Syndicated Loans Get Sexier
After he started IntraLinks Inc. BY STEVE in 1997, Mark Adams told his wife his new venture was either a [...]
December 1 1998 by Steve Bergsman
After he started IntraLinks Inc. BY STEVE in 1997, Mark Adams told his wife his new venture was either a midlife crisis or a midlife opportunity. Fortunately for Adams, it proved to be the latter.
IntraLinks, based in New York, provides Internet-based deal management services for the global capital markets. By making transaction documents available through its secure Internet service, IntraLinks reduces costs and expedites a transaction’s time to market.
“What we did was automate the work flow that was all paper-based,” says Adams 46, IntraLinks’ president and chief executive officer and a 20-year Wall Street veteran of Kidder Peabody, Drexel Burnham, and Bear Stearns. On a typical loan agreement, teams of lawyers from all participating parties will draft credit agreements, offering documents, etc., then send them back and forth to each other so it all can be redrafted, rewritten, and reorganized a few more times. By using a process like IntraLinks, it takes just one second beyond the time needed to form a draft for all parties to receive a copy.
Marty Rosenblatt, national director of Mortgage and Asset-Backed Securities Services for Deloitte & Touche in New York, worked as the transaction accountant for First Union Corp. which in September was underwriting a $100 million home equity securitization for First Alliance Mortgage Co. of Irvine Calif. This was the first time in the asset-backed securities market that the IntraLinks technology was to be used. “For 15 years, I have been days or nights waiting in my office for a delivery from an investor, a proof of a prospectus, a fax to come in,” Rosenblatt recalls. “With this Internet connection, I can go home after the workday and locate the data with my home computer. It will never eliminate paperwork, but it makes the system more efficient and your time more productive.”
In addition, IntraLinks cut printing costs for prospectus material by 40 to 50 percent, a First Alliance vice president reported.
Since its first deal in April 1997, IntraLinks has facilitated more than 170 transactions for more than $120 billion. IntraLinks’ products now include IntraLoan for the syndicated loan market, IntraMuni for municipal bonds, IntraPlace for private placements, IntraABS for asset-backed securities, IntraAgency for syndicated loan agency functions, and IntraM&A for M&As.
At this point in the development of the transaction process technology, IntraLinks has jumped out to a substantial lead, but Deloitte & Touche’s Rosenblatt observes financial printers “are at various stages of trying to duplicate something like this.”
On its 100th deal, completed just this past August, BankAmerica’s Agency Management unit used IntraLinks to manage the agency function of a syndicated loan for Specialized Bicycle Components Inc., based in Morgan Hill, Calif.
The positive experience of BofA’s syndicated loan group led other BofA units to hook up with IntraLinks as well. “We were looking for a technological means to accelerate the distribution process,” says Mark Nichols, a managing director in BofA’s private placement group. “We were also looking for ways to get more information and data on the degree of attention that investors were paying to our transactions while we were in the midst of the process.”
BofA’s private placement group’s first IntraLinks usage was a senior note issued for Newbridge Networks Corp., a $1 billion telecommunications company based in Ottawa, Canada. “We were under considerable pressure to get in and out of the market as soon as possible,” says Nichols. “We didn’t have the luxury of time to wait until the full package was entirely complete, so we were able to put (sequential) segments on the Web site. This is not necessarily the ideal way to market a transaction but under certain circumstances you can do it, and in this case it worked.”
Since then, BofA’s private placement group has also used IntraLinks in deals for Ferrellgas Partners LP out of Liberty, MO, and Ticor Chemical Co. Pty Ltd. based in Australia.
Nichols noted one other important benefit of using Internet technology. During the process, one can monitor the degree to which investors are examining various parts of the offering documents and thus be able to ascertain which investors are very interested in the transaction. “The IntraLinks product will tell you who is looking at the package, what parts they are looking at, and how often they looked at it. “It’s a good feature,” says Nichols, “because investors may tell you one thing such as they are very interested, but if they haven’t even looked at the offering, that tells you something else.”
Time is never your friend when you are marketing a transaction, adds Nichols. “The quicker you can get in and out of the market, the safer generally you are in a volatile environment.” IntraLinks apparently found a way to make that happen.
Steve Bergsman is a Mesa, AZ-based freelance business writer who has written about corporate finance for Reuters, Barron’s, Global Finance and Corporate Finance.