Babson Capital establishes subsidiary to finance middle-market firms

By Toni Weeks

San Luis Obispo, Calif., May 14 - Babson Capital Management announced the formation of Babson Capital Finance, an operating subsidiary that will provide financing to middle-market companies and specialized industries globally.

Mike Hermsen, managing director of Babson Capital, has been named chief executive officer of the new subsidiary. He will report to CEO and chairman of Babson Capital Management Tom Finke.

According to a press release, the establishment of Babson Capital Finance consolidates the firm's existing global middle-market leveraged finance and energy finance investment teams into one platform. This realignment, combined with backing by parent company Massachusetts Mutual Life Insurance Co., will enable the firm to expand its origination and investments in a broad range of products, including middle-market senior and second-lien loans as well as unitranche, subordinated debt and private equity co-investments. The new subsidiary will also manage funds and customized separate accounts for clients seeking private finance solutions for their investment portfolios.

"We plan on establishing Babson Capital Finance as a leading global finance company serving middle-market companies, especially those backed by financial sponsors and in certain specialized industries," Finke said in the release, also noting that many regional banks and other traditional financiers have either cut back their activity levels or withdrawn completely from the leveraged finance market recently due to increasing financial regulations and changing economic conditions.

Babson Capital is an investment management firm and is based in Boston and Springfield, Mass.

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