORMATION REQUESTS RELATED
THERETO. FAILURE TO HONOR ANY SUCH REQUEST MAY RESULT IN REDEMPTION BY THE FUND OR A FORCED SALE
TO ANOTHER INVESTOR OF SUCH APPLICANT’S LIMITED PARTNERSHIP INTERESTS. ANY INFORMATION CONTAINED
ON ANY WEBSITE FOR THE FUND, THE GENERAL PARTNER OR ANY OF THEIR RESPECTIVE AFFILIATES IS NOT PART OF
THE INFORMATION SET FORTH IN THIS MEMORANDUM.
Cautionary Note about Forward Looking Statements
THIS MEMORANDUM INCLUDES “FORWARD-LOOKING STATEMENTS” AS THAT TERM IS USED IN SECURITIES LAWS.
SOME OF THE MATTERS DISCUSSED IN THIS MEMORANDUM, INCLUDING, BUT NOT LIMITED TO, UNDER THE
CAPTIONS “EXECUTIVE SUMMARY,” “FUND OBJECTIVE”, “BACKGROUND AND RATIONALE OF THE FUND”, “MARKET
OPPORTUNITY”, “INVESTMENT STRATEGY AND PROCESS”, “SUMMARY OF FUND TERMS,” “INVESTMENT OBJECTIVES
AND POLICIES,” AND “SUMMARY OF PRINCIPAL TERMS” CONTAIN FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS RELATE TO, AMONG OTHER ITEMS, RETURN OF THE FUND, MARKET OPPORTUNITY, GOALS FOR THE
FUND, EXPECTATIONS OF WORKING ENVIRONMENT, KEY DIFFERENTIATORS OF THE FUND AND STRATEGY FOR
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 57
THE FUND. IN SOME CASES, YOU CAN IDENTIFY FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS
“ANTICIPATES,” “BELIEVES,” “AIMS”, “MAY,” “ESTIMATES,” “SEEKS,” “EXPECTS,” “PLANS,” “WILL,” “INTENDS”, “SHOULD”,
AND SIMILAR EXPRESSIONS. ALTHOUGH THE GENERAL PARTNER BELIEVES THAT THE EXPECTATIONS REFLECTED IN
THOSE FORWARD-LOOKING STATEMENTS ARE REASONABLE, AND HAS BASED THOSE STATEMENTS ON THE BELIEFS
OF, AND ASSUMPTIONS MADE BY, THE GENERAL PARTNER, SUCH EXPECTATIONS MAY PROVE TO BE INCORRECT.
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM SUCH EXPECTATIONS
INCLUDE, WITHOUT LIMITATION, FAILURE BY ONE OR MORE PORTFOLIO COMPANIES TO BE SUCCESSFUL, FAILURE
OF THE GENERAL PARTNER TO RAISE SUFFICIENT CAPITAL FOR THE FUND AND GENERAL ECONOMIC AND MARKET
CONDITIONS. FOR INFORMATION ABOUT FACTORS THAT COULD CAUSE THE FUND’S ACTUAL RESULTS TO DIFFER
FROM THE EXPECTATIONS STATED IN THE FORWARD-LOOKING STATEMENTS, SEE THE SECTION ENTITLED “RISK
FACTORS.” THE GENERAL PARTNER URGES YOU TO CONSIDER THOSE FACTORS CAREFULLY IN EVALUATING THE
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS MEMORANDUM. ALL SUBSEQUENT WRITTEN OR ORAL
FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE GENERAL PARTNER OR ANY PERSONS ACTING ON BEHALF
OF THE GENERAL PARTNER ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THESE CAUTIONARY STATEMENTS.
THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS MEMORANDUM ARE MADE ONLY AS OF THE DATE OF
THIS MEMORANDUM. THE GENERAL PARTNER AND ITS MANAGEMENT DO NOT INTEND, AND UNDERTAKE NO
OBLIGATION, TO UPDATE THESE FORWARD-LOOKING STATEMENTS EXCEPT AS REQUIRED BY LAW. FURTHERMORE,
EXCEPT AS OTHERWISE INDICATED, THE INFORMATION CONTAINED IN THIS MEMORANDUM HAS BEEN COMPLIED
AS OF THE DATE OF THIS MEMORANDUM AND THERE IS NO OBLIGATION TO UPDATE THIS MEMORANDUM. UNDER
NO CIRCUMSTANCES SHOULD THE DELIVERY OF THIS MEMORANDUM CREATE ANY IMPLICATION THAT THERE HAS
BEEN CHANGE IN THE AFFAIRS OF THE FUND OR THE GENERAL PARTNER SINCE THE DATE HEREOF.
THE SUITABILITY STANDARDS REPRESENT MINIMUM STANDARDS FOR PROSPECTIVE INVESTORS. THE SATISFACTION
OF SUCH STANDARDS BY A PROSPECTIVE INVESTOR DOES NOT NECESSARILY MEAN THAT INVESTMENT IN THE
FUND IS A SUITABLE INVESTMENT FOR THAT INVESTOR. EACH PROSPECTIVE INVESTOR SHOULD DETERMINE
INDEPENDENTLY WHETHER AN INVESTMENT IN THE FUND IS SUITABLE TO THAT INVESTOR IN LIGHT OF THE
INVESTOR’S OWN PERSONAL CIRCUMSTANCES.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 58
I. EXECUTIVE SUMMARY ....................................................................................................………... 8
The Fund Objective………………………………………………………………....................................................................... 8
Background and Rationale of the Fund……………………………………………………………………............................. 8
The General Partner: US Capital Global Investment Management, LLC…………….................................. 8
The Founder and Managing Partner: Jeffrey Sweeney……………............................................................ 8
Rationale of US Capital Global Business Credit Income Fund, LP……………........................................ 9
Market Opportunity…………………………………………………………………………………………………............................... 9
Investment Strategy…………………………………………………………………………………………………............................... 10
Origination Team……………………………………………………………………………………………………................................. 11
II. EXECUTIVE SUMMARY OF KEY TERMS....................................................................................... 12
III. FUND OBJECTIVE…………………………………………………………..…………………………………………….. 13
IV. BACKGROUND AND RATIONALE OF THE FUND…………………………………………………………….. 14
Background of the General Partner and the Fund……………………………………………………....................……. 14
Rationale of the Fund………………………………………………………………………………………………....................……….. 14
Some Key Differentiators of the Fund……………………………………………………………………....................……….. 16
V. MARKET OPPORTUNITY.............................................................................................................. 18
The Preeminence of the United States……………………………………………………………………....................………. 18
Targeting High-Quality SMBs in the United States……………………………………………………....................…….. 18
Focusing on an Underserved Market…………………………………………………………………………....................……. 19
VI. INVESTMENT STRATEGY AND PROCESS…................................................................................. 22
Investment Strategy……………………………………………………………………………………………....................…………..... 22
Investment Process………………………………………………………………………………………………....................………...… 23
VII. INVESTMENT TEAM.................................................................................................................... 26
VIII. ORIGINATION TEAM…………………………………………………………………………………………….……. 29
IX. SUMMARY OF FUND TERMS..................................................................................………............ 30
X. RISK FACTORS .........................................................................................................………........... 39
XI. LEGAL AND TAX MATTERS......................................................................................………........... 50
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 59
I. EXECUTIVE SUMMARY needs of well-established SMBs across a broad range
of industries. These businesses, which are the engine
The Fund Objective of the U.S. economy, remain underserved by traditional
lenders and provide tremendous lending opportunities
The General Partner’s objective in creating the US Capital for sources of capital that have the ability to reach these
Global Business Credit Income Fund, LP (the “Fund” or the enterprises and the financing flexibility and know-how to
“Partnership”) is to both preserve principal and achieve meet their specific capital needs.
consistent attractive returns by making primarily senior
debt investments in small and medium-sized businesses The Founder and Managing Partner: Jeffrey Sweeney
(SMBs) located primarily in the United States.
A seasoned industry veteran with deep experience in
The Fund will seek to provide primarily direct senior structured debt finance, Jeffrey Sweeney is Chairman
loans of $1 million to $10 million to qualifying SMBs. and CEO at US Capital Global, a global financial
The General Partner believes that there continues to be group that provides sophisticated debt, equity, and
a thriving SMB segment seeking such alternative debt investment products to lower middle market companies
financing. The General Partner has a robust proprietary and investors, using the latest FinTech and RegTech
flow of lending opportunities from its affiliate US Capital innovation. Since 1998, the US Capital team has been
Global Partners, LLC (“US Capital Global Partners”), a providing well-structured, custom financing solutions
licensed broker lender, and believes that ongoing lending to private and public companies with $5 million to $100
opportunities continue to exist. million in sales. Headquartered in San Francisco, the firm
is a full-service private investment bank that makes direct
Background and Rationale of the Fund debt investments between $500,000 and $30 million,
participates in debt facilities, and underwrites debt and
The General Partner: US Capital Global Investment equity private placements. The firm also offers financial
Management, LLC advisory services for buy-side and sell-side M&A and
capital formation through private placements, including
US Capital Global Investment Management, LLC early-stage or later stage financings requiring equity or
(“US Capital Global Investment Management,” or the debt through its registered broker dealer subsidiary,
“General Partner” or “Investment Adviser”) is a private US Capital Global Securities, LLC.
investment management firm based in San Francisco,
California. US Capital Global Investment Management Until September 2014, Mr. Sweeney served as a Managing
was founded by Jeffrey Sweeney as an alternative Partner at Breakwater Investment Management, LLC,
asset manager that leverages Mr. Sweeney’s significant a Los Angeles-based private investment firm that is
track-record of successful investments in SMBs. US the General Partner of Breakwater Structured Growth
Capital Global Investment Management offers both Opportunities Fund, LP (the “First Credit Fund”).1 The
independent investors and institutional investors an investment objective of the First Credit Fund was to
opportunity to invest in a carefully managed credit fund generate both current income and capital appreciation
that aims to preserve capital while delivering consistent, through direct debt investments accompanied with
risk-adjusted, above-market returns. equity participation rights, primarily in growth-oriented
companies in the United States. In 2009, as a Managing
In its investment activities, US Capital Global Investment Partner, Mr. Sweeney established the First Credit Fund
Management focuses primarily on serving the capital and was primarily responsible for architecting its
1. On November 12, 2014, Breakwater Structured Growth Opportunities Fund, LP changed its name to Breakwater Credit Opportunities Fund, LP.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 60
structure, strategy, and portfolio management The Fund will target highly promising, established
techniques. A lead member of the Investment Committee, businesses with annual revenues of up to $100 million
Mr. Sweeney played a key role in approving all debt and with EBITDA of $500,000 to $10 million. The General
investments of the First Credit Fund and also brought in Partner believes that this segment continues to be
a majority of its investors. underserved by traditional lending sources. According
to a 2015 report by Pepperdine University, for instance,
The First Credit Fund developed an impressive track record nearly 89% of SMB owners report having the enthusiasm
from its inception in early 2009, despite the slow and to execute growth strategies, yet just 52% report having
drawn-out economic recovery and ongoing turbulence in the necessary financial resources to successfully execute
the global markets. growth strategies.2 A lack of capital is preventing smaller
enterprises from growing their business or expanding
Rationale of US Capital Global Business Credit Income operations, financing increased sales, and increasing
Fund, LP inventory to meet demand.3 The Fund aims to close this
lending “gap” and thereby capitalize on what it believes is a
In 2014, Mr. Sweeney sold his interest in Breakwater very strong lending opportunity.
and formally separated from the management of the
Breakwater Credit Fund, freeing him to create US Capital Market Opportunity
Global Investment Management, LLC and US Capital
Global Business Credit Income Fund, LP. The General SMBs are the engine of the economy. These businesses
Partner’s goal in setting up the Fund is to provide attractive have demonstrated attractive performance metrics.
risk-adjusted returns for investors, with such returns For example, according to the Small Business Investor
redeemable in cash at a Limited Partner’s option each Alliance, revenue growth for companies with $10 million to
quarter as current interest income. In addition, the General $100 million of revenue have been higher and significantly
Partner aims to respond to calls in the marketplace for more stable than that of the S&P 500 over the past four
greater transparency in asset management. The General years.4 The middle market, in particular, has delivered
Partner believes that it has custom designed the Fund strong performance relative to other segments of the
as a “next-generation” investor-centric, current income economy even during recessionary periods. For instance,
fund. The Fund’s investment objective is to both preserve during the financial crisis the middle market added
principal and achieve consistent attractive returns by 2.2 million jobs, while big business lost 3.7 million jobs.5
making primarily senior debt investments in small and
lower middle market private and public companies located Large companies usually struggle to achieve such
primarily in the United States. The Fund will make short accelerated growth, and they are also far fewer in number.
to medium-term direct senior debt investments, with the The entrepreneurial nature and smaller size of SMBs
average lifetime of loans expected to be 36 months. Loan allows them to change direction more quickly, adapt
amounts are expected to typically range between $1 million more aggressively, innovate more nimbly, and potentially
and $10 million. The Fund also expects to borrow money grow exponentially.
to leverage its capital and increase available funds for
investment purposes (“Credit Facility”). Since the recent financial crisis, there has also been a
significant increase in the credit quality of many growth-
2. Craig Everett, 2015 Pepperdine Private Capital Markets Report (Pepperdine University Graziadio School of Business and Management), p. 69.
3. National Small Business Association, 2014 Year-End Economic Report, p. 13.
4. Small Business Investor Alliance, Lower Middle Market Investment Insights, Volume 3, Issue 2 (October 3, 2016), p. 3.
5. Lawrence Delevingne, “Private Equity Salivates at Bullish ‘Middle Market,’” CNBC, January 2014.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 61
oriented SMBs. The majority of these companies have Partner believes that there is a large and even widening
prospered since the crisis, having been forced to support gap in the market that can be filled by alternative sources
growth with prudent fiscal management and by building of capital like the Fund that have the flexible capital
a strong balance sheet. Many of these smaller businesses solutions these SMBs are looking for, the origination
have emerged from the recession with stronger, healthier capability to reach them, and the portfolio management
financials than before.6 skills to prudently mitigate the risk of these loans.
Credit markets are biased towards bigger businesses, Investment Strategy
and that bias has become more pronounced following
the financial crisis.7 The General Partner believes that The Investment Adviser’s team has years of experience,
asset valuation and careful loan portfolio management allowing them to offer custom debt financing for SMBs,
are the keys to properly managing SMB credits, and intelligently and creatively structured to meet their
these are areas of specialization in which the US Capital particular needs. The Fund is able to provide financing
Global Investment Management team has a strong track solutions in the form of additional leverage to SMBs that
record of success. Overall credit for larger businesses has traditional banks and other sources of capital generally
been increasing because larger enterprises present less cannot, thereby closing the SMB lending gap. The Fund’s
need for accurate asset valuation and skilled portfolio asset-based collateral management approach and in-
management, specializations that generally represent depth underwriting analysis allow it to provide the best
a challenge for larger banks and regional banks. For financing available, especially for SMBs in excellent
SMBs, by contrast, securing sufficient working capital financial condition that for one reason or other fail
and growth capital remains a top concern.8 Large banks to secure the leverage they deserve from traditional
have curtailed their SMB lending, and smaller banks have lenders, primarily because of regulatory restraints.
been facing greater regulatory oversight since they took
severe losses during the financial crisis in commercial The Fund aims to offer “middle market” customized
real-estate lending. As a result, many SMBs now find financing solutions to smaller businesses, thereby
themselves unable to access capital from the traditional providing creative capital to propel these businesses into
banking sector to finance ongoing operations, fund their growth curve. The General Partner’s collateral and
expansion plans, or launch other strategic initiatives.9 portfolio management skill and structuring expertise
across a broad range of transaction types will help
Consequently, smaller companies have been increasingly provide the Fund with a continuous and deep pipeline
seeking financing from alternative capital sources, as of compelling investment opportunities. The Fund offers
banks struggle to compete in the space.10 The General a breadth and flexibility in its debt product offering that
Partner believes that the Fed’s leveraged lending is not generally found in the small and lower middle
guidelines will continue to hold back SMB lending by market. In a crowded space, this should differentiate
banks, thereby giving non-bank lenders an opportunity to the Fund and should make it a highly attractive source
provide higher leverage on loans.11 Further, the General of capital for leading, growth-orientated SMBs.
6. J. D. Harrison, “Why Small Businesses Are Better Off Now Than Before the Recession – In One Chart,” The Washington Post, April 23, 2014.
7. Ruth Simon and Angus Loten, “Small-Business Lending Is Slow to Recover,” The Wall Street Journal, August 17, 2014.
8. Jeremy Quittner, “Former SBA Chief Raises Alarm Over a Still Tight Credit Market for Small Businesses,” Inc. Magazine, July 22, 2014; Karen. G. Mills
and Brayden McCarthy, “The State of Small Business Lending: Credit Access During the Recovery and How Technology May Change the Game,”
Harvard Business School Working Paper, No. 15-004, July 2014.
9. For example, see National Small Business Association, 2014 Year-End Economic Report, p. 13.
10. Allison Collins, Mary Kathleen Flynn, Danielle Fugazy, and Anthony Noto, “Cover Story: Fresh Starts,” Mergers & Acquisitions (January 2015), p. 21.
11. Ibid. See also Shayndi Raice and Michael R. Crittenden, “Regulators Question Banks on Business Lending Risks,” The Wall Street Journal, June 12, 2013.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 62
Investment Team reputation as a funding source for SMBs. US Capital Global
Partners, the group’s licensed broker lender, originates
US Capital Global Investment Management is led by industry or is presented with over $4 billion in potential funding
veterans with significant investment banking, financial opportunities each year.12 Within that large proprietary
advisory, operational, and direct lending experience. The deal flow are many financing opportunities that meet the
General Partner believes that it knows how to structure Fund’s investment objectives and are a perfect fit for the
debt financing in the most effective manner for portfolio Fund. Opportunities that do not meet the Fund’s criteria
companies while also maximizing returns for the Fund and are placed with other third-party lenders. As a result, US
diligently protecting against any potential downsides— Capital Global Partners also regularly receives numerous
including through prudent and highly experienced use referrals from these third-party lenders for transactions
of security agreements, underwriting, and collateral that fall outside their particular specialty.
management. The General Partner believes this offers
the Fund a competitive advantage, particularly over less The ability to offer a wide range of financing solutions
specialized or skilled lenders. in the marketplace has created a strong brand and
marketplace presence for US Capital Global Partners,
Origination Team which delivers sustained proprietary deal flow. The firm’s
wide range of funding solutions with high success rates
Sourcing suitable credit opportunities is a major challenge makes US Capital Global Partners attractive to business
for most capital providers in the SMB lending sector. There advisers and referral sources in the market looking to
is a plethora of commercial lenders in this fragmented finance their clients. This is expected to generate a high
space, each with its own particular narrow specialty volume of attractive investment opportunities for the
for qualifying loans—not unlike banks, but with slightly Fund, carefully pre-selected in an effort to minimize risk.
different criteria. This makes it difficult and expensive These potential transactions are submitted to the General
for these finance companies to effectively market their Partner’s Investment Committee, for further analysis
individual financial “product” in the marketplace, as these and final decision-making. US Capital Global Partners
lenders are typically relatively small and have limited receives banking fees for placing loans irrespective of
marketing capabilities and personnel available. whether the provider of credit is the Fund or a third-
party lender. Importantly, any such banking fees are paid
Headquartered in San Francisco, US Capital Global by the borrower, and not by the Fund. We believe this
(www.uscapglobal.com) is a global financial group reduces the risk to the Fund of investment opportunities
that provides sophisticated debt, equity, and investment which are not suitable for the Fund.
products to lower middle market companies and
investors, using the latest FinTech and RegTech
innovation. The group manages direct investment funds
and provides wealth management and capital raise
services. Operating with its registered investment bank
affiliate, US Capital Global Securities, LLC, the firm acts
as a licensed placement agent for companies, funds,
and projects, and collaborates closely with its peers in
professional banking and investment advisory. During the
past twenty years, the group has built a wide and trusted
12. US Capital Global Partners’ Affiliate Report, “2014 Deal Pipeline Report Summary and Sources” (Salesforce origination study at US Capital
Partners Inc.), completed on 7/2/2015.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 63
II. EXECUTIVE SUMMARY OF KEY TERMS
The following information is presented as a summary of Distributions: In general, realized gains income will
certain of the Fund’s key terms only and is qualified in its be allocated to Partners (who may elect to receive
entirety by reference to the more detailed “Summary of Fund distributions of the amounts allocated) in the following
Terms” in Section IX herein and to the Limited Partnership sequence every quarter:
Agreement of the Fund (the “Partnership Agreement”), which
will be provided to all prospective investors in the Fund. 1. 2% preferred return, if any, per quarter to the Limited
Partners;
The Fund: US Capital Global Business Credit Income
Fund, LP, a Delaware limited partnership 2. After the 2% preferred return hurdle has been met for the
quarter, catch-up to the General Partner until the General
General Partner: US Capital Global Investment Partner has received an amount equal to 0.5%;
Management LLC, a Delaware limited liability company
3. Thereafter, 80% to Limited Partners and 20% to the
Investment Adviser: US Capital Global Investment General Partner
Management LLC
Management Fee: 2.00% of the amount of the
Fund Size: Up to $250,000,000 (no minimum amount Partnership’s Assets Under Management (as defined in
required to commence operations) Section IX of this Memorandum, entitled “Summary of
Fund Terms”).
Minimum Commitment: $250,000, subject to lesser
amounts being accepted at the discretion of the Offering and Organizational Expenses: The Fund will
General Partner cover its own offering, organizational, and marketing costs.
Investment Period: Open-ended fund; one-year Placement Agent: US Capital Global Securities, LLC,
lock-up in Custodial Account. Both before and after a registered broker-dealer member of FINRA and an
lock-up period, limited partners may elect to receive affiliated entity of the General Partner.13
cash distributions from their Custodial Accounts, subject
to certain limitations. Limited Partners who make Placement Agent fee: 0.50% per annum of the total
redemption requests and choose to withdraw from the amount of subscription funds raised by the Placement
Fund will receive returns from investments, including Agent, paid by the Fund to the Placement Agent.
payments of interest and repayments of principal,
quarterly as such investments amortize out.
13. For conflicts of interest disclosures, see the section of the Memorandum entitled “Risk Factors.” 64
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum
III. FUND OBJECTIVE
The Fund’s investment objective is to both preserve without the volatility and uncertainty of correlation to the
principal and achieve consistent attractive returns by broader capital markets.
making primarily senior debt investments in small and
lower middle market private and public companies There can be no assurances that the Fund will achieve its
located primarily in the United States. objectives. See “Risk Factors.”
The General Partner will take a management fee
of 2.00% of the amount of the Partnership’s Assets
Under Management (as defined in Section IX of this
Memorandum, entitled “Summary of Fund Terms”),
and will receive its performance carry for a calendar
quarter (the “Incentive Allocation”) only after the Limited
Partners have first received a minimum allocation of at
least 2.00% in net realized returns for such quarter. As
such, the General Partner will not receive any share of
profits or any returns based on profits prior to the Limited
Partners receiving a minimum net return, which may be
collected as cash income disbursements at the end of
each quarter.
The Fund intends to primarily provide direct senior loans
of $1 million to $10 million to qualifying SMBs. The Fund
aims to invest in SMBs that will generate a steady stream
of cash flow. The General Partner expects such internally
generated cash flow, leading to the payment of interest
on, and to the repayment of the principal of, the Fund’s
investments in portfolio companies to be the principal
means by which the Fund exits from its investments
over time. The Fund also expects to borrow money
to leverage its capital and increase available funds for
investment purposes. Such a Credit Facility may limit the
funds available to the Limited Partners and may need to be
repaid before amounts are returned to Limited Partners.
The Fund intends to generally make short to medium-term
direct senior debt investments, with the average lifetime
of loans expected to be 36 months and not to exceed 48
months. Loans executed by the Fund will generally carry
fixed repayment and interest terms irrespective of macro-
economic conditions. This is designed to allow the Fund
to deliver consistent current income and outsized returns
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 65
IV. BACKGROUND AND RATIONALE Rationale of the Fund
OF THE FUND
Capitalizing on a Tremendous Lending Opportunity
Background of the General Partner and the Fund
The Fund will target highly promising, established
US Capital Global Investment Management is a private businesses with annual revenues of up to $100 million
investment management firm based in San Francisco, and with EBITDA of $500,000 to $10 million. This segment
California. The firm was founded by Jeffrey Sweeney as an continues to be underserved by traditional lending
alternative asset manager that offers both independent sources. According to a 2015 report by Pepperdine
investors and institutional investors an opportunity to University, for example, nearly 89% of SMB owners
invest in credit funds and other investment vehicles report having the enthusiasm to execute growth
that aim to deliver consistent, risk-adjusted returns. In strategies, yet just 52% report having the necessary
its investment activities, US Capital Global Investment financial resources to successfully execute growth
Management focuses primarily on serving the capital strategies.14 A lack of capital by these smaller enterprises
needs of well-established SMBs in the United States, is preventing them from growing their business or
across a broad range of industries. The General Partner expanding operations, financing increased sales, and
believes that these businesses, which are the engine of the increasing inventory to meet demand.15 The Fund aims to
U.S. economy, remain underserved by traditional lenders, close this lending gap and capitalize on what it believes is
providing tremendous lending opportunities for sources a strong lending opportunity.
of capital that have the ability to reach these enterprises
and the financing flexibility and know-how to meet their SMBs are the engine of the U.S. economy. However,
specific capital needs. these businesses have historically been underserved by
the traditional banking sector. Since the financial crisis,
A seasoned industry veteran with deep experience in banks’ interest in making loans to SMBs has waned
structured debt finance, Jeffrey Sweeney is Chairman further, and a lack of access to financing has been a top
and CEO at US Capital Global, global financial group concern for many smaller companies. Consequently, these
that provides sophisticated debt, equity, and investment companies have been increasingly seeking financing from
products to lower middle market companies and investors, alternative capital sources, as banks struggle to compete
using the latest FinTech and RegTech innovation. Mr. in the space.17
Sweeney founded the General Partner and established US
Capital Global Business Credit Income Fund, LP, a private Regulatory pressures on banks including new capital
investment limited partnership organized under Delaware standards, have led to less leverage for SMB loans and
law. Mr. Sweeney and the investment professionals at to less at-risk capital being managed or deployed by the
the General Partner have custom designed the Fund as traditional banking sector. The Investment Adviser believes
a “next-generation” investor-centric, current income fund. that the Fed’s leveraged lending guidelines will continue to
hold back SMB lending by banks, thereby giving non-bank
lenders an opportunity to provide higher loan leverage.18
14. Craig Everett, 2015 Pepperdine Private Capital Markets Report (Pepperdine University Graziadio School of Business and Management), p. 69.
15. National Small Business Association, 2014 Year-End Economic Report, p. 13.
16. Jeremy Quittner, “Former SBA Chief Raises Alarm Over a Still Tight Credit Market for Small Businesses,” Inc. Magazine, July 22, 2014; Karen G.
Mills and Brayden McCarthy, “The State of Small Business Lending: Credit Access During the Recovery and How Technology May Change the
Game,” Harvard Business School Working Paper, No. 15-004, July 2014.
17. Allison Collins, Mary Kathleen Flynn, Danielle Fugazy, and Anthony Noto, “Cover Story: Fresh Starts,” Mergers & Acquisitions (January 2015), p. 21.
18. Ibid. See also Shayndi Raice and Michael R. Crittenden, “Regulators Question Banks on Business Lending Risks,” The Wall Street Journal, June 12, 2013.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 66
There is a large gap in the market that can be filled by the Fund and makes it highly attractive as a source of
alternative sources of capital like the Fund that understand capital for leading, growth-orientated SMBs.
what these SMBs are looking for, have the origination
capability to reach them, and have the financing Targeting Emerging Leaders
flexibility and, importantly, the collateral management
expertise to provide custom solutions to meet their The Fund plans to target SMBs with proven, scalable
specific capital needs. business models that have developed leading positions
within their respective markets. The Fund will generally
The lower middle market in particular has consistently be seeking businesses with mature products and
delivered strong performance during both recessionary services, demonstrated market penetration, sticky and/
and growth periods of the overall economy. For instance, or recurring revenue, and exceptional long-term growth
during the financial crisis, big business lost 3.7 million prospects. In particular, the Fund will look for sustainable
jobs, while the middle market added 2.2 million jobs.19 competitive advantages, such as growing market share
Large companies usually struggle to achieve such positions, robust and growing brands that can gain market
accelerated growth, and they are also far fewer in share from national competitors, expanding operations
number. The entrepreneurial nature and smaller size and sales, strong digital commerce capabilities, proven
of SMBs allows them to change direction more quickly, technologies, and proprietary concepts.21
adapt more aggressively, innovate more nimbly, and
potentially grow exponentially. Opportunistic Approach
Since the recent financial crisis, there has also been a High-quality SMBs in need of well-structured financing
significant increase in the credit quality of many growth- can be found across a broad range of industries and sub-
oriented SMBs. The companies that have weathered the sectors in the United States. The Fund therefore takes
crisis have been forced to support growth with prudent an opportunistic, sector-agnostic approach, so as not to
fiscal management and by building a strong balance unnecessarily limit its reach. The Investment Team at US
sheet. Many of these smaller businesses have emerged Capital Global Investment Management (the “US Capital
from the recession with stronger, healthier financials Investment Team”) is made up of industry veterans with
than before.20 decades of experience in structuring and funding SMB
finance across a wide range of industries and sub-sectors
Flexible and Custom Debt Financing Solutions for SMBs in the United States.
The Investment Adviser’s financing professionals have The Fund will also target U.S. companies with an
years of experience, allowing them to offer custom debt expanding international footprint. Private companies
financing for SMBs, intelligently structured to meet their doing business in international markets have consistently
particular needs. The Fund intends to utilize a “large- been more growth-focused than their domestic-only
cap,” customized approach to the small and lower middle peers. According to PricewaterhouseCoopers, for
market, providing creative capital solutions to propel example, the revenue growth forecast for privately
these businesses into their growth curve. In a crowded owned companies selling internationally is significantly
space, the Investment Adviser believes this differentiates higher than the forecast for companies doing business
19. Lawrence Delevingne, “Private Equity Salivates at Bullish ‘Middle Market,’” CNBC, January 2014.
20. J. D. Harrison, “Why Small Businesses Are Better Off Now Than Before the Recession – In One Chart,” The Washington Post, April 23, 2014.
21. For a more detailed explanation of the Fund’s investment parameters, please refer to Part IV (“Investment Strategy and Process”) of this
Private Placement Memorandum.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 67
solely in the United States.22 These companies are also Protective Structures
more likely to require well-structured financing, as they
remain ahead of their domestic-only peers in their The Fund will generally invest directly in asset-backed
spending on key growth activities.23 business loans, and intends to tailor the types of loans
and the exposure towards the secure side, while availing
The US Capital Investment Team has special expertise itself of the Investment Adviser’s quality collateral
in engineering innovative financing solutions for small to management and risk management experience.
lower middle market U.S. companies that may also have
some non-U.S. operations, subsidiaries, or distribution. The Fund’s principal base capital is intended to be carefully
protected through securitization of debt against business
Some Key Differentiators of the Fund assets. Importantly, the Fund will generally focus on senior
debt only (senior secured and senior second-out), and will
Current Income not generally provide junior or mezzanine debt.
The Investment Adviser intends US Capital Global The Fund will target SMBs with proven, scalable business
Business Credit Income Fund, LP to be a reliable, models, mature products and services, and exceptional
consistent private fund that prioritizes income and safety long-term growth prospects. The Fund will invest only
with the goal of steadily delivering strong returns for its in companies with an established track record. Target
Limited Partners. The General Partner aims to implement companies must generally have a minimum of three years
FOLO (“first-out, last-out”) credit structures to achieve of historical growth performance (>10% CAGR), annual
attractive risk-adjusted returns for the Fund’s Limited sales of $10 million to $100 million, an experienced
Partners. All gains of the Fund will be realized gains. management team with proven track record, and
There will be no opaque, inaccessible unrealized gains marketable assets for securitization.
locked into the Fund’s performance. At the end of every
quarter, even before the end of the Lock-Up Period, as Importantly, the Fund plans to utilize an extensive and
described below, Limited Partners will be able to receive thorough due diligence process prior to making any
100% cash income disbursements of the Fund’s realized investment. When structuring an investment, assets
gains in that quarter, should they so choose. used as collateral are generally valued by independent
third-party appraisers to determine not only their fair
Uncorrelated to Volatility of Broader Capital Markets market value but also their liquidation value. In addition,
the General Partner makes sure to actively monitor the
Loans executed by the Fund will generally carry primarily performance of the portfolio company and manage
fixed repayment and variable interest rate terms, its collateral carefully over the lifetime of the loan,
irrespective of macro-economic conditions. This allows sometimes also taking an observer seat with a portfolio
the Fund to deliver outsized returns without the volatility company’s Board of Directors.
and uncertainty of correlation to the broader capital
markets. The General Partner believes that in a general Commitments by a Limited Partner will be placed into
low-return environment, in which expected returns over an interest-bearing, capital call account (the “Custodial
the next one and five years are below historical averages, Account”). The Custodial Account will be drawn by the
the Fund represents an especially attractive risk/return General Partner as needed to fund transactions approved
opportunity for investors.
22. PricewaterhouseCoopers, Trendsetter Barometer: Business Outlook (Q4 2014), p. 12. 68
23. Ibid.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum
for the Fund portfolio. Any interest payments and Registered Placement Agent
repayments of principal by portfolio companies will be
returned to the Custodial Account after repayment of any The Fund will offer and sell interests only to a limited
Credit Facility. Any capital in the Custodial Account has no number of eligible investors.24 To protect the Fund and its
portfolio investment risk attached to it, and Limited Partners Partners, the Fund will undertake all fundraising activities
will earn 100% of the interest accrued at a money market through US Capital Global Securities, LLC (the “Placement
interest rate on such capital. Agent”), an affiliated registered placement agent. The
Placement Agent will receive a recurring placement
As a result, the General Partner believes that there will agent fee from the Fund of 0.50% per annum of all
be no pressure on the General Partner to enter into subscription funds raised historically by the Placement
transactions that are not in the best interests of the Agent. All investors will be vetted by the Placement
Limited Partners. Agent, to ensure they meet the requirements to be able
to purchase interests in the Fund. The Placement Agent
In addition, as all repayments of principal by portfolio is a broker-dealer that serves as distributor for the Fund
companies will be paid into the Custodial Account after and other investment vehicles structured by US Capital
accounting for any Credit Facility, there will be no dilution Global Investment Management, LLC.
to the Fund by such repayments. The General Partner
believes that this creates true transparency on earnings
from the Fund’s deployment of capital, while allowing
Limited Partners to enjoy a market rate of interest on
their Custodial Account, similar to their own options for
holding cash.
No Investment Origination Fees, Collateral Monitoring Fees,
or Other Transaction Fees Charged to the Limited Partners
The General Partner will employ quality asset-based
collateral management and monitoring techniques
on behalf of the Fund, but this will be paid for by the
borrower, and not by the Fund. As mentioned previously,
all investment origination fees, collateral or portfolio
monitoring fees, and acquisition, disposition, financing,
break-up and similar transaction fees that are directly
related to the investment activities of the Fund will be
paid by the company obtaining credit from the Fund.
24. The Fund will offer and sell interests only to a limited number of “accredited investors,” as defined in Regulation D promulgated under the U.S. Securities
Act of 1933, as amended, and “qualified clients” as defined under the Investment Advisers Act. The General Partner may, in its discretion, elect to sell
interests solely to “qualified purchasers,” as defined under the Investment Company Act of 1940.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 69
V. MARKET OPPORTUNITY Given this preeminence of the United States, the Fund
has selected the United States as its primary geographical
The Preeminence of the United States region. More specifically, the Fund will target SMBs
nationwide, which are the “engine” of the U.S. economy.
Since the global financial crisis of 2008, the United States
has outpaced major developed and emerging market Targeting High-Quality SMBs
countries and regions across economic, financial, and
human capital dimensions.25 The United States has The Fund targets credit opportunities in the largest
emerged economically and financially stronger, and the segment of the business economy, the small and
gap between it and the rest of the world has actually lower middle market. As reported by the U.S. Census
widened. While emerging market countries grew at a Bureau, U.S. businesses with revenues of $10 million to
much faster rate than the United States at the turn of $100 million number approximately 177,000, in contrast
the 21st century, this differential peaked at 6.5% in 2007 to approximately just 21,000 with revenues above
and has been declining ever since. This differential is $100 million.28 By focusing on smaller businesses, the
expected to narrow to a mere 1.2% in 2015.26 Fund increases the range of attractive credit opportunities
available to it.
In a 2015 investment outlook report, Goldman Sachs
noted: “What is striking about current U.S. GDP growth After several cautious years, SMBs are showing renewed
is that it is broad-based, with all major sectors of the interest in pursuing growth, with CEOs across the
economy contributing to growth relative to prior years. U.S. feeling increasingly optimistic about the outlook
This breadth of recovery across residential and non- of their businesses. For instance, according to the
residential investments, consumption and exports, along 2015 Pepperdine Private Capital Markets Report,
with an end to the fiscal drag from the government sector, 67% of privately-held SMBs surveyed believe growth
is not being replicated in other developed economies.”27 opportunities will increase over the next 12 months,
with more than half (57%) planning to hire additional
While there are some cyclical components to this workers.29 Unsurprisingly, more than a quarter of
widening gap, the Investment Adviser believes that the SMBs (28%) report that they are planning to raise new
gap is primarily structural. The structural advantages of financing in the next 12 months. Reasons for needing
the United States include a strong human capital edge external financing include supporting planned future
with respect to demographics including immigration, growth (51%), covering expected working capital
the quality of higher education, and the brain gain from fluctuations (50%), and meeting expected increases in
the rest of the world. The United States continues to demand (46%).30
be the center of technological innovation in the world.
Accordingly, there is good reason to believe that the U.S. SMBs continue to demonstrate attractive performance
economy is transitioning from a substandard recovery to metrics, with revenue growth for companies with
an above-trend expansion. $10 million to 100 million of revenue being higher and
25. Sharmin Mossavar-Rahmani, Brett Nelson, et al., Outlook 2015: US Preeminence, Goldman Sachs (Investment Management Division), January 2015, p.1.
U.S. preeminence does not mean that U.S. assets will always outperform. In fact, there are many periods in which U.S. equities have underperformed
the Eurozone, Japan and emerging market equities by significant amounts and over long periods of time for varying reasons.
26. Ibid., p. 9.
27. Ibid.
28. Census Bureau, U.S. “Statistics about Business Size (including Small Business) from the U.S. Census Bureau,” US Census Bureau.
29. Craig Everett, 2015 Pepperdine Private Capital Markets Report (Pepperdine University Graziadio School of Business and Management), pp. 69 and 83.
30. Craig Everett, Pepperdine Private Capital Access Index, Quarterly Survey Report (Fourth Quarter 2014), p. 8.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 70
significantly more stable than that of the S&P 500.31 Large early stage, to surrender a share of future profits of the
companies usually struggle to achieve such accelerated business, or to relinquish operating control or strategic
growth, and they are also far fewer in number. direction of their company and its Board of Directors.
They will therefore most often prefer appropriate, well-
The lower middle market in particular has consistently structured debt financing over equity financing.
delivered strong performance during both recessionary
and growth periods of the overall economy. For instance, Focusing on an Underserved Market
during the financial crisis, big business lost 3.7 million
jobs, while the middle market added 2.2 million jobs.32 While credit markets have eased up since the financial
There has also been a significant increase in the credit crisis, securing sufficient working capital and growth
quality of smaller businesses that have survived the capital remains an ongoing challenge for many SMBs.
financial crisis. These businesses have been forced to Banks have largely lost interest in making smaller loans,
support growth through prudent fiscal management and especially since the financial crisis, and a lack of access to
by building a strong balance sheet, and have emerged financing remains a top concern for many smaller firms.34
from the recession with stronger, healthier financials Consequently, many high-quality SMBs find it challenging
than before.33 As these SMBs now turn their attention to to secure the capital they need to fund expansion or
renewed growth, the General Partner believes the Fund pursue other strategic initiatives.
is ideally placed provide the capital they need to finance
ongoing operations, fund expansion plans, support According to a 2015 survey of smaller businesses by
increased sales, and launch other strategic initiatives. Pepperdine University, nearly 89% of business owners
report having the enthusiasm to execute growth
As SMBs begin to expand their business and move into strategies, yet just 52% report having the necessary
new markets, they require debt or equity financing to be financial resources to successfully execute growth
able to take advantage of emerging growth opportunities. strategies.35 Likewise, the National Small Business
These highly promising SMBs, which are most commonly Association, an industry trade group, reported that nearly
privately-owned, need to be careful not to take excessive one in three small businesses (31%) is unable to get the
or unnecessary dilution in exchange for growth capital, financing it needs.36 When these enterprises apply for
especially if they are at an inflection point in their growth. business loans, they are frequently turned down. A lack
of capital is preventing these companies from growing
Based on appreciating valuation multiples that these their business or expanding operations (34%), financing
expanding companies can realize upon exit, equity will increased sales (18%), and increasing inventory to meet
usually cost the business excessively more than debt, and demand (13%).37
will commonly also be accompanied by highly restrictive
operating and board control provisions. The owners of Despite increased availability of capital from the
promising SMBs will usually be reluctant to substantially sidelines, many SMBs continue remain underserved
dilute their ownership interest in their business at this by traditional banks, asset-based lenders, and other
31. Small Business Investor Alliance, Lower Middle Market Investment Insights, Volume 2, Issue 1 (March 30, 2015), p. 3.
32. Lawrence Delevingne, “Private Equity Salivates at Bullish ‘Middle Market,’” CNBC, January 2014.
33. J. D. Harrison, “Why Small Businesses Are Better Off Now Than Before the Recession – In One Chart,” The Washington Post, April 23, 2014.
34. Jeremy Quittner, “Former SBA Chief Raises Alarm Over a Still Tight Credit Market for Small Businesses,” Inc. Magazine, July 22, 2014; Karen G. Mills
and Brayden McCarthy, “The State of Small Business Lending: Credit Access During the Recovery and How Technology May Change the Game,” Harvard
Business School Working Paper, No. 15-004, July 2014.
35. Craig Everett, 2015 Pepperdine Private Capital Markets Report (Pepperdine University Graziadio School of Business and Management), p. 69.
36. National Small Business Association, 2014 Year-End Economic Report, pp. 10–11.
37. Ibid., p. 13.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 71
alternative sources of capital. This is largely the result of Heighted Regulatory Oversight in Bank Lending
structural and systemic factors. A deep understanding
of these factors informs the Fund’s investment strategy, The financial crisis has resulted in increased government
opening up significant investment opportunities for the scrutiny and heighted regulatory controls in bank lending.
Fund, which has dedicated, nationwide deal sourcing and U.S. regulators have been grilling banks over lending
flexible financing solutions to close this lending gap. standards and warning them about mounting risks
in business loans, which banks are less experienced
Shift in Focus to Larger Loans at mitigating through active collateral management.39
Simultaneously, bank examiners have been pulling out
Banks and other traditional sources of capital have been more loans for inspection, questioning loan officers
shifting their focus away from small businesses to larger more thoroughly about credit standards, and studying
enterprises. At the end of Q1 2014, banks held $585 billion other underwriting functions more closely than they have
in loans to small businesses, 18% less than the peak of in years.40 Indeed, U.S. regulators have been imposing
$711 billion in 2008. By contrast, loans to businesses of all standards that go even beyond international standards,
sizes totaled $2.48 trillion as of March 31, 2014, up 9% since placing U.S. banks at a particular disadvantage against their
2008.38 This has been aggravated by the consolidation of overseas rivals.41
regional banks into money center banks, which traditionally
focus on lending and providing other services to large As a result, banks have been tightening commercial lending
corporate clients to whom they can deploy larger amounts standards once again. Many have shrunk their commercial
of capital more efficiently. loan portfolios, frequently in response to ongoing uncertainty
over new regulations.42 Many smaller businesses continue
Asset valuation and careful loan portfolio management to report that they are being turned down, or that loans
are the keys to properly managing SMB credits. Larger have been called in early or availability suddenly reduced—
enterprises present less need for accurate asset valuation often despite good business performance.43 According
and skilled portfolio management, specializations that to a recent survey of smaller businesses by Pepperdine
generally represent a challenge for both larger banks and University, only half (49%) of smaller private businesses
regional banks. This too contributes to the bias towards that attempted to secure a bank loan in Q4 2014 were
larger allocations, leaving attractive, growth-oriented small successful.44 Unsurprisingly, 62.2% of respondents
and lower middle market companies orphaned by the characterize the current business environment as difficult
capital markets. for raising new business financing.45
38. Ruth Simon and Angus Loten, “Small-Business Lending Is Slow to Recover,” The Wall Street Journal, August 17, 2014.
39. Shayndi Raice and Michael R. Crittenden , “Regulators Question Banks on Business Lending Risks,” The Wall Street Journal, June 12, 2013.
40. Ibid.
41. For example, U.S. regulators now require banks to have larger capital cushions, in efforts to make the financial system less risky. The proposal goes beyond what
international regulators agreed to in Basel, Switzerland. The biggest impact will be felt by J.P. Morgan Chase & Co., the nation’s largest bank by assets, which is $21
billion short of the requirement. See Victoria McGrane and James Sterngold, “Fed Sets Tough New Capital Rule for Big Banks,” The Wall Street Journal, December
9, 2014. See also Jesse Hamilton, Ian Katz, and Yalman Onaran, “Large U.S. Banks Face Tougher-Than-Global Capital Rule,” Bloomberg, December 2014.
42. Shayndi Raice, “Smaller Banks’ Loans Growing Faster Than Larger Rivals: Regulatory Uncertainty Limiting Lending at Largest Firms,” The Wall Street Journal,
September 4, 2013.
43. For instance, Ruth Simon and Angus Loten, “Small-Business Lending Is Slow to Recover,” The Wall Street Journal, August 17, 2014. See also National Small Business
Association, 2014 Year-End Economic Report, p. 11.
44. Craig Everett, Pepperdine Private Capital Access Index, Quarterly Survey Report (Fourth Quarter 2014), pp. 3 and 7.
45. Ibid., p. 7.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 72
As the Fed’s leveraged lending guidelines continue to approach and in-depth analysis, as well as its use of credit
hold back SMB lending by banks, loans to SMBs will insurance on foreign assets, allow it to provide optimal
continue to be provided by non-regulated financial solutions for leading SMBs that might typically fall outside
institutions.46 The Fund is ideally placed to source and the “bankable box.”
invest in the most promising of these enterprises, through
well-structured, flexible capital solutions customized to Highly Fragmented Alternative Lending Marketplace
meet their particular needs.
There is a well-developed market for providing
Lack of Flexibility by Banks in SMB Lending alternative financing for SMBs with assets. However, the
small-business alternative lending marketplace is highly
SMBs usually have very specific financing needs. However, fragmented, made up of many specialty lenders that are
most commercial banks try to fit these customers into generally willing to lend only against their favored asset
one of their traditional business loan products. class. As a result, SMBs will often need to coordinate
several different specialty lenders to a successful closing.
In particular, there are numerous special situations With several competing interests, the transaction is
that render business financing challenging for many fraught with difficulty and prone to failure.
traditional lenders, by increasing complexity. These
include, for example, more complex company structures, The US Capital Investment Team is made up of financing
where a business seeking financing is comprised of a technicians with decades of experience in asset-based
number of subsidiaries or related entities. They include lending techniques for SMBs across the full spectrum
U.S. businesses with subsidiaries abroad, for which these of asset classes. With its large proprietary network of
enterprises may struggle to find suitable funding. More relationships in the industry, the US Capital Investment
commonly, these companies may simply have trade Team is able to structure optimal financing solutions on
receivables and other assets abroad. Often, traditional behalf of the Fund, using its deep investment banking
lenders may simply lack sufficient expertise and expertise, which is rarely found at other lenders, to work
experience in certain industries or sectors, or in relation in partnership with other sources of capital. The Fund
to certain specialized enterprises. They are therefore even has the ability to structure and provide unitranche
able to offer only limited financing flexibility for such loans to vastly simplify the situation for SMBs.
businesses.
In addition, commercial banks typically also have slow,
cumbersome, and bureaucratic loan processes, with
layers of decision makers. The employees involved in the
loan approval process are frequently located in different
cities, and may never even have met each other. This
creates an added layer of difficulty for SMBs looking for
timely financing.
By contrast, the Fund is able to provide timely and custom
debt financing, intelligently structured to meet the
particular needs of its clients. The Fund’s non-formulaic
46. Allison Collins, Mary Kathleen Flynn, Danielle Fugazy, and Anthony Noto, “Cover Story: Fresh Starts,” Mergers & Acquisitions (January 2015), p. 21. 73
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum
VI. INVESTMENT STRATEGY • strong, competitive position in industry with a
AND PROCESS diversified customer and supplier base;
Investment Strategy • mature products and services;
• recurring and growing revenue, attractive margins,
As mentioned previously, the Fund’s investment objective
is to both preserve principal and achieve consistent and strong cash flow conversion;
attractive returns by making primarily senior debt • disciplined financial controls;
investments in small and lower middle market private and • socially responsible;
public companies located primarily in the United States.47 • sustainable business practices; and
• experienced and committed management team with
The Fund will generally make short to medium-term
direct senior debt investments, with the average lifetime a strong track record and a meaningful equity stake
of loans expected to be 36 months and not generally in the business.
to exceed 48 months. Loan amounts will typically range
between $1 million and $10 million. The Fund will generally In identifying potential portfolio companies, the Fund will
focus on senior debt only (senior secured and senior look for key growth features and sustainable competitive
second-out), and will not generally provide any junior advantages. These include growing market share
or mezzanine debt. However, within fully collateralized positions, robust and growing brands that can gain market
senior debt positions, the Fund may choose a variety of share from national competitors, expanding operations
loan structures, including unitranche financing. and sales, strong digital commerce capabilities, proven
technologies, and proprietary concepts.
The Fund will target SMBs with a proven, scalable business
model and exceptional long-term growth prospects. As high-quality SMBs in need of well-structured financing
Importantly, the Fund will invest only in companies with can be found across a broad range of industries and
an established track record. Target companies must sub-sectors, the Fund will adopt a generalist (industry-
generally have a minimum of three years of historical agnostic) investment approach to selecting and
growth performance (>10% CAGR), annual sales of making investments, based on thorough industry and
$10 million to $100 million, an experienced management company-specific research and due diligence. The
team, and marketable assets for securitization. Investment Adviser will focus on industries that show
stable performance during economic downturns (non-
Target companies will generally have a number of the cyclical), limited regulatory risks, and low exposure to
following characteristics: raw material pricing volatility. The Investment Adviser is
continuously monitoring industry sectors in which it has
prior experience and new industry sectors to identify
untapped investment opportunities.
• revenue up to $100 million and/or enterprise value up The Fund will actively consider a wide range of transaction
to $100 million; opportunities that meet its investment objective. These
may include:
• EBITDA up to $10 million;
• strong and sustainable revenue model; • Growth capital: Capital to support business expansion,
• marketable assets for securitization; such as developing new products and entering into
• high intrinsic enterprise value of business; new markets.
• proven business with clear competitive advantages
• Refinancing: Improved financing structures to facilitate
and demonstrated market penetration; business growth or accommodate changes to a business.
47. There can be no assurances that the Fund will achieve its objectives.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 74
• Recapitalization: Improvement of capital structure and third-party asset appraisals. Typically, the Fund does not
preservation of cash flow. expect to invest in start-up companies or companies having
speculative business plans.
• Bridge financing: Short-term asset-based loans to
maintain operations to foreseeable recapitalization US Capital Global Partners will complete both preliminary
event. and in-depth due diligence on investment opportunities
before they are referred to the General Partner’s
• Acquisition financing: Capital for contingent merger or Investment Committee for final scrutiny and approval.
acquisition event. As a result of satisfying this double hurdle, investment
opportunities that reach the Investment Committee
As an investment guideline, the Fund generally will not will already be in the investment “strike zone.” The
invest in any investment that exceeds more than 15% selection and screening process will rely on (i) careful
of the Fund’s aggregate commitments at the time of the selection from a very large pool of engaged investment
investment; provided, however, that the General Partner opportunities at US Capital Global Partners without cost
may waive this guideline with respect to any investment. to the Fund, (ii) rigorous evaluation of the target company,
its financial history, and its management team, (iii) and
Investment Process the investigation and evaluation of the target company’s
tangible assets.
Diversified Origination Strategy
Due diligence will typically include, but not be limited to:
To identify potentially attractive investment opportunities,
the Fund will be supported by US Capital Global Partners, a • management interviews, with background checks on
registered broker lender of the General Partner. The Fund key individuals;
will leverage US Capital Global Partners’ extensive network
of contacts, nationwide database, proprietary relationships • analyzing market position, including value proposition,
with investment banks and other sources of capital, and distinct points of differentiation, and competitive
robust direct marketing program to tens of thousands of strengths and weaknesses;
businesses across the United States. For further details
about US Capital Global Partners and its origination • analyzing historical and projected financial information;
capabilities, please refer to Part XIII of this Private Placement • reviewing all key agreements material to the company’s
Memorandum, entitled “Origination Team.”
operations;
Once an attractive investment opportunity has been • assessing the condition of operations (including
identified, the Investment Adviser believes that
recognition of the “US Capital Global” brand renders the on-site visits and interviews with management,
Fund a desirable capital provider relative to competitors employees, customers and vendors of the potential
with lesser known brand names. portfolio company);
• arranging third-party asset valuation appraisals (fair
Two-Stage Due Diligence Process market value and liquidation value);
• reviewing the company’s capital structure;
The Fund believes it takes a disciplined investment approach, • analyzing the economic risk and reward of the
focusing on preserving capital and minimizing downside investment; and
risk. This begins with bottom-up, fundamental research on • conducting legal due diligence and review of off-
potential portfolio companies and investments. The Fund balance sheet risks and liabilities, regulatory
will seek to reduce risk in investments by concentrating compliance, and pending or potential litigation.
on high-quality businesses with mature products and
services, conducting extensive due diligence, and engaging Upon the successful completion of due diligence, the
deal team at US Capital Global Partners will present
the opportunity to the General Partner’s Investment
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 75
Committee, which will determine whether to pursue the maturity). The General Partner expects to hold most of
potential investment by unanimous consent. Additional its loans to maturity, but will liquidate such investments
due diligence with respect to any investment may be earlier if a liquidity event or other opportunity, such as the
conducted by attorneys and independent accountants sale or recapitalization of a portfolio company, occurs.
prior to the closing of the investment, as well as by other In addition, the General Partner anticipates investing in
outside advisers, as appropriate. portfolio companies in the form of short-term bridge
loans. These senior secured loans will have a term of one
Flexible Transaction Structuring year or less.
Once the Investment Adviser has determined that a In determining an appropriate financing structure for
prospective portfolio company is suitable for investment, a potential portfolio company, the General Partner is
the Investment Adviser will work with the management experienced in assessing the balance sheet, nature of
of that company and any other capital providers to revenues, and enterprise value of companies, as well as
structure an investment. The Investment Adviser will seek other factors relevant to an extension of credit. The Fund
to negotiate a structure that protects the Fund’s rights will secure its investment against the portfolio company’s
and manages the Fund’s risk while creating incentives assets or against the enterprise value of the business,
for the portfolio company to achieve its business plan in case of default. Tangible assets used as collateral
and improve its profitability. The Fund will use a range of will be valued by independent third-party appraisers to
transaction structures, which will vary with respect to size determine not only their fair market value but also their
and return. The Fund may also structure an investment liquidation value.
alongside other capital providers.
The Investment Adviser emphasizes contractual
As a result of targeting an underserved market, the protections in its investments. Covenants negotiated
Fund will be able to use creative transaction structures by the Investment Adviser may include affirmative and
to generate attractive risk-adjusted returns while still negative covenants, default penalties, lien protection,
meeting portfolio company’s financing objectives. In change of control provisions, and board rights, including
particular, the Fund will provide stretch pieces above either observation or participation rights. The Investment
asset-based loans (ABL). In this way, portfolio companies Adviser believes that this disciplined approach will lead to
will be able to secure greater financing than from better risk-adjusted returns over economic cycles.
bank ABL, but at broadly the same rate. The General
Partner aims to implement FOLO (“first-out, last-out”) Ongoing Portfolio Monitoring and Management
credit structures with the goal of achieving attractive
risk-adjusted returns for the Fund’s Limited Partners. Following an investment by the Fund, the Investment
However, there can be no assurance that the Fund will Adviser will closely monitor the portfolio company to
achieve such a return with respect to any investment or determine whether it is meeting the financing criteria
the portfolio as a whole. and its business plans, sometimes taking a seat on the
Board of Directors of the company, as an observer. This
The General Partner anticipates structuring investments will include monitoring the collateral and financials of
primarily as senior secured and senior second-out loans all portfolio companies continuously, as well as market
collateralized by first-priority liens on the assets of the trends, and proactively performing analyses against
portfolio company in support of the repayment of these various scenarios to identify future profitability, cash flow
loans. The Fund’s loans will generally mature over 3–4 generation, and potential liquidity needs. The Investment
years. Amortization will vary, ranging from fixed-line Adviser will maintain regular dialogue with portfolio
amortization to bullet maturity (100% of principal due at company management teams.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 76
The Investment Adviser has several methods of evaluating
and monitoring the performance and fair value of
investments, which may include, but are not limited to,
the following:
• assessment of success in adhering to the portfolio
company’s business plan and compliance with
covenants;
• periodic and regular contact with the portfolio
company management to discuss the portfolio
company’s financial position, market strategy,
requirements, and accomplishments;
• general market analysis and benchmarking
comparisons to industry competitors;
• attendance at and participation in board meetings;
• monthly/quarterly reviews of financial statements
and operations;
• outside auditor analysis and reporting; and
• third-party valuation.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 77
VII. INVESTMENT TEAM principal and CEO of Machine Works Corporation, a lower
middle market aerospace manufacturing company. His
US Capital Global Investment Management is led by experience leading a business in the highly-regulated
industry veterans with deep investment banking, financial aerospace manufacturing industry has led to his
advisory, operational, and direct lending experience. appreciation of the need to work closely with regulators
Importantly, this includes a strong specialization in while adopting technological solutions to innovate in the
underwriting and collateral management. The team sector. This successful approach has been brought over
is supported by analysts, underwriters, and financing to US Capital Global, where leveraging innovation and
specialists with significant expertise in SMB lending. regulatory developments has been a key driver in the
firm’s growth as a FinTech investment bank.
Jeffrey Sweeney, Founder and Co-Managing Partner
Mr. Sweeney has also authored numerous articles
Jeffrey Sweeney is Founder and Co-Managing Partner in leading industry journals, such as ABF Journal, ABL
of US Capital Global Investment Management LLC, and Advisor, The Secured Lender, and The Fintech Times. He
Chairman of its Investment Committee. He is a lifelong holds a bachelor’s degree in Business Economics from
entrepreneur with extensive experience in leading firms the University of California, Santa Barbara, and is active
with a forward-thinking approach. Chairman and CEO of in the Southern California and San Francisco chapters of
US Capital Global, a full-service private financial services ACG, TMA, CFA, and other financial organizations. He is an
group headquartered in San Francisco, Mr. Sweeney is avid sailor, a certified yoga instructor, and a longstanding
a keen supporter of technological innovations that can contributor to the San Francisco Food Bank and Food for
help to improve and grow the finance sector. Now in its Life Vrindavan, an educational nonprofit for girls based in
twentieth year, US Capital Global has established itself as a Vrindavan, India.
FinTech investment bank through deploying a successful
strategy that leverages technological innovation (FinTech) Charles V. Towle, Co-Managing Partner
and regulatory developments (RegTech). The group is a
leading provider of sophisticated financing solutions Charles Towle is Co-Managing Partner at US Capital
and investment opportunities for lower middle market Global Investment Management LLC and a member of
businesses. its Investment Committee. He also serves as the CEO and
licensed principal of US Capital Global Securities, LLC,
Until September 2014, Mr. Sweeney served as a Managing a broker-dealer that serves as distributor for the Fund
Partner at Breakwater Investment Management, LLC and other investment vehicles structured by US Capital
and as a member of the firm’s Investment Committee. Global Investment Management LLC.
Breakwater Investment Management is a Los Angeles-
based private investment firm that specializes in direct In addition, Mr. Towle is Managing Partner at US Capital
growth-capital investments into promising lower middle Global. Since joining in 2006, Mr. Towle has helped grow
market companies, especially businesses with expanding the firm into a leading private investment bank for small
global operations. Mr. Sweeney was seminal in architecting and medium-sized businesses in the United States. As
the firm’s inaugural $250 million credit fund, Breakwater Managing Partner, Mr. Towle oversees 30+ banking
Structured Growth Opportunities Fund, LP. As a member professionals in San Francisco and New York, in addition to
of Breakwater’s Investment Committee, Mr. Sweeney the firm’s established affiliates and institutional investors.
played a key role in structuring the firm’s debt investments
and also brought in a majority of its investors. A structured funding and corporate finance specialist,
Mr. Towle has over 10 years of business development,
Prior to being a financier, Mr. Sweeney served as a asset management, corporate finance, capital markets,
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 78
and general business management experience. Prior Since joining US Capital Global in 2010, Mr. Spencer has
to joining US Capital Global, Mr. Towle gained extensive helped grow the firm into a leading private investment
entrepreneurial and investment experience, serving as a bank for small and medium-sized businesses in the
limited partner, financial officer, or board member of various United States. As Managing Director and Partner, Mr.
investment and endowment funds and small and medium- Spencer oversees the firm’s deal teams at the firm’s
sized businesses, both in the United States and abroad. San Francisco headquarters, made up of banking
professionals, business analysis, and underwriters. Mr.
Mr. Towle has served as a board member for Turnaround Spencer also oversees a robust proprietary network of
Management Association (TMA). Currently, he sits on the 500+ business brokers and referral sources across the
National Board of the Commercial Finance Association United States.
(CFA), and remains a member of TMA and Association for
Corporate Growth (ACG). Mr. Towle chairs the finance A serial entrepreneur and corporate finance specialist,
committees of two educational trusts, and serves as a Mr. Spencer has over 15 years of business development,
board member of Bhakti Projects, Inc., an international asset management, private investment, asset and
nonprofit. He actively supports several local and market evaluation, business analysis, and general
international nonprofits, including The Puente Project business management and operations experience. Mr.
in California and Food for Life in India. In addition, he Spencer runs his own family office business, Spencer
collaborates with Cranmore Foundation, a thought Family Investments, LLC, which focuses on syndicated
leader in organizational wisdom. investments in real estate and stockholdings, as well as in
other investment funds. Mr. Spencer is also co-founder
Mr. Towle received a B.S. in Business Administration and co-CEO of Ocean Travelers, a private real estate
(emphasis in Corporate Finance and International investment management firm focused on syndicated
Business) and an M.B.A. (emphasis in Sustainable investments in emerging markets. Founded in 2000,
Business) from San Francisco State University. He holds the company currently has a portfolio of commercial
Series 24 and 79 registrations from FINRA. and residential holdings in Costa Rica and a strong track
record of successful developments.
Ish Spencer, Member of Investment Committee
Prior to setting up Ocean Traveler, Mr. Spencer worked
Ish Spencer is an Investment Committee member of as a quality systems auditor at Reglera, a regulatory
US Capital Global Investment Management LLC. He compliance and quality assurance consulting and process
also serves as Managing Director and Partner at US outsourcing company. Reglera serves the medical device
Capital Global Partners LLC. His responsibilities at US and tissue banking industries, and its clients range
Capital Global include directing the firm’s nationwide from small start-ups to large multi-national companies.
business origination program, account management for Mr. Spencer also gained experience as a staff editor at
CEOs and CFOs of SMBs, preliminary underwriting of RTC Group, where he contributed to RTC Magazine and
commercial loans, relationship management, and client COTS Journal, which serve the real-time and embedded
advocacy as a member of the firm’s loan committee. Mr. computer market. Before this, Mr. Spencer worked as a
Spencer brings extensive multi-disciplinary experience manufacturing associate at Quantum Dot Corporation,
to US Capital Global, including special expertise in a privately held business in the biotechnology industry.
particular verticals, such as healthcare, technology, and This specialized experience, together with Mr. Spencer’s
manufacturing (including their overlap in the medical academic background, have deepened his insight into
device, biotechnology, and nanotechnology industries). the healthcare and technology verticals.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 79
Mr. Spencer supports a number of philanthropic projects
including Food for Life, an international humanitarian
non-profit association in India. He also serves as a
financial adviser to the board of Braj Bhumi Group Inc.,
a registered California nonprofit. Braj Bhumi Group is a
network of experienced professionals who provide a full
range of pro bono financial, management, and strategic
services for local and international nonprofits.
Mr. Spencer received his B.S. in Chemistry from the
University of California, Berkeley, his M.S. in Chemistry
from the University of California, San Diego, and his
M.B.A. from San Diego State University.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 80
VIII. ORIGINATION TEAM
US Capital Global Partners, a registered broker lender the Fund, and not by the Fund. Origination and collateral
and affiliate of the General Partner, will carry out all monitoring fees are expected to vary between 0.5% to
origination for the Fund. US Capital Global Partners 3.0%, depending on transaction size.
originates or is presented with over $4 billion in potential
funding opportunities each year. The firm will act as a US Capital Global Partners is led by a management team
direct sourcing “engine” for the Fund, unearthing and of SMB financing specialists and industry veterans, and is
vetting the very best credit opportunities and then passing supported by 30+ banking professionals in San Francisco
them on to the General Partner’s Investment Committee and New York, and a proprietary network of 500+
for further analysis and final decision-making. US Capital business brokers and referral sources across the United
Global Partners will present investment opportunities to States. As mentioned previously, Jeffrey Sweeney is
the Fund if, following due diligence, they appear to be Chairman and CEO at the firm, and Charles Towle serves
appropriate and competitive credit opportunities that as Managing Partner. Ish Spencer serves as Senior Vice
meet the Fund’s investment objectives and criteria (see President of business development and heads the firm’s
“Investment Strategy and Process” above). Founded in dedicated origination team.
1998, US Capital Global Partners has grown into one
of the leading investment banks for SMBs in the United
States today. It has a robust and recognized brand, a
large and dedicated direct origination team, a broad
and growing network of third-party referral sources, and
one of the most innovative and far-reaching nationwide
marketing programs in the marketplace today. Through
its many strategic and industry relationships, US Capital
Global Partners gains exposure to a wide spread of
leading SMBs looking for financing solutions beyond
traditional bank loans and asset-based loans.
Importantly, US Capital Global Partners will complete
initial due diligence on investment opportunities before
they are referred to the General Partner’s Investment
Committee for further scrutiny and approval. As a result
of satisfying this initial hurdle, investment opportunities
that reach the Investment Committee will already be in
the investment “strike zone.”
This dedicated origination and initial due diligence work
by US Capital Global Partners will be without cost to the
Fund. Instead, the borrower will pay a small success fee
of 2-4% to US Capital Global Partners. All origination fees,
collateral monitoring fees, and other transaction fees
that are directly related to the investment activities of the
Fund will be paid by the company obtaining credit from
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 81
IX. SUMMARY OF FUND TERMS
The following information is qualified in its entirety by the detailed information appearing elsewhere in this document and
by the terms and conditions of the Partnership Agreement. Prospective Limited Partners of the Fund should carefully read
this document and the Partnership Agreement before investing. In the event that any description of the terms set forth in
this Summary of Terms is inconsistent with, or contrary to, the terms included in the Partnership Agreement or related
agreements, then the terms of the Partnership Agreement or such other related agreements will control.
The Fund US Capital Global Business Credit Income Fund, LP (the “Fund”) is a private investment limited
partnership formed under Delaware law.
Address The address, telephone and facsimile numbers and email of the Fund and US Capital Global
Investment Management , LLC, a Delaware limited liability company and the general partner
of the Fund (the “General Partner”), are 555 Montgomery Street, Suite 1501, San Francisco, CA
94111; telephone: (415) 889-1010; email: [email protected].
Investment The Fund’s investment objective is to both preserve principal and achieve consistent attractive
Objective and returns by making primarily senior debt investments in small and lower middle market private
Strategy and public companies located primarily in the United States. The Fund will use a range of
transaction structures which will vary with respect to size and return.
The Fund will generally target businesses with the following characteristics:
• highly promising growth prospects;
• sustainable business practices;
• socially responsible;
• annual revenue of up to $100 million;
• EBITDA of $500 thousand to $10 million;
• strong revenue model;
• asset coverage;
• robust and growing brand;
• experienced management team; and
• proven track record.
To identify potentially attractive investment opportunities, the Fund will be supported by US
Capital Global Partners LLC. (“US Capital Global Partners”), an affiliate of the General Partner.
The Fund will leverage US Capital Global Partners’ extensive network of contacts, relationships
with investment banks and private equity firms, and robust direct marketing program to tens
of thousands of businesses across the United States. The selection and screening process will
rely on (i) selecting opportunities from a very large pool of engaged investment opportunities
at US Capital Global Partners without cost or brokering commissions to the Fund, (ii) rigorous
evaluation of the target company, its financial history, and its management team, (iii) and the
investigation and evaluation of the target company’s tangible assets.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 82
The Fund will partner with successful management teams and utilize its investment,
underwriting, and collateral management expertise to finance asset-backed debt investments
that meet the unique growth needs of these smaller private and public companies. The
Fund will adopt a generalist investment (industry agnostic) approach to selecting and making
investments (collectively, the “Investments”) based on thorough industry and company-specific
research and due diligence.
General Partner The General Partner has the general supervisory responsibility and authority for all aspects
(Investment of the Fund’s business and operations. The General Partner will also serve as the investment
Adviser) manager to the Fund. As such, the General Partner is also responsible for the day-to-day
portfolio management of the Investments. The General Partner is an investment adviser
under the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”), but
it intends to rely on an exemption from registration as an investment adviser for investment
advisers solely to private funds with less than $150 million in assets under management in the
United States (an “exempt reporting adviser”). The General Partner intends to satisfy all federal
and state filing and other requirements applicable to an exempt reporting adviser.
Jeffrey Sweeney is Founder and Co-Managing Partner of the General Partner, and Charles
Towle is the other Co-Managing Partner at the firm.
Fiscal Year The fiscal year of the Fund ends on December 31.
Advisory Board The General Partner will establish an independent advisory board composed of Limited
Partner investor representatives and thought leaders and industry specialists selected by
the General Partner at the sole discretion of the General Partner. The Advisory Board will
provide such advice and counsel as is requested by the General Partner in connection with
Limited Partner interests, investment standards, guidelines on ethical principles, potential
conflicts of interest, and other Fund matters. The General Partner (or its designee) will retain
ultimate responsibility for all decisions relating to the operation and management of the Fund,
including, but not limited to, investment decisions.
Administrator Perennial Fund Services, LLC (the “Administrator”) is responsible for the administrative
functions of the Fund. The Administrator performs certain administrative, accounting, registrar
and transfer agency services for the Fund subject to the overall supervision of the General
Partner. The Fund will pay the Administrator a fee for its services. The General Partner may
change the Administrator at its discretion.
Committed The Fund is seeking limited partner commitments aggregating up to $250 million, including the
Capital General Partner’s commitment (each, a “Commitment” and, collectively, the “Commitments”).
The aggregate Commitments may include Commitments received by one or more Parallel
Funds (as defined below) that invest substantially all of their assets in the Fund. See “Parallel
Investment Entities” below.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 83
Limited Partners will be required to fund the entire amount of their Commitments upon
closing of their investment in the Fund, unless otherwise agreed in writing by the General
Partner. Limited Partner Commitments will be placed into a custodial capital call account (the
“Custodial Account”). The Custodial Account will be drawn upon by the General Partner, as
needed and without prior notice to the Limited Partners, to fund transactions approved for
the Fund portfolio. Limited Partners will earn 100% of the interest accrued at a money market
interest rate on capital placed in the Custodial Account attributable to the respective Limited
Partners, which interest will remain in the Custodial Account and be available to be drawn by
the General Partner for Fund transactions. The balances attributable to each Limited Partner
in the Custodial Account, at the previous month end, will be drawn down on a proportional
basis for allocation to the Fund’s Investments. Limited Partner Commitments placed into the
Custodial Account will be locked up in the Custodial Account for a period of twelve (12) months
beginning from the date of any such Commitment (the “Lock-Up Period”). Any draw downs
by the Fund from the Custodial Account and any payments by the Fund into the Custodial
Account will not reset the Lock-Up Period. The General Partner may, in its sole discretion, also
waive the Lock-Up Period.
Credit Facility The Fund may borrow money to leverage its capital and increase available funds for investment
purposes
Minimum The minimum Commitment of a Limited Partner in the Fund (collectively, the “Limited Partners”)
Investment will be $250,000, although individual Commitments of lesser amounts may be accepted at
the discretion of the General Partner. The General Partner and the Limited Partners are
sometimes referred to collectively as the “Partners.”
Investor The Fund will offer and sell interests only to a limited number of investors who shall be required
Qualifications to represent and verify that they are both “accredited investors,” as defined in Regulation D
promulgated under the U.S. Securities Act of 1933, as amended, and “qualified clients” as
defined under the Investment Advisers Act. The Fund intends to rely on Section 3(c)(1) of the
Investment Company Act of 1940, as amended (the “1940 Act”), so the number of Limited
Partners that will be allowed to invest in the Fund will be limited. The General Partner may, in
its discretion, elect to sell interests solely to “qualified purchasers” (as defined under the 1940
Act), in which case the Fund will rely on Section 3(c)(7) of the 1940 Act.
Placement Agent The Fund may engage selling agents to offer and sell interests in the Fund. US Capital Global
Securities, LLC (the “Placement Agent”), a registered broker-dealer member of FINRA and an
affiliate of the General Partner, will act as placement agent for the Fund. The Placement Agent
will receive a recurring placement agent fee, paid out by the Fund to the Placement Agent, of
0.50% per annum of the total amount of subscription funds raised by the Placement Agent.
Selling agents must be registered broker-dealers in every State in which they solicit. Such
selling agents may be paid a commission which will be borne out of the General Partner’s
income and/or equity ownership in the General Partner.
Closing There is no closing date for the Fund. The Fund is an open-ended fund.
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 84
Additional Limited Partners may increase their respective Commitments in $10,000 increments, subject
Contributions, to the discretion and timing required by the General Partner.
Closings
Term The term of the Fund will terminate on the earliest of: (i) the bankruptcy, dissolution or
withdrawal of the General Partner and (ii) the election, in the sole discretion of the General
Distributions Partner, to dissolve the Fund.
All returns from Investments, including payments of interest and repayments of principal by
portfolio companies, will be paid into the Custodial Account after covering any Credit Facility,
expenses, liabilities and obligations of the Fund.
Both during and after the expiration of the Lock-Up Period, Limited Partners may elect to
receive cash distributions from their Custodial Account of 100% of their realized gains income
each fiscal quarter, calculated net of the Fund’s expenses. Any such election by a Limited
Partner will not be treated as a request by that Limited Partner to withdraw fully from the
Fund (a “Redemption Request”). If a Limited Partner elects not to receive cash distributions
of realized gains income, such income shall be used proportionately from their Custodial
Account to fund any Investments, as needed, and cannot subsequently be withdrawn by a
Limited Partner without triggering a Redemption Request.
Allocations to the Partners for any given fiscal quarter of the Fund’s realized gains income in
that fiscal quarter shall generally be made in the following order of priority:
(a) first, one hundred percent (100%) to the Limited Partners until the Limited Partners
have received hereunder an amount equal to a two percent (2%) net return for
that fiscal quarter on their capital called from the Custodial Account (the “Preferred
Return”);
(b) second, one hundred percent (100%) to the General Partner until the General
Partner has received hereunder an amount equal to a one half percent (0.5%) net
return for that fiscal quarter on the sum of the Limited Partners’ capital called from
the Custodial Account, this allocation representing part of the General Partner’s
incentive allocation (the “Incentive Allocation”); and
(c) thereafter for that fiscal quarter, eighty percent (80%) to the Limited Partners and
twenty percent (20%) to the General Partner, such allocation to the General Partner
representing the remainder of its Incentive Allocation.
The Preferred Return shall be calculated and tracked separately for each Limited Partner. If
the General Partner makes a capital contribution to the Fund, the General Partner shall be
treated as a Limited Partner for the purpose of allocating realized gains and income to the
extent of such capital contribution. If the Preferred Return or Incentive Allocation are not met
in any fiscal quarter, they will not carry over to subsequent fiscal quarters. The Partners’ share
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 85
Withdrawals of profits in respect of the last fiscal quarter of the fiscal year may be subject to adjustment at
fiscal year-end following the annual audit.
During the Lock-Up Period, a Limited Partner cannot withdraw any funds from the Custodial
Account other than by electing to receive cash distributions of realized gains income.
After the expiration of the Lock-Up Period, a Limited Partner can at any time choose to withdraw
from the Fund in full by making a Redemption Request. In such event, all funds in the Custodial
Account attributable to that Limited Partner will be paid out to that Limited Partner at the
end of the fiscal quarter in which the Redemption Request was made, except to the extent
necessary to: (i) fund investments with respect to which the Fund has entered into a term
sheet engagement or binding written commitment on or prior to the Redemption Request;
(ii) effect follow-on investments in existing Investments with respect to which the Fund has
entered into a term sheet engagement or binding written commitment on or prior to the
Redemption Request; (iii) repay any Credit Facility or advances made by a creditor of the Fund
to fund existing Investments and secured by the Commitments in the Custodial Account; and
(iv) cover expenses, liabilities and obligations of the Fund. Thereafter, all returns attributable
to that Limited Partner from Investments, including payments of interest and repayments of
principal by portfolio companies, will be paid out quarterly to such Limited Partner as they
are received in the Custodial Account. In other words, such Limited Partner will be paid out as
Investments by the Fund amortize out. The maturity period of Investments is generally thirty-
six (36) months, and will not exceed forty-eight (48) months. If there is liquidity in the Fund, a
Limited Partner making a Redemption Request may be paid out earlier, at the discretion of the
General Partner.
If a Limited Partner makes a Redemption Request, then such Limited Partner chooses to exit
their position in the Fund in full. A Redemption Request, once made, cannot subsequently be
reversed by a Limited Partner. All redemptions and distributions will be calculated and paid
out on a trailing quarterly basis. The General Partner may, in its sole discretion, also accept
partial Redemption Requests.
The General Partner may also suspend withdrawal rights, in whole or in part, when there
exists, in the opinion of the General Partner, a state of affairs where disposal of the Fund’s
assets, or the determination of the balances of the Limited Partner’s capital account, would
not be reasonably practicable or would be seriously prejudicial to non-withdrawing Limited
Partners.
The General Partner may establish reserves for contingencies (even if such reserves are not
otherwise required by GAAP) that could reduce the amount of a distribution upon withdrawal.
Withdrawal proceeds shall also be subject to reduction for legal, accounting or administrative
costs and expenses associated with each withdrawal.
The General Partner may require a Limited Partner to withdraw, in whole or in part, from
the Fund for any or no reason at any time on not less than 30 days’ prior written notice
US CAPITAL GLOBAL BUSINESS CREDIT INCOME FUND, LP –– Confidential Private Placement Memorandum 86
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US Capital Global Credit Income Fund – Investor Pack - 30 Oct 19
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