In a comprehensive fireside chat hosted by Giovanni Amodeo, Philippe Arbour, CEO and Managing Partner of Tresmares Capital UK, delved into the evolving landscape of private credit trends. The discussion, part of the ION Influencers’ series, highlighted Arbour’s extensive background in leveraged finance and private equity, and the strategic growth and operational focus of Tresmares.

Key Discussion Points and Timelines –

Background and Company Overview:
Philippe Arbour shared his transition from leveraged finance to private equity, culminating in his role at Tresmares, which specializes in financing businesses in the lower middle market.

Evolution and Expansion of Tresmares:
Tresmares started with minority private equity in Spain and evolved by adding direct lending to address market gaps. A significant partnership with Santander in 2020 boosted their capital for direct lending to €1.1 billion, emphasizing a strategic shift towards larger-scale operations in direct lending.

Geographic Expansion and Market Strategy:
Arbour discussed Tresmares’ expansion into the UK and other European markets, aiming to establish a pan-European asset management presence. He highlighted the allocation of €840 million specifically for UK operations.

Market Positioning and Competitive Strategy:
The conversation shifted towards Tresmares’ approach to establishing a market presence in the competitive UK landscape, leveraging Arbour’s extensive network and focusing on underserved segments of the market.

Investment Philosophy and Origination Process:
Arbour detailed Tresmares’ investment philosophy, which targets leaders or disruptors in high-growth micro-sectors. He also introduced a proprietary business intelligence tool, ‘Macroscope’, which aids in identifying promising sectors and companies by analyzing economic trends and company performance data.

Future Outlook and Industry Trends:
Looking ahead, Arbour predicted continued interest in traditional and innovative financial products, like stretch senior loans and TLB (Term Loan B), adapting to market needs and sponsor objectives. He also touched on the impact of interest rates on the industry, suggesting that a normalization of rates would likely benefit deal-making and overall market stability.

Throughout the chat, Arbour emphasized Tresmares’ commitment to adding value beyond capital provision, aiming to be a strategic partner to businesses in the lower middle market. The discussion not only provided insights into Tresmares’ strategic initiatives and market approach but also highlighted broader trends in the private credit sector, making it a valuable resource for stakeholders in the financial industry.

Key timestamps:

00:09: Introduction to ION Influencers’ Fireside Chats
01:51: Transition to Middle Market Banking
02:57: Transition to Tresmares as CEO of UK Operation
03:20: Overview of Tresmares and its Origins
04:14: Transition to Direct Lending and Expansion of Services
05:05: Expansion of Services and Commitments
05:56: Focus on Lower Middle Market Space
06:33: Allocation of Funds to the UK and Strategy
07:08: Expansion to the UK and Capital Allocation
07:41: Reasons for Expansion to the UK
08:55: Impact of Direct Lending on Banks
10:17: Competition between Direct Lenders and Banks
11:06: Comparison of Private Equity and Private Credit
11:26: Advantages of Specialization vs. Integrated Asset Management
12:19: Relevance of Product Offering in Different Scenarios
13:54: Managing Conflicts and Integrating Products
15:11: Deal Flow and Transaction Volumes
17:09: Introduction to Tresmares’ Business Intelligence Tool
19:46: Investment Criteria
21:42: Expansion to the UK
22:30: Tool Utilization and Origination
23:26: Use Cases
24:18: Team Building Criteria
26:08: Role of Intermediaries
28:22: Resource Allocation