OFS Capital Management's investment philosophy is rooted in its thorough credit evaluation process, which has been developed over multiple credit cycles. This process focuses on both Fundamental Value Analysis and Relative Value Analysis to maintain a well-diversified portfolio and to optimize performance for its investor base.
FUNDAMENTAL VALUE ANALYSIS
- Review of a company’s business including financial performance, competitive position, contracts and customers, industry trends, concentrations, commodity price risks, and price/volume mix
- Review of a company’s sponsor and management team including its track record, previous operational experience, and relationship with OFS
- Review of a company’s historical and current capital structure, credit metrics, covenants and other major legal terms, and exit strategy
RELATIVE VALUE ANALYSIS
- Comparison of issuers based on spreads, ratings, absolute yield, credit metrics, trading price levels
- Comparison of issuers within the same industry sector and across different industry sectors
OFS Capital Management’s Broadly Syndicated Loan business targets investments primarily in the senior secured tranches of a company’s capital structure.
Typical characteristics include:
REVENUES / EBITDA
- Revenues greater than $300 million
- EBITDA greater than $50 million
- North America-focused
- All industries except Real Estate
- B2/B or better
- $250mm or greater
The Broadly Syndicated Loan team has been making leveraged loan investments over multiple credit cycles and has serviced and managed loan funds since its inception.
Members of the management team have a demonstrable track record having an average of more than 20 years of industry experience in areas such as lending, corporate finance, turnaround management and operations, workouts, and debt capital management.
As an established asset manager with an experienced team, OFS Capital Management’s advantage in investing in broadly syndicated loans is based on its industry relationships, robust underwriting capabilities, substantial infrastructure, a long history, and proven track record.
ORIGINATION AND CREDIT EVALUATION PROCESS
- Long history in the market has allowed the firm to develop long-standing sourcing relationships with market participants including syndicating banks and private equity sponsors.
- The firm and its management team have worked through multiple credit cycles and the investment process has stood the test of time.
- OFS Capital Management’s team of industry experts provides deep insights across industry sectors, which provides relative value decisions both within and across different sectors
- Deep knowledge of the market and individual issuers and their performance through credit downturns.
- Infrastructure and processes have been built to anticipate and withstand periods of stress in the credit markets.
- Underwrite each loan to ensure a satisfactory investment profile and seek to maintain a well-diversified portfolio across industries and issuers
INFRASTRUCTURE AND SERVICING CAPABILITIES
- OFS Capital Management’s infrastructure can accommodate a multiple of current investment volume
- Experience in managing loans through multiple credit cycles in a CLO environment
- State-of-the-Art technology infrastructure that allows active monitoring of portfolios
WORKOUT AND DISTRESSED ABILITY
- Strong in-house workout experience
- Experience in distressed debt management contributes to greater investment flexibility during a market turndown