Safeguard Scientifics to Acquire 36% Interest in Penn Mezzanine
Posted by | July 6, 2011
Safeguard Scientifics announced today that it has signed a definitive agreement to acquire a 36% ownership interest in Penn Mezzanine, a mezzanine platform which commenced operations in early 2010 with over $30 million of initial fund capital. In addition to this capital, Safeguard will deploy up to $30 million over a several year period in lending opportunities that meet certain predefined criteria alongside existing and future Penn Mezzanine funds.
“This strategic partnership represents Safeguard’s first initiative to augment its capabilities as a provider of growth capital and to participate in the management of external sources of capital,” said Peter J. Boni, President and CEO of Safeguard. “This initiative is expected to produce management fee income and profit participation. Managed by a team of experienced mezzanine lenders, this platform will enable Safeguard to provide flexible financing strategies to our current and prospective partner companies, as well as other potential borrowers, to build value in their business and ultimately realize that value through a well-timed exit.”
Penn Mezzanine will be managed day-to-day by an experienced team with a proven track record:
- Donald K. Rice, Managing Partner — 30+ years of principal investing and fund management experience. He also has a deep background in credit and leveraged lending, operating management and investment banking. In total, he has invested $1.1 billion in 82 transactions, with 59 realized mezzanine debt exits (Gross IRR of 17.5% and 1.5x return on capital). Previous roles include: founding partner of Rice Capital/RSTW Partners, a $900 million mezzanine/equity investment firm; Chairman and CEO of Ascend Acquisition Corporation, a Special Purpose Acquisition Corporation that went public in 2006; President of First Texas Merchant Banking Group; Vice President with PruCapital, Inc. (Prudential Insurance Co.); President and CEO of Hunter Air Freight. Currently, Don serves as a director of, Mrs. Fields Famous Brands, and various other portfolio companies.
- Darl A. Petty, Managing Director — 18 years of experience in lending, mezzanine financing and private equity. In total, he has analyzed, structured and managed investments with 40 transactions closed. Previous roles include: Partner with Capital Point Partners; Managing Director with Rice Partners/RSTW Partners; and Vice President in the Structured Finance Group of JPMorgan Chase Bank.
In addition, Stephen T. Zarrilli and Brian J. Sisko, from Safeguard’s executive management team, will join Penn Mezzanine’s Management Committee.
“Penn Mezzanine will target companies with proven business models and strong leadership,” said Don Rice. “This platform will provide meaningful and flexible junior capital plus operational support services to growth-stage businesses. In addition, it will provide rational levels of mezzanine financing to properly capitalize lower middle-market mid-Atlantic enterprises.”
