LS Investments
We Invest in Middle Market Companies.
Lafayette Square’s Investment Platform typically focuses on lending to profitable middle market companies in historically overlooked areas.
What we invest in
Annual EBITDA Range
$5M – $100M+
Our Check Size
$15M – $75M+
Industries
Industry-agnostic; no commodities or consumer discretionary
Security Exposure
First lien, senior secured preferred, with some flexibility for subordinated debt and preferred and common equity investments
The Problem
Capital flows are skewed toward high-income places and just a few states – 80% of private credit funding flows to businesses headquartered in high income places. Additionally, more than 50% of private credit funding is concentrated in just 5 states.
Source(s): Lafayette Square analysis of data from the U.S. Securities and Exchange Commission's Electronic Data Gathering, Analysis, and Retrieval (EDGAR) database and Preqin.
American Workers living paycheck-to-paycheck
Low-income workers are less likely to participate in employer retirement and healthcare plans than higher income employees
Traditional benefits don’t meet the needs of Working-Class people, particularly for workers outside of high-income places – 64% of American workers are living paycheck-to-paycheck, Low-income workers are 3x less likely to participate in employer retirement and healthcare plans than higher-income employees. Employee financial stress can have significant, damaging effects on the financial outcomes of operating companies.
Source(s): PYMNTS & Lending Club, January 2023, Bureau of Labor Statistics, September 2022.
The Opportunity
However, the data shows there are ample investment opportunities in low-income places.
Credit Funding Deployment
Source(s): Lafayette Square analysis of data from the U.S. Securities and Exchange Commission's Electronic Data Gathering, Analysis, and Retrieval (EDGAR) database and Preqin.
The Solution
We believe leveraged finance and private markets can be a delivery mechanism, both for capital to overlooked places and benefits to underserved workers. For investors, we believe the combination drives better risk-adjusted returns.
Our Focus
Measure
Our direct lending platform prioritizes non-sponsored middle market investments with an emphasis on place. We believe there are compelling opportunities in overlooked markets.
We define middle market businesses as companies that typically have annual revenues between $10 million and $1 billion and EBITDA between $10 million and $100 million.
Adopt
We gather and analyze data on place and labor we believe will improve outcomes for our portfolio companies, their employees, and our stakeholders.
By understanding geography in economic terms, we can pinpoint challenges facing the workers of our portfolio companies, address them to build a more productive workforce, and we believe will decrease the probability of defaults.
Support
Our place-based strategy enables us to identify investment opportunities that aim to improve the lives of workers employed by these businesses through a proprietary offering of comprehensive traditional and non-traditional benefits.
This approach seeks to create better financial and social outcomes for all stakeholders.
