Horizon Technology Finance Corporation (“Horizon” or the “Company”), a leading specialty finance company that provides capital in the form of secured loans to venture capital backed companies in the technology, life science, healthcare information and services, and sustainability industries, announced that an affiliate of Monroe Capital LLC (“Monroe Capital”), a premier boutique middle market asset manager, has entered into a definitive agreement to acquire Horizon Technology Finance Management LLC (“HTFM”), the investment adviser to the Company (the “Transaction”), and that the Company’s Board of Directors has unanimously approved a new investment advisory agreement with HTFM, subject to stockholder approval and the closing of the Transaction.
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The terms of the proposed new investment advisory agreement between the Company and HTFM are substantially similar to the existing agreement between HTFM and the Company.
In connection with the Transaction, HTFM’s current management team and investment personnel are expected to continue to serve as officers and senior management of the Company and the Company plans to maintain and expand its venture lending investment strategy. Monroe Capital and HTFM believe that the Transaction will allow the Company to benefit from the ability to capture a broader range of investment opportunities designed to enhance shareholder value in both the near and long-term as a result of access to Monroe Capital’s fundraising capabilities and overall investment platform. Monroe is a market leader in private credit with a 20-year track record and approximately $16 billion in assets under management.
Monroe Capital Chairman and Chief Executive Officer Ted Koenig commented, “Horizon has assembled a high-quality portfolio and strong market position that we intend to continue to scale into a market leader in venture lending. Monroe has a robust asset management, direct origination and fundraising platform, along with a proven ability to generate consistent and differentiated returns for investors. We continue to look for ways to strategically differentiate and scale our asset management platform and Horizon augments our nearly 20-year track record and expertise in specialty lending areas, including software and technology, specialty finance, independent sponsor finance, opportunistic, media and entertainment, sports, fintech and real estate. This acquisition will allow us to better serve our limited partners and other investors with additional product expertise with a proven management team dedicated to venture lending.”
“We believe this transaction combining Horizon’s established presence in the venture lending market and Monroe’s deep credit experience offers a compelling opportunity to participate in the future growth potential of the Horizon portfolio under a larger, more diversified manager, led by a highly experienced investment team. Monroe’s long-term investment approach, emphasizing return consistency and downside protection for investors, is further enhanced by adding a core venture lending strategy to the platform,” said Zia Uddin, Monroe Capital President & Co-Portfolio Manager, Institutional Portfolios.
Rob Pomeroy, Chairman and Chief Executive Officer of HTFM, said, “We are confident that Monroe Capital’s platform is a natural fit for HTFM and we believe joining with the Monroe Capital team has the ability to create great value for Horizon shareholders. Our cultures and values are aligned, and with the ability to access Monroe Capital’s platform and infrastructure moving forward, we believe Horizon will experience increased investment opportunities with greater diversity, with potentially reduced expenses through economies of scale. We are excited to be partnering with Monroe Capital as we continue to deliver additional value for Horizon’s shareholders.”
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Consummation of the Transaction is subject to customary closing conditions, including approval of the new investment advisory agreement with HTFM by the Company’s stockholders. The Company’s Board of Directors unanimously recommends that the Company’s stockholders approve HTFM to continue as the Company’s investment adviser. Senior management of HTFM has agreed to vote their shares in favor of the acquisition transaction.
Dechert LLP is acting as legal counsel, and Broadhaven Capital Partners is acting as financial advisor, to HTFM. Nelson, Mullins, Riley & Scarborough LLP is acting as legal counsel, and JMP Securities, a Citizens Company is acting as financial advisor, to Monroe Capital. Blank Rome LLP is acting as legal counsel to the Company’s independent directors.
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