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Bain Capital Specialty Finance IPO: The Key Takeaways

Oct. 11, 2018 11:11 AM ET
Euan Jones profile picture
Euan Jones


  • Bain Capital Specialty Finance Inc., a subsection of investment firm Bain Capital, has filed for a $100 million IPO.
  • BCSF is a small company which could take advantage of a major market opportunity and interest in middle market lending.
  • The company reports high revenue growth, but its debt level is higher than investors should like.
  • No conclusions can be drawnwithout a formal pricing, but investors should be skeptical as the company isnew and may not draw that much benefit from its association with its parentcompany.

Bain Capital is finally going public. To be more specific, a section of the well-known investment firm called Bain Capital Specialty Finance Inc. (BCSF) has filed for a $100 million IPO under the banner of BCSF according to Reuters. The IPO amount is a placeholder value used to calculate filing fees and we can expect BCSF to enlarge the IPO size eventually. BofA Merrill Lynch, Goldman Sachs, Morgan Stanley and Citigroup are among the underwriters for the IPO.

There is not a lot we know about this IPO, especially as we do not know the IPO size nor its resulting valuation. We cannot thus draw a firm conclusion about whether investors should be interested, but there are some troubling signs as we look through the initial numbers and what BCSF is trying to do. Investors should listen carefully during the roadshow, but skepticism should be the initial order of the day.

A New Business

Bain Capital is a well-known and large investment firm, but the same cannot be said for BCSF. In fact, BCSF states in its S-1 filing that it was founded in October 2015 and commenced investment operations on October 13, 2016. Furthermore, BCSF’s website states that it has just “25 dedicated professionals around the world that exclusively focus on middle-market investments.”

Bain defines middle-market investments as companies “between $10.0 million and $150.0 million in annual earnings before interest, taxes, depreciation and amortization.” The company aims to retain effective voting control through its investment, with a heavy emphasis on high tech, healthcare and pharmaceuticals, and business services. None of these sectors make up more than 15 percent of BCSF’s portfolio, which is good from a diversification standpoint.

It should be noted that middle market lending has become a hotspot of capital and ideas recently, as Reuters reported in

This article was written by

Euan Jones profile picture
Evan Jones is an investment writer and a graduate of the University of Exeter. He has a degree in Economics and Finance and has previously worked as a communications manager at Deloitte. He has expertise in equity products as well as experience managing assets on New York stock exchanges on behalf of financial institutions, pension funds, government agencies and retail investors.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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