🍪 Our Cookies

This website uses cookies, pixel tags, and similar technologies (“Cookies”) for the purpose of enabling site operations and for performance, personalisation, and marketing purposes. We use our own Cookies and some from third parties. Only essential Cookies are used by default. By clicking “Accept All” you consent to the use of non-essential Cookies (i.e., functional, analytics, and marketing Cookies) and the related processing of personal data. You can manage your consent preferences by clicking Manage Preferences. You may withdraw a consent at any time by using the link “Cookie Preferences” in the footer of our website.

Our Privacy Notice is accessible here. To learn more about the use of Cookies on our website, please view our Cookie Notice.

9Questions — Angelo Rufino, Bain Capital — Going for the in-between

Share

9Question

9Questions — Angelo Rufino, Bain Capital — Going for the in-between

Rachel Butt's avatar
  1. Rachel Butt
6 min read

The Celts believed that, on the night of Halloween, the boundary between the living and the dead would blur and become the thinnest, allowing spirits to pass through.

The grey space that exists between the private equity and credit worlds is what fascinates Angelo Rufino. Earlier this year, Rufino joined Bain Capital as a partner and head of special situations in North America as well as head of corporate special situations in Europe. Before that, he spent more than a decade in Brookfield Asset Management.

9fin sat down with Rufino to talk about his vision for the team, strategy and whether the pumpkins got him this season.

1. You joined Bain Capital in May of this year. What is your vision for the groups you lead?

Bain Capital’s Special Situations strategy is a scale business with $20bn+ of AUM and a team of over 140 people. The opportunity ahead is to help the team broaden into new sectors and industries, develop adjacent products and grow the great talent we have on the team to continue producing top decile returns while further integrating our business into the Bain Capital ecosystem. There are many opportunities that come to our business from the broader Bain Capital franchise especially through our credit and private equity businesses. With our global special situations team sitting at the nexus of the Bain Capital ecosystem, we have the great opportunity to partner with these various divisions to look for the many opportunities that sit in the “in-between.”

2. There are fewer pureplay distressed debt investors these days, with many branching out to opportunistic credit and capital solutions providers. Is Bain going through such repositioning, and why?

Our franchise has always maintained an orientation of providing minority capital to both defensive and offensive opportunities. While there is a long heritage of distressed investing at Bain Capital, we have continually grown our franchise toward value-add capital solutions. The way the market has developed over the last decade, you have a bifurcated regime with private credit and private equity at each end of the spectrum. Bain Capital defines special situations as the white space that sits between private credit and private equity, specifically with a strategic value-added component. There has been and continues to be an enormous void in the market for this type of partnership capital.

What gets us most excited is business building alongside founders and public companies who not only want a capital partner but also a strategic partner.

3. Last year, Bain Capital Special Situations announced a deal to acquire a roughly 20% stake in Intel's IMS business. We are seeing more capital solutions of this sort for large corporates. Can you tell us more about how this deal came about and the rationale behind it?

Thematically, we are always looking for growth businesses embedded in larger corporations that need to be highlighted. The IMS business is a strategic component of the leading-edge, chip value chain.  Intel wanted to highlight the value of this important asset and bring in a partner that could accelerate the build out of the business organization, assist with product commercialization and help with strategic partnerships. The deal came into our ecosystem through our private equity franchise but was a natural fit for our special situations business given the return profile, minority ask and opportunity for structure.  Once we engaged in a dialogue with Intel, the process rapidly transitioned to a bilateral dialogue where we all found a chemistry and partnership developed around future plans for the company and how to further buildout the leading franchise Intel had created.

4. Where do you see the biggest opportunities to deploy capital, in light of the Fed starting to lower interest rates, signs of economic resilience and the election coming up?

We are less focused on short-term market gyrations. Sure, volatility typically brings opportunity, but the core of our mandate is attached to the long-term secular need of public companies and founder-owned businesses who are seeking partnership capital. What happens with Fed rate cuts really doesn’t change our opportunity set materially.

Today, we are thematically focused on the opportunities stemming from the AI revolution, both energy and data related but also how AI can enhance services related industries. Registered Investment Advisors and how alternative investments are reaching a wider audience is also of interest and an area where we have made several investments.

Cyclically, we continue to see value in the aviation value chain and distressed opportunities across real estate. The pending maturity wall and opportunistic distress will provide opportunity but we’re most excited about partnering with businesses to help them enter new markets, grow their franchises through M&A or new business development in areas of interest.  We call this offensive capital partnership.

5. How much time does the team spend in primary markets vs. secondary markets?

We are always monitoring secondary markets for opportunistic investments. Oftentimes, secondary markets can lead you to a subset of companies which have capital structures in need of assistance.

Today, we see far more robust opportunities in primary markets, originating deals to develop bespoke capital solutions. We define these capital solutions by structuring instruments with debt-like downside but always maintaining exposure to some piece of the underlying equity thus allowing us to participate in value creation as we assist in scaling the business.

6.  In Europe, Bain has been active across both hard asset investments and corporate capital solutions. Can you tell us about your outlook for those markets?

We think Europe is getting quite interesting. The economy has bumped around for a few years and tends to lag the U.S. in terms of product innovation. We’re starting to see a real desire to for companies both public and private to look at capital solutions, understanding there’s a whole new asset class for founders to fund their businesses without losing control and gaining a true partner. We’ve been active in this market over the last year with investments ranging from real estate to digital infrastructure.

Europe is a diversified continent, but we’re finding opportunities across the board ranging from consumer to business services in the UK, to deals as far as the Czech Republic. Europe has a strong rule of law, we’re able to invest capital soundly and safely.  We think itʼs generally an under analyzed opportunity compared to other markets. Just this week, we signed a deal to partner with the Aquila Group to build a leading, sustainable data center platform across Europe.

7. Loose credit documents borne out of the easy money era have spawned a flurry of liability management exercises (LMEs). Is that an opportunity or a risk for your strategy?

We squarely see this as an opportunity. It’s not our regular-way business—trading in and out of bonds, however we have the capability to do this in periods of stress and distress. When it comes to LMEs, what’s interesting for an origination dominant franchise is that the LME often catalyzes the right time to look at these capital structures to propose creative solutions. Oftentimes incumbent financing providers will be best positioned to provide this capital, but third parties can also bring a welcome alternative.

8. How does your team think about distressed investing as part of a broader capital solutions strategy, and how do you leverage the Bain Capital ecosystem when investing in distressed situations?

Distressed is one of our three investing archetypes— capital solutions, hard assets and distress. What we have found in distressed investing is that we want to have control over our own destiny, largely achieved through distressed for control deals where we can work with a company to build value over the medium to long term. Our dedicated portfolio group is key in facilitating this operational value add.

We made a successful investment in Virgin Australia that came out of the pandemic, which is a good example of how the Bain Capital ecosystem can come together in a complex reorganization to rebuild and reinvigorate a great franchise.

We see less opportunities in distress today outside of a few select areas like real estate.  We’re most active in capital solutions and hard asset investing.

9. What is your favorite thing to do in the fall? Are you a pumpkin spice fan?

Fall is my favorite season. This month, Iʼll take my kids to at least three haunted houses. No pumpkin spice for me, I’m an apple cider fan.

Enjoyed this interview? Explore our full collection of 9Questions interviews here.

What are you waiting for?

Try it out
  • We're trusted by 9 of the top 10 Investment Banks