Wells Fargo Commercial Capital (WFCC) recently announced that David Koshenina is head of its Lender Finance Group. In his new role, he will lead a team that provides asset-based lending for specialty finance companies, including other asset-based lenders, factors, equipment leasing, and other nonbank lenders. He is based in Dallas, and reports to Nick Cole, head of the WFCC’s Specialty Finance Group. 

Koshenina is a 12-year company veteran who most recently served as managing director of Loan Sales and Syndications for Wells Fargo Capital Finance. Before joining Wells Fargo, he was a turnaround consultant for Alvarez & Marsal and spent six years in Investment Banking at Piper Jaffray Companies covering financial institutions. He holds an undergraduate degree from University of Wisconsin, and an MBA from the University of California, Los Angeles.

Please tell us a bit about your career trajectory, which led to this new position.
I am excited about my new role, and it is something I have worked toward for a long time.  Over my 20-plus year career, I have developed a passion for the specialty finance industry by covering nonbank finance companies from several different angles, including investment banking, equity research, and as a managing director in the Loan Sales & Syndications team for Wells Fargo’s Lender Finance Group.  

My introduction to specialty finance companies was as an investment banking analyst in the Financial Institutions Group at Piper Jaffray. As an analyst, I supported senior bankers by building models, completing valuation work, conducting due diligence, and drafting marketing materials mostly for merger-and-acquisition transactions and public equity offerings.  

After completing the two-year analyst program and a third year as a junior associate, I attended the Anderson Business School at University of California, Los Angeles.  While studying at Anderson, I could not stay away from the finance industry, so I found an internship at Jefferies & Company, Inc., in its equity research group covering banks, thrifts, market makers, and traders. 

After graduating from business school, I returned to the financial institutions group at Piper Jaffray to continue working with small community banks, asset-based lenders, factors, equipment lessors, Business Development Corporations, and other nonbank finance companies. During this time, I enjoyed developing relationships with owner operators of small business and middle-market finance companies. While many of my investment banking colleagues worked with large multinational industrial companies, I had the pleasure of meeting and working directly with founders and business owners whose blood, sweat, and tears built their businesses from the ground up.  

After three more years at Piper Jaffray, when I got the opportunity to be in the bankruptcy restructuring group at Alvarez & Marsal, I took a step in my career that did not involve working with specialty finance companies. This was an incredible learning experience, in which my role was boots-on-the-ground, managing clients through periods of tight liquidity.  I gained a deeper understanding of how businesses work by building 13-week cash flow models, managing an accounts payable department, negotiating leases, making past-due collection calls, and just about anything else that popped up. While I really enjoyed this role, my desire to start a family made me rethink the five-days-a-week on the road schedule.

Twelve years ago, I joined Wells Fargo Capital Finance on the loan sales and syndications team. In my role, I covered both traditional asset-based lending and due to my prior experience working with specialty finance companies, the Lender Finance Group (LFG). While I enjoyed working on traditional asset-based loans, my passion was covering LFG, in which we built a world-class distribution platform.  When I first started covering LFG, we had to scratch and claw to get more than four or five lenders to attend a bank meeting, and the market depth was in the low hundreds of millions. Compare that with 2019, when we had more than 25 different institutions attend a bank meeting.

Hopefully, my strong connectivity to the internal team and many of the clients provides for a seamless transition, so we can continue to help our clients achieve their financial goals.

What about this new role appealed to you?
In addition to my passion for the specialty finance industry, one thing that I really enjoy about my new role is the connectivity to the founders, owner-operators, and other principals with meaningful financial and sweat equity in the businesses. Many of our clients started their businesses from scratch, raising them like their children. Their love for their businesses is contagious and inspiring.

I am also very excited to work with an excellent team of professionals, including a strong senior leadership team to help manage the business. They built a team of robust relationship managers, associates, and analysts and I am impressed with the quality of our team members at every level.  This team has managed and provided capital to our clients through multiple economic cycles, and we will be there to help our clients manage through the next ones, too.

What are your immediate and long-term priorities and goals for Wells Fargo Lender Finance?
My number one priority at this stage is to meet with our clients to listen to their needs. We want them to know we value their relationships and will work tirelessly to help them accomplish their financial goals. We will follow through with creative problem solving and quick turnaround times on amendments and new business requests.  

To help my team members develop and serve our clients better, I am also building regular training sessions into our monthly portfolio review meetings. There is a wealth of knowledge across the Wells Fargo Commercial Capital platform and, as lenders to finance companies, my team members will benefit from regular training and update sessions from the people in Wells Fargo’s factoring, asset-based lending, asset-backed finance, investment banking, and other groups. My vision for this practice is not for the head of asset-based lending to present, but for the business development officers on the front lines to spend 30 minutes discussing what they are seeing on a day-to-day basis in the marketplace.  

While meeting with clients, I am also taking the opportunity to share the positive messaging I received from senior management at Wells Fargo regarding our dedication to the space. From both strategic and credit perspectives, the lender finance business has strong support from the most-senior Wells Fargo leaders.    

What trends are you seeing right now that are having an impact on lender finance?
One trend that is impacting our clients positively and negatively is banks’ aggressiveness.  

The benefit to our clients is that there is increased market depth to finance their businesses.  Unfortunately, for us, some of those lenders are offering more flexible terms than our comfort zone, especially around items like concentration limits and control of cash. While it is tempting to chase the market on specific terms, our value proposition is that Wells Fargo has been dedicated to providing capital to asset-based lenders, factors, and equipment finance companies since the early 2000s, and our structures have allowed us to service our clients and manage risk through positive and negative economic cycles.  

The downside to banks being so aggressive is that they are providing cheaper (and in some cases more flexible) financing to many underlying obligors that probably belong in the nonbank market.  

What do you see as the industry’s biggest challenges and opportunities over the next few years?
If there is an economic downturn, I think it will be a double-edged sword for many of our clients. It will simultaneously create softness in many of our clients’ portfolios and significant opportunity for growth.   

The challenge: Many of our clients will want to raise additional capital when their portfolio metrics are showing stress relative to the last few years. Aging, write-offs, risk rating trends, and other metrics will likely be showing negative trends and therefore make it more challenging to raise capital when they want it the most. At Wells Fargo, we know that lending money is not about perfection, but rather making proper risk management decisions. We understand that our clients will experience stress in their portfolios, but great operators, proper capitalization, and the right amount of patience mitigate it. Wells Fargo has supported clients through multiple economic cycles and we will continue to do so in the future. Therefore, I am recommending borrowers with syndicated facilities to lock in their extensions and facility increases now, and pay the additional unused line fee as an insurance policy, so they do not need to worry about the right-hand side of the balance sheet when there are good opportunities to book assets. 

Michele Ocejo is editor-in-chief of The Secured Lender.