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2014 Middle Market Private Equity Outlook
CIT Executive Insights Video Examines Lending in Key Sector of U.S. Economy
Demand for Lending in the Middle Market Is Robust
Energy and Information Technology Sectors Are Growth Industries
Private Equity Firms Are Holding Businesses Longer
Lending Practices Are Evolving Dramatically Since Great Recession
Monday, March 3, 2014 08:30 AM
We’re seeing the return of traditional lenders, such as banks and finance companies, as well as new entrants to the market, like private equity-backed finance companies

NEW YORK--(BUSINESS WIRE)--The demand for lending in the middle market is robust, according to Jeff Kilrea, Co-Head and Managing Director of CIT Sponsor Finance at CIT Group, Inc. (NYSE: CIT) (cit.com), a leading provider of financing and advisory services to small businesses and middle market companies. These views and others are presented in the “2014 Middle Market Private Equity Outlook” (cit.com/kilrea), the latest in a series of in-depth executive video Q&As featured in the award-winning CIT Executive Insightsvideo series(cit.com/executiveinsights).

Energy and IT Are Growth Industries

The energy sector, specifically the oil field services businesses and the information technology businesses, were the industries that spurred overall trading activity and interest from private equity sponsors last year. “Energy and information technology will again be the growth industries that private equity sponsors will continue to focus on going forward,” says Kilrea.

Private Equity ROI

With M&A activity flat to down, private equity firms are holding their businesses longer and making their returns by two ways, according to Kilrea. “They’ve been making strategic tuck-in acquisitions and they’ve been focusing on internal organic growth opportunities that might not have existed in the past. It might be a new product or a product extension to what they currently do. It might include additional hires to spur sales, going international or it could be a host of different things.”

Evolving Landscape

Middle market lending practices have evolved over the past three years. “We’re seeing the return of traditional lenders, such as banks and finance companies, as well as new entrants to the market, like private equity-backed finance companies,” said Kilrea. “With greater capital entering the marketplace, we’re seeing more variation in structures and financing terms.”

Credit Conditions Hold Steady

According to Kilrea, credit conditions should not change dramatically over the next year. “The Federal Reserve’s monetary policy continues to support a low interest rate environment, which makes it an attractive time for a consumer or small business to borrow money,” he said.

EDITOR’S NOTE:

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About CIT Corporate Finance

Corporate Finance provides lending, leasing and other financial and advisory services to the middle market with a focus on specific industries, including: Aerospace & Defense, Business Services, Communications, Energy, Entertainment, Gaming, Healthcare, Industrials, Information Services & Technology, Restaurants, Retail and Sports & Media.cit.com/corporatefinance

About CIT

Founded in 1908, CIT (NYSE: CIT) is a financial holding company with more than $35 billion in financing and leasing assets. It provides financing, leasing and advisory services to its clients and their customers across more than 30 industries. CIT maintains leadership positions in middle market lendingfactoringretail and equipment finance, as well as aerospaceequipment and rail leasing. CIT operates CIT Bank (Member FDIC), its primary bank subsidiary, which, through its Internet bank BankOnCIT.com, offers a suite of savings options designed to help customers achieve a range of financial goals. cit.com

 

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