New Holland Capital invests in veteran muni firm Foundation Credit
Foundation Credit
Foundation Credit has partnered with alternative investment manager New Holland Capital in a deal that gives New Holland a majority stake in the longtime municipal credit and infrastructure debt management firm.
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The move will give Foundation more resources to scale up at a time when project sponsors are looking for alternative ways to finance infrastructure, said CEO and founder Hector Negroni.
New York-based New Holland, which manages $8.3 billion of assets for institutional clients, has also invested in Foundation’s municipal hedge fund and infrastructure debt strategies, the companies said in a press release. New Holland will provide resources to support distribution, product development and “other efficiencies” associated with Foundation’s investment strategies, the firms said.
Negroni will continue to lead the firm and retain control over its daily operations and investments.
The partnership “adds scale and breadth,” Negroni told The Bond Buyer.
New Holland has “really interesting, innovative, and flexible capital to deploy. And that helps us accelerate new ideas, accelerate new strategies,” he said. “They’re a really good partner that helps us explore both broader strategies and broaden our client base. We complement them because they don’t have a lot of experience in our area.”
Foundation, with $2.2 billion of assets under management, manages municipal investments for institutional investors, including New Holland. It also has an infrastructure debt fund that works with government and non-governmental sponsors looking for private capital to finance infrastructure.
The firm closed its second infrastructure debt fund, with $540 million, in late October.
The partnership comes at a time “when the municipal market would benefit from more private capital solutions,” said Negroni, who founded Foundation in 2012 after leaving Goldman Sachs where he was on the sell side.
“There’s a growing gap in the market where our financings provide a solution,” he said. Rising construction costs and local revenue pressures are driving are prompting sponsors to look for alternative financings, he added.
“We’re filling a gap where the capital markets don’t solve problems,” he said. “We respect the fact that there’s a lot of very capable capital in high-yield tax-exempt bonds,” he added. “I’m not there to compete” with those investors. “When people don’t have a solution, they call us up.”
The projects are typically bespoke, unrated, cost less than $250 million and may not qualify for the tax exemption.
Examples include the United States Air Force Visitors Center, electric vehicle charging stations in Oklahoma, mobile turbines for a Memphis data center and a financing backed by water rights in the Brazos River for a future pipeline.
Negroni said the firm may consider expanding with the fresh capital from its current 11 employees. “We’re opening the aperture around what we’re doing,” he said. “And so we expect to be growing our team over time.”
New Holland Capital CEO Scott Radke said the firm looks forward to growing its platform.
“We look forward to expanding NHC’s platform by partnering with the team at Foundation to expand the distribution of their strategies, further product development and grow its footprint among global institutional investors,” Radke said in a statement.
