Interview with: Arif N. Bhalwani, Managing Director, Third Eye Capital Management

1. Interview with: Arif N. Bhalwani,
Managing Director, Third Eye
Capital Management
“Many promising companies lack access
to financing,” according to Arif N.
Bhalwani, Managing Director, Third Eye
Capital Management. “Banks and
other conventional lenders typically
focus on a company’s history and
earnings track record, but that is not
always a reliable indicator of its future.
We look at a lot of pro forma
information and consider the company’s
prospects and potential,” he explains.
Third Eye Capital Management is a
private debt manager at the marcus
evans European Pensions &
Investments Summit 2015, in
Montreux, Switzerland, 8 - 10 June.
Tell us about your investment
approach and what you look for in
companies.
We provide promising companies,
whether established or early stage,
opportunities to access financing that
they might otherwise not be able to
achieve. That could be due to
complexity in the business, the effects
of seasonality or industry cyclicality, or
issues with the visibility of their
earnings.
We look at the hidden assets of the
underlying business, and make loans to
companies we think will be successful
long-term. By seeing more, we can
combine capital with our operational
skills and experience to help drive
value. We are industry agnostic and
pursue mid-market lending opportuni-
ties primarily in Canada.
How would traditional lenders
approach some of these companies?
Why would they not provide capital
but you would?
Typically, traditional lenders use a
mechanical process that is backwards-
looking. They look at the company’s
history, earnings track record and
tangible assets. We prefer to focus on
the future and try to uncover the assets
that are invisible on the balance sheet.
For instance, what contracts are they in
the process of negotiating? Where are
they taking their product or service
strategy? What are the market trends?
What is their competitive advantage?
More and more companies today are
driven by their intellectual property.
That may include their brands or the
patents they hold, maybe distinct access
to a market or distribution strategy,
how they cultivate themselves in the
minds of their customers, or the
employee culture. All of these are
invisible assets that add value.
How would these assets compare
with other assets pension funds
hold?
Privately-negotiated loans are, by their
nature, unique assets that cannot be
found anywhere else in a pension fund’s
portfolio. They can generate yields at a
substantial premium to what investors
would get in the publicly traded
markets. This premium is derived in
part from the illiquid nature of the asset
but its size is dependent on a manager’s
skill. Our ability to manage complexity
and drive value through our team’s
operational experience has ensured
investors get measurable alpha above
the illiquidity premium.
The other benefit is mark-to-market
issues. We do not have the same
considerations that you would see in a
publicly-traded portfolio, where market
gyrations and changes in investor
sentiment can affect the value of an
investment even when nothing has
changed with the underlying borrower.
We are not watching Bloomberg all day
and do not really worry about what is
happening in the broader capital
markets. We care about what our
portfolio company needs to be more
successful and how we can add value.
For us, it is about discrete company
analysis, old fashioned fundamentals,
and future prospects. We invest with
high conviction so that we can support a
company as it sails through market
storms when they come.
Privately-
negotiated
loans are, by
their nature,
unique assets
that cannot
be found
anywhere else
in a pension
fund’s portfolio
Seeing More in the
Canadian Mid-Market

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About the European Pensions & Investments Summit 2015
The 15th annual European Pensions & Investments Summit is the ultimate meeting
point, bringing elite buyers and sellers together. The Summit offers regional pension
investors and international fund managers and consultants an intimate environment
for focused discussion of the key new drivers shaping institutional asset allocations.
Taking place at the Fairmont Le Montreux Palace, Montreux, Switzerland, 8 - 10
June 2015, the Summit includes presentations on capturing attractively valued
investments, increasing fund resilience, tail risk management and making
responsible investing a reality.
www.epi-summit.com
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About Third Eye Capital Management
Third Eye Capital Management (“TEC”) is Canada’s leading alternative credit manager with approximately $500 Million in assets.
Since 2005, TEC or its affiliates have been succesfully helping good companies that are overlooked or underappreciated by
traditional financing sources to reach their goals. TEC takes a broader perspective to identify a company’s potential and fulfils a
critical need in the Canadian middle-market.
www.thirdeyecapital.com
About marcus evans Summits
marcus evans Summits are high level business forums for the world’s leading decision-makers to meet, learn and discuss
strategies and solutions. Held at exclusive locations around the world, these events provide attendees with a unique opportunity to
individually tailor their schedules of keynote presentations, case studies, roundtables and one-to-one business meetings.
For more information, please visit: www.marcusevans.com
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To view the web version of this interview, please click here: www.epi-summit.com/ArifBhalwani