Start-Up Lender Raises $200 Million From Ex-Owner of Los Angeles Dodgers

01/14/15 |
The New York Times |
William Alden

One of the hottest areas of finance these days is also one of the oldest: small-business lending.

With traditional banks constrained by regulations put in place since the financial crisis, alternative investment firms and technology start-ups are increasingly in the business of lending to companies. One new firm, MGG Investment Group, which is expected to make its official debut on Wednesday, has raised $200 million for a fund it will use to try to capture a slice of this market.

The firm, based in Manhattan, said it raised the capital from Frank H. McCourt Jr., the real estate developer who formerly owned the Los Angeles Dodgers. Although its loans will probably be more expensive than those from a traditional bank, MGG is hoping that its Wall Street expertise and a nimble approach can help it find business.

So far, MGG has committed to five deals since starting last fall, said Kevin Griffin, the firm’s chief executive, who formerly worked at big hedge funds. He said he planned to lend to companies with $10 million to $40 million of earnings before interest, taxes, depreciation and amortization. 

“Banks are still having a tremendously hard time lending to those types of businesses,” Mr. Griffin said. “I think it’s only getting harder.”

Mr. Griffin, 38, has years of experience in debt markets. He formerly was a managing director and member of the credit committee of the hedge fund Highbridge Principal Strategies and previously held senior roles at the hedge funds Octavian Advisors and Fortress Investment Group. 

He has done several deals with Mr. McCourt over the years, he said, providing a portion of the financing to buy the Dodgers and then extending a loan when Mr. McCourt put the team into bankruptcy. 

The new firm’s name is a combination of the initials of McCourt Global, Mr. McCourt’s company, and Mr. Griffin. It currently has four investment professionals, Mr. Griffin said. 

Though banks may be retreating from this market, MGG is bound to have rivals. Hedge funds and private equity firms are doing more lending. One upstart lender, OnDeck Capital, had its initial public offering in December.