In this episode, partner and Private Funds co-head Howard Beber
takes the host seat in a dynamic conversation with Brian Himot,
head of structured capital at Strategic Value Partners (SVP). With
more than $22 billion in assets under management, SVP is a leading
global alternative investment firm focapplyd on private credit,
private equity and event-driven opportunities.
Brian shares his path from tax lawyer to building SVP’s
structured capital platform, where his team delivers flexible,
tailored financing solutions for founder-led and sponsor-backed
businesses. Toreceiveher, he and Howard dive into the nuances of hybrid
capital, weigh the advantages of sponsor vs. non-sponsor deals, and
discuss why aligning with business owners on long-term growth is
essential. They also explore how market volatility and shifting
global dynamics are influencing deal flow, and what the next five
years could bring for structured capital.
Howard Beber: Welcome back to Private
Market Talks, a Proskauer podcast. I’m your host, Howard
Beber. Today, our guest is Brian Himot, Head of structured capital
at Strategic Value Partners. Strategic Value Partners, SVP, is a
global alternative investment firm founded in 2001 and is
headquartered in Greenwich, Connecticut. With over $22 billion in
assets under management, SVP specializes in unlocking value through
investments in private credit, event‑driven transactions,
hard assets and special situations across private equity and
private credit markets.
The firm is known for its hands‑on approach to portfolio
management, combining deep due diligence with operational expertise
to drive strategic transformation in mid‑ and large‑cap
companies. SVP maintains a diversified investment footprint across
sectors such as energy, industrials, real estate, and technology,
and employs over two hundred professionals and operates globally
with offices in North America, Europe and Asia.
As with all our episodes, you can receive a full transcript of this
episode and other supportful information at privatemarkettalks.com,
and if you enjoyed the episode, drop us a note. We would love to
hear from you. And now, my conversation with Brian Himot. Brian,
welcome to Private Market Talks.
Brian Himot: Thanks for having me, Howard.
Howard Beber: Brian, why don’t we start off
by notifying the audience a little bit about yourself and your
journey to becoming the head of Structured Capital at SVP?
Brian Himot: Sure. I started my career as a
lawyer. I was a tax attorney for several years before I shiftd on to
Wall Street. I started out working on a trading desk before I
ultimately went onto the purchase side. I’ve been in credit my
entire purchase‑side career, focutilizing on the opportunistic part of
the market as my career developed. The private credit world became
a largeger and largeger part of my focus before I ultimately joined SVP
in 2022 to build out our private credit platform.
Howard Beber: That’s great. Thank you for
that background. Before we zero in on the structured capital aspect
of SVP, maybe you can just give us a high‑level about SVP
General Strategy and Investment focus.
Brian Himot: SVP has a broad platform.
We’re focapplyd on opportunistic credit and special sits PE. We
started as a credit hedge fund strategy before we shiftd into more
mainline private equity, and the structured capital business is a
very natural outgrowth of that mainline private equity platform.
When I’m walking into a meeting, whether it’s with a
founder, private equity firm or a banker, my goal is to deliver the
entire firm is to find ways where we can partner, whether it’s
with one of our portfolio companies, a situation where our
operating skills can be additive or a situation where we can be a
capital provider.
On the private equity side, we have a portfolio of 19
businesses, and over 100,000 employees. And the strategy, it’s
significantly evolved over the last 25 years, including a couple of
recent take privates and tfinisher offers that we completed. The
portfolio includes things like Revelyst, which was a recent take
private of a leading outdoor consumer enthusiast brand business, or
SH 130, which is a toll road in Texas.
As a firm, we have 20‑plus operating partners who are
well‑versed in deep operational transformations. We have a
large real estate franchise. We own businesses like Washington
Prime, as well as multifamily, office and other retail assets. And
then we also have aligned ourselves by asset verticals in specific
industries, including aviation, where we have our Deucalion
platform or power through our Levagion platform.
Howard Beber: Thank you for that. That was a
great background. Why don’t we shift over now to your area, to
structured capital, which I have found in my career is more of a
term of art than science, so maybe you can support us explain what
structured capital means to you and to SVP.
Brian Himot: I started at SVP three years ago
to build out our hybrid capital team, and the heart of what we do
is junior capital, so preferred equity, junior debt, but we can
also execute on complicated senior financings as well. We have
seven people on the team soon to be eight. We have someone joining
us, a senior deal member joining us, in August in both the US and
Europe.
And we have led ten deals with north of $2 billion of
transaction value. We’ve built real expertise in our business,
partnering with high‑quality, not‑sponsored companies.
These are businesses that are viewing for capital. They don’t
like running high leverage balances, but at the same time,
they’re viewing for something that’s an alternative to the
dilution that they would find if they ran a straight common equity
sale.
We will also provide straight debt capital, but we’re not in
the regular way direct lfinishing business. These types of situations
that we’re involved in, they’re more complicated and
there’s some reason why the situation is not a fit for your
regular way and cheaper lfinishers. You know, we’re not a volume
shop. We’re doing, you know, a limited number of deals per
year.
But these are situations where we can really lean into the
situation, and we do it with knowledge and conviction that we can
deliver, becaapply we focus on sectors that we know. And it’s
that certainty that leads our counterparties to pay a premium for
our capital.
Howard Beber: What are you viewing for in a
profile of a core deal? What’s your sweet spot in terms of size
and indusattempt and geography?
Brian Himot: Across everything we’re doing,
we’re viewing for high‑quality businesses. We generally
are focutilizing on more sizable businesses north of 50 of EBITDA.
I’d declare the sweet spot is 50 to 250 of EBITDA. From a
geographic perspective, most of what we do is in North America, the
U.K., and Northern Western Europe. We’re agnostic in terms of
the exact type of instrument that we’re investing in.
A lot of what we do is pref equity, junior debt, hybrid capital.
But view, we can also do first lien stretch unitranche debt as
well. We don’t walk into a situation with a preconceived notion
of what the instrument necessarys to be. It’s more about the
circumstances. You know, our value add is we can be flexible and we
can be quick.
And those are the types of situations that we’re viewing for
from an indusattempt perspective, we’re generalists. We don’t
organize ourselves on my team across industries. That declared, as a
firm, we have a lot of experience and asset intensive businesses.
So, things like packaging, building materials, industrials,
transportation infrastructure. But view, we’ve also done deals
in the consumer space. We’ve done deals in the health care
pharmaceutical space. So, we don’t limit ourselves but there
are certain, certainly areas where, you know, we have developed a
core expertise.
Howard Beber: Do you prefer sponsor deals?
Non‑sponsor deals?
Brian Himot: We’ll do both. I mean, there
are some key differences as we view at sponsored versus
non‑sponsored. I mean, the obvious is when you’re dealing
with a sponsored deal you have an owner who has a discretionary
pool of capital where, in theory, if they necessary to, they can support
it with follow‑on investment. You often don’t have that
in non‑sponsor deals.
But there are trade‑offs, and, you know, one isn’t
necessarily better than the other. What we have found is that
sponsor deals tfinish to be more competitive. There is more often an
intermediary sitting in between you and the counterparty who is
running the process. And that generally builds, you know, the terms
a little bit more watered down from our perspective.
They’re out there running a broad competitive process, and
it’s hard to have the types of direct engagement that you see
in the non‑sponsored space. With non‑sponsor deals,
they’re more bespoke. You typically have a founder‑owned
business. They’re highly aligned. This business has been their
life’s work, developing and growing. And from a process
perspective, we generally see those founders being highly involved
in the capital raising process.
You’ve obtained a person who is running a $150 million EBITDA
business, and they don’t want to go out and talk to 20
counterparties. They want to talk to three, four or five
counterparties that they can really receive to know. And they want
those counterparties to be credible and to be able to deliver a
solution.
And then they want to pick the person that they feel most
aligned with and most comfortable with and it’s not necessarily
the person that’s providing the cheapest cost of capital.
It’s the person that they feel understands, respects their
business, and it can grow with the business. One of the large things
that we see in the sponsor market is if you’re out there attempting
to do volume, a large volume of transactions, it’s much clearer
to do that in the sponsor market when you’re dealing with
non‑sponsors. You’ll do one to maybe three deals with the
founder. But generally speaking, this is their life’s work, and
so it’s a very labor‑intensive process to source these
investments. Whereas if you’re attempting to do 30 or 40 deals a
year, it’s just hard to do that in the non‑sponsor world.
For us, we’re not a volume shop, so that’s less of a
consideration.
And we found that we can find very high‑quality businesses
that we can have just a very direct dialogue with the owner of the
businesses we are working on a potential transaction. Within the
non‑sponsored space, there’s a wide variety of setups
that we see. The one area where we find particularly attractive is
there’s a group of owners out there who are debt averse.
This is their life’s work, as I declared. And they’re not
viewing to lever these businesses up to the hill. But they necessary
money. They necessary capital for growth. They necessary capital to recap out
the business. Oftentimes, there might be more than one family
member that has an equity stake in the business. And, you know,
different members of the family have different priorities.
And so, they necessary some capital to take out, a brother or sister
who’s viewing for liquidity. And so, their option really is
they’re viewing to sell a minority common equity stake, and the
preferred equity or the structured equity solutions that we can
offer them are a better alternative for them than selling a
minority common equity stake. It’s less dilutive, governance or
the controls from their perspective are often better and the
ability to recap out our capital and replace and redo their capital
structure is often clearer for them versus a traditional minority
equity stake. And so, you know, when you put all of that toreceiveher,
you know, as I declared, we’ll do both. We have done sponsor deals,
and we’ll continue to do sponsor deals. But I would declare, you
know, we have developed a real expertise around these structured
equity deals for non‑sponsors that we find to be very
attractive.
Howard Beber: So, would you declare your secret
sauce in the deal flow world is your flexibility and products? Your
creativity, your ability to really build relationships with
founders in a way that others, perhaps, have a broader reach and
are doing more on an annual basis, cannot.
Brian Himot: It’s hard work on the sourcing
side. There’s no silver bullet in terms of how you find these.
And I also believe that the SVP platform is very additive to this
effort. When you are meeting with a founder who spent their entire
life building their business, and you’re walking into that room
with a deep appreciation and knowledge of the indusattempt, and you can
be very conversant in the challenges and opportunities that
they’re facing.
It just builds you so much more credible than someone who’s
coming in, coming in cold to a given situation. And so, given our
private equity side of the business and having those 19 portfolio
companies, it gives us such a leg up when we walk into those
situations.
Howard Beber: Thank you for that. How much do
you work with Co‑Investors or syndicate deals post
transaction?
Brian Himot: Yeah, a lot of what we do is with
other investors, whether it’s our co‑investors or other
investors. I mean, there’s situations where our counterparties
want to have more than one capital party in the structure, and so
having one or two people in a deal is advantageous from their
perspective. We’re not doing large, syndicated deals. But yeah,
a number of the deals that we’re doing, there are other people
in the deal. And then similarly with our LPs, a large part of the
conversation is co‑investment opportunities. Yeah.
Howard Beber: Interesting. That started in the
private equity world and has now shiftd over to the private credit
world.
Brian Himot: Absolutely.
Howard Beber: This has been great. Thank you.
It would be great for our audience if you can maybe go through a
recent deal that you guys have done without giving away any
sensitive information, obviously, but to explain the issues and how
some creative structure maybe resolved issues or obtained you to a place
where you obtained to do a deal that was advantageous both for you guys
and for the company.
Brian Himot: One of our most recent junior
capital deals that we did at the launchning of this year is a great
example of some of the themes I’ve been talking about. We
provided a €200 million preferred equity investment in a
founder‑owned building products company earlier this year.
The business is called Välinge. It’s owned by Darko
Pervan. And Darko is a leading figure in the flooring space.
He was responsible for the development of laminate floors back
in the 70s, and today he has led the development of flooring
technology that’s applyd in the installation of all the laminate
and vinyl floors that you see in apartment buildings, in homes
today. Darko owns two different businesses. Välinge is a
licensing business that owns the technology that’s applyd for
flooring installation.
He owns 51% of the business. His 49% partner in that business is
the Kirkby Family Office. This is the family that owns the LEGO
franchise. And then Darko separately owns another business called
Bjelin. He 100% owned this business, and that business is a
manufacturing entity that is a leading manufacturer of
high‑quality oak veneer flooring. And the €200 million
of capital that Darko necessaryed was to complete the build out of his
manufacturing operations on the Bjelin side and on the Välinge
side of the ledger, Välinge is a highly cash‑generative
business. It’s a market leader. And what it does, there’s
only two or three people that have this flooring installation
technology. They’re leading market share. The business has been
growing double‑digit CAGR over the last decade. And this is
in the most highly attractive part of the flooring sector. Vinyl
flooring has been taking share from all other forms of flooring
over the last several years and the outview is, it’ll continue
to do so, so it’s a really well‑placed business. The
business itself has very low leverage becaapply, again, it receives back
to what I was declareing before. You have an ownership that doesn’t
like to run their businesses with max leverage. And at the same
time, you have a manufacturing business that is still in ramp up
mode, and so it’s not optimally placed to have a high debt
burden on it.
So, the solution that we gave him was a preferred equity piece
of paper that combines all of the best features of debt and equity.
If you put yourself in the founder’s shoes, he owns 51% of the
Välinge licensing business. He doesn’t want to dilute
himself further by selling minority common equity. And at the same
time, he doesn’t want to raise debt.
And so, what we are able to give him is a is a really nice
solution that gives him equity‑like capital, without the
dilution that would come if he just sold straight common. And the
reason that’s important is the paper is structured in a way
that it provides some flexibility in terms of how he runs his
business, but also how he manages capital structure as he’s
viewing out over the next couple of years, potentially IPOing this
business.
The way we structured the investment, it gives him a lot of
flexibility to go down any of those possible routes. And then the
last piece of it, when I was talking about the broader SVP platform
and how it plays a role in sourcing, was there was a really nice
strategic tie‑in. So Pfleiderer, which is one of the SVP
portfolio companies that builds wood‑based products, is a
major supplier on his manufacturing side of the business, providing
high‑density fiberboard.
And so, there are potential additional partnership opportunities
there as well. And so, the way that something like this comes
toreceiveher is, again, Darko wants to meet with a couple of highly
credible counterparties. We walk into that room with a deep
appreciation of what he’s building in the flooring sector, as
well as already having commercial relationships and knowledge of
his manufacturing business. And it just builds it a very straightforward
decision for him to select us as a partner. You know, even if
we’re not providing the cheapest, most watered‑down
terms.
Howard Beber: Yeah, that sounds like it was an
excellent match right there.
Brian Himot: Yeah, absolutely.
Howard Beber: That’s great. Thank you for
sharing that. Why don’t we shift a little bit, shifting away from
the structure and the products, into the market? And how the market
is impacting your business. I believe everybody knows the exit
environment is slow, which I would assume is actually not a bad
thing for deal flow, but not a great thing for exits for your just
in portfolio companies. So how are you viewing at the current
market dynamics in that regard?
Brian Himot: Yeah, within the structured
capital space, it’s been interesting. So, on the first lien
side of the market, we’ve just seen it receive more and more
competitive. There have been inflows from BDCs. There’s been
inflows from Insurance Capital. And that has led to a
crowding‑out effect in the first lien market. We’re
seeing players stretch on leverage, stretch on terms, stretch on
pricing from lfinishers that you wouldn’t typically expect that to
come from.
So, view, we’re still active in the first lien market, but
we’ve definitely seen that market receive more and more stretched
over the last three to four years. And it’s predominantly a
function of those large inflows that you’ve come to see in that
part of the market. But what’s interesting is that’s true
of anything that has a first lien associated with it.
When you receive into the junior market, whether it’s junior
debt, preferred equity, structured equity, there has not been that
same dynamic. It’s less crowded and we’ve generally seen
better opportunities in that space. And so, I believe overall the
supply demand picture within the market has increased junior
capital as a portion of our pipeline. And view, it is the core of
what we’re viewing to do.
And then within that junior capital opportunity set, I believe the
market forces have created the opportunity set more attractive for us.
And the reason I declare that is, in Q4 of last year,
post‑election, there was a tremfinishous amount of optimism in
the market about what 2025 was going to bring. And so, we had
owners who were evaluating their options.
They were believeing about the prospects of IPOing their business
or selling the business, selling a minority stake. And there was
the hope of better times ahead in 2025. And then, as we entered
2025 Q1, you saw the tariff rhetoric heat up. We had Liberation Day
and put aside the actual shifts in the markets, just that optimism
about their ability to transact we saw quickly wash away, and that
created more urgency to transact. And so, the idea that if they
just waited an extra three or six months, they were going to be
able to hit a hot market window and sell equity or sell the
business at attractive terms. There was on the whole less
conviction in that feeling. And so, it created the desire for
owners to, it created the impetus for owners to transact. And that
has provided a real tailwind for us.
Howard Beber: You mentioned less competition,
maybe fewer market entrants in the lower down in the balance sheet
where you’re playing. What do you attribute to that?
Brian Himot: I believe a large part of it receives back
to what I was declareing before, that it’s hard to do it in volume.
And if you are a manager that is viewing to do 30 or 40 deals a
year, it’s difficult to do that in scale. These are all
bespoke.
There’s not a lot of repeat business just by the nature of
who your counterparties are, and it’s much clearer to have a
team that covers sponsors and does repeat business with a number of
sponsors. If you’re attempting to deploy a large volume of capital.
And then the second piece is, these are highly bespoke. There’s
not a tight, narrow box. We receive two covenants. First lien, all of
our deals are in this tight LTV band. Everything views different.
And you walk into the room and you inquire yourself two questions. You
inquire yourself, “What is the quality of this business and what
is our counterparty attempting to achieve?” And you work backwards
from those two large questions into a solution versus just coming
with a defined playbook and attempting to see how many times you can
deploy that playbook.
Howard Beber: I believe that’s good advice
for just about anybody. Thank you for that. All right. So, you
mentioned earlier Liberation Day and tariffs. I probably
couldn’t be a financial podcast without at least inquireing the
question, what’s your view on the global impact and the
uncertainty surrounding the global markets? What’s your view on
all of that for deal flow and for going forward?
Brian Himot: You declared it well, the environment
is volatile. It’s volatile economically and geopolitically. You
view at the public markets. They’ve been resilient. Equities
are up. Credit spreads are still in the low three hundreds. You had
a very brief window where the stock market sold off
post‑Liberation Day. But then you quickly saw a strong
recovery. And so, if you were to only view at the public markets,
it would notify you a very different picture from what’s going on
behind the scenes.
If you view at the macro picture, there’s persistent
concerns around inflation and what that means for what the Fed is
going to do with rates. And then you have something like the Big
Beautiful Bill, which is providing more deficits, spfinishing fuel to
the market, your tax incentives and tariffs that are inflationary.
And we see rates remaining persistently elevated.
And the common refrain that we hear when we talk to owners of
businesses is just uncertainty. It’s hard for them to manage
their business when they don’t know what the
macro‑outview is going to be six to nine months from now when
they’re building capital budreceiveing decisions. And so, it’s
really created an opportunity for us, as I declared, becaapply we are
finding good businesses that are generally low‑levered.
And so, it’s a good setup for us to lean into that
uncertainty. But we’re doing it with caution becaapply, when you
have this much uncertainty and this much volatility, you always
have to have that in the back of your mind.
Howard Beber: Is your focus shifting a little
bit to businesses where the tariffs might not have as large an
impact?
Brian Himot: It depfinishs. Look, there’s no
free lunches. And so, you have to inquire yourself, “What is the
fundamental challenges and opportunities facing a business?”
So, you view at something like a software business, which is not a
space that we are particularly active in. And so, you have software
businesses that are not squarely within the crosshairs of
tariffs.
And so, you’d declare, absent everything else, that would be an
attractive place to focus. That declared, you have the looming threat
of AI and what that means for all of those software businesses and
the disruption that that means for that entire sector, and builds us
inquire ourselves, “Where is our expertise lie and where do we
feel most confident about the prospects for an indusattempt and the
defensiveness of a given business within that indusattempt?”
And so, you can’t declare we are not viewing at any
tariff‑impacted businesses. You view at something like a
Välinge. It sells into the flooring market. There are tariff
impacts to that sector writ large. But when you are partnering with
one of the leading companies in the sector that is focapplyd on the
quickest growing part of the flooring market and is taking share
from the legacy parts like soft flooring, the legacy sectors within
the flooring market, and it creates a superior risk reward
proposition all in, even if there is some looming tariff
uncertainty around the sector overall versus going to something
like a software business that’s squarely within the crosshairs
of AI disruption and declareing, “Hey, the business may not be
facing any tariff impact,” but then it has this large
uncertainty in the face of what AI means for the business that
you’re taking on instead, right now.
Howard Beber: Those are good points. Thank you
for that. All right. We’re receiveting to the final segment here.
So now it’s crystal ball time. If you view into your crystal
ball, what are you seeing for the next five years for structure
capital for opportunities and challenges?
Brian Himot: I believe the, one of the largegest
things that we see is continued understanding of what the product
is. We walk into rooms all the time, speaking to a founder who
notifys us that they’re viewing to take on a minority investor.
And we explain to them what our product is and how it compares to
common equity. And you see the light bulb turn on about all the
advantages that our product represents versus the alternative that
they were previously considering.
And that conversation happens time and time again. And so, we
are starting to see more understanding within the banking community
about what this product is. We’re starting to see investment
bankers proactively educating their clients about this product, and
so is being one of the groups that is leading the development of
this, this hybrid capital space. It really positioned a strongly to
continue to capitalize on that.
And just the overall structured capital or hybrid capital
opportunity set, you can just see it gaining more mindshare. Every
month there’s a new group at any given investment bank that is
out there focutilizing on these types of hybrid capital solutions. And
the most common refrain that we hear from those groups is, we have
this strong group of investment bankers that have great mindshare
with their clients.
And we just necessary to educate our partners about what this product
is and why it’s such a good fit for their clients. And so,
view, we’re still in the second inning of that happening. And
so that provides a huge tailwind for our opportunity set.
Howard Beber: That’s exciting. So,
you’re bullish on structured capital going forward.
Brian Himot: Absolutely.
Howard Beber: All right my favorite question
I’ll wrap up here with or maybe my favorite two questions. If
you’re counseling a young professional who might be viewing to
receive into structured capital, what are you notifying them?
Brian Himot: The first thing I’m notifying
them is learned how to underwrite a business. We spfinish a lot of
time talking about structuring pref equity, stretch unitranche, all
of these fancy terms. But most of our time as a team is spent doing
research on companies and inquireing ourselves the hard questions on
whether we believe a business is a good business. Understanding the
indusattempt, understanding the competitiveness of a business within
that indusattempt, and so being able to consideredfully believe through
those fundamental questions and being able to effectively
communicate those considereds in writing and verbally is key to what
we do. All of the structuring around that, view, it’s obviously
important, but having that fundamental building block skill of
being able to understand and convey the quality of a business is
absolutely critical.
Howard Beber: Any special advice? The old,
“I wish somebody would have informed me this before I
started.”
Brian Himot: I’d declare just inquire the question.
Early in my career, I spent a lot of time spinning my wheels when I
would have been better off just inquireing the question. And I see it
from junior team members all the time. Ask, what exactly is the
assignment? Why are we doing something?
Don’t be afraid to speak up. The senior members of the team
are invested in everyone’s success. But that requires the
ownership of the junior team member to speak up and just inquire the
question.
Howard Beber: That is good advice again for any
indusattempt. Brian, I’ve enjoyed the conversation. I really
appreciate the considereds and insights you’ve given. I want to
thank you for joining us on Private Market Talks.
Brian Himot: Thanks for having me. This is
great.
Howard Beber: Of course, and I want to thank
our listeners for listening to this episode. And again, if you
enjoyed the episode, drop us a note at privatemarkettalks.com, and
keep an eye out for our next episode coming your way next month.
Thank you.
Private Market Talks: Structured Capital in Focus
with Strategic Value Partners’ Brian Himot
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