Texas Capital (TCBI) Unveils Capital Direct Lending Platform

Texas Capital Bancshares, Inc. TCBI announced a new private credit strategy with the launch of the Texas Capital Direct Lending (TCDL) platform. The new platform will focus on Texas-based middle market companies and private equity sponsors, with an emphasis on senior secured floating rate term loans. TCDL will offer non-bank private capital to the middle market.

TCDL will be an integral part of Texas Financing's Corporate & Investment Bank, allowing Texas Capital clients and prospects to access a broader range of financing solutions.

Texas Capital Direct Lending, in collaboration with the broader Texas Capital platform, will strive to offer borrowers a consistent stream of capital. With a primary focus on businesses with EBITDA between $10 million and $30 million, TCDL plans to lend to middle-market companies that generate between $5 million and $50 million.

Texas Capital, the preeminent full-service financial services business established in Texas, has expanded its array of financial and consulting offerings with the launch of TCDL, solidifying the firm's position as the ‘first call’ for middle-market companies headquartered in Texas and beyond.

The Direct Lending platform's launch is a significant milestone for Texas Capital, as the company will be able to provide clients with direct access to private credit funding while leveraging our industry expertise, breadth of products and services, and leading treasury, payments, and investment banking capabilities.

The company also announced that Tim Laczkowski has joined as Managing Director. Laczkowski will be responsible for heading the firm's new Direct Lending division, including fund management, underwriting, investment, and portfolio management for TCDL.

Texas Capital’s head of Corporate & Investment Banking, Daniel Hoverman, stated, “We fundamentally believe that business owners should have access to Texas-based financing options. We trust that the TCDL platform will provide a welcome resource for ambitious, growth-oriented companies in the middle market. Under Tim’s leadership, complemented by our robust private wealth, sponsors coverage, and capital markets businesses, we are confident that Texas Capital can deliver our clients financing options to address an array of strategic challenges.”

With the addition of a private capital funding alternative, TCBI expands its scope as a full-service financial institution.

The Private credit business is turning out to be a lucrative one. Per the Morgan Stanley report, the size of the private credit market at the start of 2024 was approximately $1.5 trillion compared with approximately $1 trillion in 2020 and is estimated to rise to $2.8 trillion by 2028.

With this launch, TCBI will join a burgeoning landscape of financial institutions tapping into the vast potential of the private credit market. Several global firms like Raymond James RJF are set to enter into the lucrative private credit business. Through its Investment Banking (IB) division, RJF formed a strategic collaboration with Eldridge Industries and Raymond James Bank.

In May 2024, Stifel Financial Corp. SF and Lord Abbett, LLC entered into a joint agreement to establish a leveraged lending joint venture — SBLA Private Credit. This new entity will concentrate on the origination and management of existing loans to small and mid-sized portfolio companies of financial sponsors, thus augmenting the existing capabilities of both firms. SF and Lord Abbett have co-invested across multiple loans beforehand, demonstrating the strongly aligned credit cultures between both entities.

In the past six months, shares of TCBI have declined 1.2% against the industry’s 10.5% growth.