Private Capital Group business lending overview.

Mezzanine finance is subordinated debt that sits between senior debt and equity in the capital stack. Private Capital Group typically structures mezzanine with a cash coupon plus payment-in-kind (PIK) interest accrual and, on many transactions, a warrant or equity option over a small minority stake. The subordinated position drives the indicative 14% to 20% pricing band, reflecting the higher loss-given-default exposure relative to senior debt.

Tickets commonly run from $500,000 at the smaller end through to multi-million dollar facilities for lower-mid-market acquisitions, MBOs, and growth-capex transactions. Borrowers typically need established trading history, identifiable EBITDA, and a clear use-of-funds case. Below $500K, the establishment-fee, due-diligence, and legal-cost overhead is commonly disproportionate to the ticket, and other lenders typically fit better.

Pricing varies by capital-stack position. Senior term debt indicatively prices in the 9% to 13% range. Second-lien facilities indicatively run 12% to 16%. Mezzanine debt indicatively runs 14% to 20% on a cash plus PIK basis, sometimes with an equity warrant component. Unitranche facilities blend senior and subordinated tranches into an indicative 11% to 15% blended rate. Actual rates depend on the lender's assessment.

Timelines run in weeks rather than days. Initial engagement through indicative term sheet commonly takes 2 to 4 weeks. Due diligence and credit committee typically take a further 4 to 6 weeks. Documentation, PPSR registrations, and settlement add another 2 to 4 weeks. End-to-end, 6 to 10 weeks is the common range, though tighter timetables are sometimes accommodated on warm transactions with deal-pack diligence already completed.

Private Capital Group operates as a non-bank specialist credit provider, registered on the Financial Service Providers Register under the Financial Service Providers Act 2008. Where the fund operates wholesale or managed-investment-scheme structures, disclosure obligations under the Financial Markets Conduct Act 2013 apply. The lender sits outside the Reserve Bank of NZ registered-bank perimeter, which means a different regulatory tier from major-bank counterparties.

Mezzanine debt is contractually subordinated to senior debt under an intercreditor deed signed at facility execution. On default, the senior lender (commonly a major NZ bank) controls enforcement against the GSA registered on the PPSR. Mezzanine receives proceeds only after the senior debt is fully repaid. The intercreditor deed also typically contains a payment-blockage and standstill regime applying to mezzanine during senior-debt default events.

A unitranche facility blends senior and subordinated tranches into a single loan agreement and a single blended interest rate. The structure suits borrowers wanting a single lender across the entire debt stack rather than coordinating a major bank senior loan and a separate mezzanine provider. Common use cases are acquisition funding, MBOs, and growth capex where execution speed and structural simplicity are commercially weighted alongside cost.

Standard application documentation includes an information memorandum or equivalent deal pack, three years of historical financial statements, a three-year forecast financial model, the proposed capital-stack structure, and detail on existing security and creditors. On larger transactions, a quality-of-earnings report from a Big-Four or specialist firm, a legal due-diligence report, and a tax due-diligence report are commonly engaged. Borrowers typically work with a corporate-finance adviser through this process.

Interest on debt used for business purposes is generally deductible against business income under the Income Tax Act 2007, subject to the accountant's confirmation on the specific business position. PIK interest accrual and establishment fees on facilities running across balance dates are typically handled under IRD financial-arrangement rules. GST does not apply to interest charges (financial services are exempt under section 14 of the Goods and Services Tax Act 1985). Equity-warrant components are generally outside the financial-arrangement framework.

On mezzanine transactions, an equity-warrant or option component is common, typically over a small minority stake (commonly 1% to 5% of post-deal equity, structured as a future right rather than current ownership). Senior, second-lien, and unitranche transactions commonly do not include warrants because the senior or blended pricing already reflects the credit risk. Warrant terms are negotiated transaction-by-transaction.

On default, remedies depend on the position in the capital stack. On senior facilities, Private Capital Group can enforce the first-ranking GSA registered on the PPSR and any property mortgage. On second-lien and mezzanine, the intercreditor deed governs payment-blockage and standstill regimes during senior-debt default events; mezzanine recovery typically follows full senior repayment. Working with the lender early on a covenant breach or temporary cash-flow setback is widely the cleaner outcome for both sides.

A major NZ bank typically prices senior secured debt below specialist-credit pricing and is the right starting point for relationship-managed senior facilities. Private Capital Group is widely regarded as the right shortlist option where the deal requires more leverage than the senior bank will fund alone, where a mezzanine or second-lien layer is needed, or where a unitranche structure is preferred to coordinating multiple lenders. The two are commonly complementary rather than substitutes.