About the Manager
Founded in 2005, CapitalSpring Finance Company LLC (“CapitalSpring") provides structured financing solutions to franchisees and branded restaurant operators across North America. Primarily, CapitalSpring issues senior secured debt, subordinated debt, unitranche investments, mezzanine/preferred capital, and, to a lesser extent, common equity financing.
The firm's 34 employees, including 17 investment professionals, span four office locations: Nashville, Los Angeles, New York and Atlanta. With over $1.8 billion invested in more than 60 brands across the US and Canada, CapitalSpring has become one of the most active institutional investors in the restaurant sector. Their expertise is reflected in the 16+ year track record, and their industry specialism puts them in a unique position to offer significant value-add to underlying portfolio companies.
Investment Approach:
CapitalSpring
Focus on value-oriented segments of restaurant industry: Quick Service, Fast Casual and Family Dining
These areas of the market have proven resilient in previous economic downturns
Experienced management teams operating across franchised restaurant industry with strong, longstanding brands and significant regional/national presence
Insufficient capital from traditional bank lenders gives market to more creative/flexible investment approaches
Mitigate risk by seeking multi-year call protection/make-wholes, strong covenants, guarantees and credit enhancements
Senior secured and mezzanine debt/opportunistic equity
Allows ongoing capital needs to be met - incremental investments, with contractual right of first refusal on follow-ons
Private equity-style portfolio oversight: data-driven monitoring mitigates risk and enhances value-maximizing exits
About the Deal
Investment Amount
$8.1 million total
$3.5 million in April 2020
$4.6 million in September 2021
Structure
A special purpose vehicle (SPV) has been established in order to purchase CapitalSpring interests from certain existing third-party shareholders at a discount to “Book Value”. VPC is financing 90% of the SPV; CapitalSpring’s Founder is financing 10%. VPC ’s investment is senior in the SPV’s structure.
Capital Protection
VPC has significant asset coverage on its investment. CapitalSpring management sit in a first loss position until VPC is redeemed upon hitting target return.
The Manager's Use of Proceeds
To buy-out existing third-party passive shareholders