PGIM Private Capital provides nearly $6.5B in first half of 2021
PGIM Private Capital provided nearly $6.5 billion of senior debt and junior capital to more than 100 middle-market companies.
“This is the most challenging period I’ve ever had to deal with in my career.”
For Adam Satterfield, chief financial officer of Old Dominion Freight Lines, an 86-year old North Carolina-based trucking company, the global financial crisis of 2007-2008 was a bump in the road. The COVID-19 pandemic, in contrast, was looking like a 10-car pileup.
Customers were closing their doors and shipments were left in limbo. A rolling cascade of safety restrictions across the U.S. were impacting the company’s nationwide network of service centers and more than 20,000 employees. Broad disruptions to manufacturing and retail caused by pandemic-related shutdowns clouded the company’s future.
“Overnight, we went from our business performing right along with our plan to our revenue being down 20%,” Satterfield said. “We didn’t know if our revenue levels would fall off 50% or even more. There was a challenge to adjust cost and operations and all those measures to keep the business running—not only for the short term, but to make sure we were positioned to be able to participate in the recovery.”
In need of a solid source of financing to ride out the storm, Old Dominion sought help from the same partner that supported their business expansion after the financial crisis—PGIM Private Capital.
“There are people that knock on the door and tell you they want to come in with certain levels of capital when times are good, but when you go through a challenging period, those commitment levels decrease,” Satterfield says. “Prudential has always been consistent.”
PGIM Private Capital arranged a shelf agreement—a pre-approval for funds that Old Dominion can access quickly anytime a borrowing need arises. It was just what Old Dominion needed to see past the current crisis.
“We’re looking to make sure we have people in place, equipment in place and our service center network set up to not only deal with what may come at us 6 to 12 months from now, but years down the road,” Satterfield says. “When, not if, things get better, we can successfully grow for the future."
Invested in what matters
Helping companies like Old Dominion through boom and bust times is only one part of what PGIM Private Capital does.
Formerly known as Prudential Capital Group (or Pricoa Capital Group to international borrowers), Prudential’s 75-year old private debt business adopted its new brand name last year to reinforce its connection to the global PGIM brand and underscore the types of investment products they offer.
PGIM Private Capital manages more than $20 billion in outside non-affiliated assets and purchases up to $13 billion annually. PGIM Private Capital also manages debt through its regional office network, known as Prudential Private Capital in the Americas to maintain its link to Prudential (or Pricoa Private Capital to international borrowers), with offices in Atlanta, Chicago, Dallas, Frankfurt, London, Los Angeles, Mexico City, Milan, Minneapolis, Newark, New York, Paris, San Francisco and Sydney. PGIM Private Capital’s newest offices—Milan, Sydney and Mexico City—opened in the last five years and represent more than $10 billion in assets under management.
Altogether, PGIM Private Capital’s activities account for more than $97 billion in assets under management as of March 31, 2021, an all-time high for the business.
How business is faring in 2020
With more than $2 billion in new loans across all platforms in the first quarter, PGIM Private Capital was on track for a strong year. Then the pandemic hit. But the business carried on and finished the third quarter with $7.7 billion in new investments, less than $1 billion below production by third quarter of 2019. At time of publishing, PGIM Private Capital had originated nearly $11 billion in new loans in 2020, down only $500 million from the same time last year.
“We thought it would be very difficult to close new business, because so much of what we do requires boots on the ground, meeting face-to-face to build relationships,” says Allen Weaver, senior managing director and head of PGIM Private Capital. “But our regional office network has allowed us to stay close to clients without significant travel, and I’ve been pleasantly surprised at what our team can do virtually. It demonstrates our flexibility and ability to forge new relationships under tough circumstances.”
All about relationships
Around 60% of PGIM Private Capital’s business is repeat business. To achieve that kind of loyalty, PGIM Private Capital relies on its regional office network to understand local industries, markets and customs. This helps them get to know prospective borrowers and their businesses deeply, building up contacts with business owners and executive teams long before any investment opportunities come to the table.
Take White Castle, for example. Historically, the slider-slinging fast food business based in Columbus, Ohio—known for their “Crave Cases” of bite-sized burgers and dedicated fans called “Cravers”—had primarily worked with a single bank for their capital needs. But managing director David Quackenbush, in PGIM Private Capital’s Chicago office, struck up a relationship with the company’s chief financial officer Russell Meyer.
“What I really liked about Prudential and Dave Quackenbush and his team was that over a number of years we really got to know each other, even though it didn’t make sense to be doing transactions at that time,” Meyer says.
PGIM Private Capital’s relationship-based approach to delivering patient, long term capital convinced White Castle management that they could offer the perfect complement to the existing bank line and help the company accomplish its growth objectives, including a new headquarters in Columbus and the expansion of their frozen food business.
PGIM Private Capital had just one stipulation before the first deal could close—two “Crave Cases” of sliders.
“We had enough confidence in the relationship to ask for that,” Quackenbush says, “We know who they are, their sense of humor and how much fun they have with their brand.”
The deal closed—and the “Crave Cases” were delivered.
No such stipulations exist in PGIM Private Capital’s agreement with Old Dominion, but Satterfield is grateful for a partner that has demonstrated it’s in it for the “long haul.”
“The relationship we’ve had over the years is a strong one,” says Satterfield. “It’s been easier to have one partner we can have a dialogue with to talk about our needs. There’s a lot wrapped up in the value Prudential provides and the ability to come back to them again and again.”