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    Companies looking for Capital

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    Companies looking for Capital

    Provide access to senior secured convertible asset-based loans to public North American small cap companies.

    Overview:

    • Top-down industry analysis used to identify favorable sectors based on present macro themes
    • Senior secured convertible loans with the ability to convert to publicly traded common shares at a discount
    • Generate synergies and value by assisting borrowers on growth and acquisition plans
    • Convertible loans allow for investors to participate on upside to growing industries in rising markets.

    Capital Protection:

    • Fully supported by sufficient collateral and senior liens on critical assets of the borrower with a preference for self liquidating collateral
    • Disciplined underwriting and monitoring process to ensure capital protection
    • Additional loan security including corporate/personal guarantees, confession of judgement and blocked accounts.

    Capital Allocated For A Variety Of Uses:

    • Growth Capital
    • Merger & Acquisition
    • Working Capital/Bridge Financing
    • Ownership Transfers/MBOs
    • Project Financing
    • Acquisition Lines
    Sector and Asset Allocation

    * Excludes working capital
    Typical Loan Characteristics
    Average LTV** ~50%
    Average Term 12 – 18 months with ability to renew
    Structure Equity convertible with bonus shares/warrants or royalties
    Amortizing Term Loan Bullet, fixed payment or excess cash flow sweep
    AVG loan size $1mm - $15mm
    *For illustrative purposes only.
    **Loan to enterprise value
    †After the first twelve months
    Market Opportunity

    The growth in passive investments, ETF’s and other factors has resulted in large amounts of capital chasing a very small number of stocks. For example, $1,000 invested in XIC (TSX ETF) means that about $386 would be allocated to the top 10 stocks, $236 to the top 5 and $0.50 to the bottom 5 stocks.

    1. Focus on publicly listed companies sub $100 million market capitalization
      AIP alpha generated by the following: helping with M&A, capital market expertise, increased liquidity since they are a larger company which may result in higher share prices.
    2. Large Potential Market – over 20,000 publicly listed companies with market cap less than $100 million
    3. Private Debt (Senior Secured Convertible Debt) into public companies
      AIP strategy – downside protection with upside participation.

    Major Equity Indices – Concentrated in a Few Stocks

    This information is presented solely for illustrative purposes.
    Small to Micro-Cap Financing Alternatives
    Bought Deal Traditional Private Debt Resource Loans Senior Secured Convertible Private Debt
    Fees paid to Investment Dealer 5% +5% broker warrants 5% +5% broker warrants 5% +5% broker warrants 5% +5% broker warrants
    Estimated Costs:
    Discount to Market Price 10-15% 0% 0% 0%
    Warrants or Other Issued Yes Yes Yes Yes
    Typical Interest Rate 10-15% 10-15% 7-9%
    All-in Cost of Capital 15-20% 15-20% 15-20% 12-15%
    Risks To The Issuer Shares could be shorted Cash only repayment Operational Restrictions On Use of Funds & Loss of Gold Price Upside Multiple exit strategies (i.e., share conversion, cash repayment)
    Ranking Insiders may have to lend out their shares Secured Secured by Production Senior Secured
    Term Lend shares out for 4 mths. 2-3 Years 2 years+ 1–2 years
    Fund Performance (%)*

    As of December 31, 2020

    *Class A
    **Effective January 22, 2020, AIP Global Macro Fund LP name changed to AIP Convertible Private Debt Fund LP
    *** SIRR of 36% comprised of 12% Coupon and 24% Equity Upside
    The indicated rates of return are the historical annual compounded total returns including changes in share value and reinvestment of all dividends. Please refer to the Disclaimer for additional information.
    Our Investment Process


    Identify sectors that are based on present macro themes and target debt financing.


    Identify companies in attractive sectors that require short term financing, then screen for companies with attractive prospects for success, strong management teams and utilize assets to secure debt.


    Negotiate loan terms without limitation securing loans with assets. Loans required are either convertible to shares or an additional royalty and equity warrant is needed.


    Monitor companies we have lent money to until exit. Monitoring is pro-active with periodic discussions with management, site visits and field examinations if required.


    Convert loans to shares and sell, or stay in loans and collect interest, depending on the environment and the market performance of the borrower.

    Target Transaction Type – Acquisition Line
    Target Transaction Parameters
    Industry Agnostic
    Location North American Based
    Loan Type Revolving acquisition line with conversion features
    Facility Size $1mm to $15mm
    Target LTV 50%
    Currency CAD or USD
    TTM Revenues $5M+
    TTM EBITDA $1M+
    Term 12 to 18 months, subject to semi-annual reviews
    Coupon Rate 7% to 9%
    This information is presented solely for illustrative purposes.

    Thesis Overview:

    • Private companies can be bought out at 6-10x EPS while publicly traded peers S&P trades at 21x;
    • Companies which had strong fundamentals prior to COVID-19 should rebound and resume trading at higher multiples;
    • By targeting a hold period between 12 and 24 months, convertible debt investors can earn outsized returns by supporting acquisitions during this time of temporary turmoil with relatively low risk and volatility without operational overhauls.
    • Target companies with strong management teams, strong growth profiles;
    Loan Origination and Financing Process


    Click here to view the full size chart.

    Timeline begins at start of signed Term Sheet.
    *Effective January 22, 2020, AIP Global Macro Fund LP name changed to AIP Convertible Private Debt Fund LP
    AIP Asset Management (the “Administrator”) has retained Ninepoint Partners LP (“Ninepoint”), to provide exempt market dealer, distribution and marketing services on an exclusive basis with respect to the offering of the Class A Shares and the Class F Shares for AIP Convertible Private Debt Fund LP (the “Fund”).