Enhanced Capital President and CEO Michael Korengold was recently featured in a PitchBook article titled “Private Credit 101: Rise of preferred equity deals can mean more flexibility, less debt.” The story explores the structure and benefits of preferred equity, its growing popularity in various market sectors, and its potential role in future private credit transactions.

Michael commented on the utility and viability of preferred equity as a financing option for creditworthy companies. He discusses how preferred equity may be seen as an attractive solution for companies with a significant capital gap or those maxed out on traditional debt options.

“Undoubtedly, there are those projects where we would say, this is a borrower that’s maxed out on what typical debt providers would provide, and they still have a significant capital gap, and so they’re trying to plug it with [preferred] equity,” said Enhanced Capital president and CEO Michael Korengold. “Provided there is overall credit worthiness, and as long as that pref equity provider goes in eyes wide open with respect to priority and other terms including the return profile, it might still be an attractive thing to do.”

He added, “On the other hand, we see plenty of situations where it really is a creditworthy counterparty, that, if other reasons didn’t exist, a deal could probably be styled as debt and conventional lenders would probably participate.”

Visit the PitchBook website to read the full article titled “Private Credit 101: Rise of preferred equity deals can mean more flexibility, less debt” by Zack Miller.