First Capital Investment Corporation, a publicly-registered, non-traded business development company, announced that StHealth Capital Partners LLC is purchasing the entity that owns FCIC Advisors LLC, the company’s investment adviser. In light of the changes, Bob Froehlich resigned as chairman of the board and audit committee in a strongly worded letter blasting the company’s management and new investment focus.
StHealth agreed to acquire all of the membership units owned by First Capital Master Advisor LLC, in exchange for a secured promissory note payable over time. First Capital Master Advisor is controlled by Suneet Singal, who has resigned as director, acting chief executive officer, acting treasurer, acting chief financial officer and acting secretary of the company.
First Capital Investment Corporation, which previously invested in debt and commercial assets, is changing its management structure and investment strategy to focus on investing in healthcare companies.
Froelich, a major shareholder in the company, sent a letter to the company detailing his major disagreements with management which he said have “finally reached a boiling point.”
Froelich claims that there is a “complete and total lack of transparency” between management and the board regarding the company’s investment decisions, and disagrees with their decision to become a healthcare-focused BDC.
“In the 40’ Act world when management and the advisors so grossly underperforms for our shareholders, as witnessed by the almost complete collapse of every investment the advisor has made, that advisor get fired and the board begins the exhaustive and comprehensive national search for a new advisor,” wrote Froelich.
“That didn’t happen at FCIC,” he added. “Instead the advisor is recommending and pushing through a plan that does nothing for our shareholders while it lines the advisors pocket as they walk away from this company. Our shareholders watched their wealth get destroyed while the advisor who allowed all of this to happen gets a big payday. That is just wrong. And to make matters even worse management wants to narrow the focus of this company to be a healthcare BDC not the multi-sector BDC that all of our investors thought they were investing in.”
The company’s management team responded to Froelich’s letter to provide “clarity” on the concerns raised by the former chairman.
First Capital Investment Corporation’s board appointed Derek Taller as CEO; Reid Maclellan as chief operating officer; and Paul Saint-Pierre as CFO, treasurer, and secretary. Management bios can be found below.
Saint-Pierre will serve as interim chairman of the board of First Capital until his replacement is appointed at the 2018 annual meeting of stockholders.
“This acquisition and decision to focus the company’s strategic direction maximizes value for our shareholders by aligning our best resources along with some of the industry’s top talent in an area where we are not only seeing the most growth, but feel we can also add the most value in driving innovation and returns,” said Singal.
Brian Wall also resigned from his position as the company’s financial consultant.
Taller currently serves as the CEO of StHealth Capital and previously served as managing director of LG Investments, a New York-based multi-family office. Taller has healthcare expertise and has originated, structured and executed both public and private investment and financing deals.
Taller has conducted research at New York Medical/Rockefeller, King’s College London, Cancer Institute of New Jersey, UC Berkeley and UCSF. He holds a Ph.D. from the Cancer Institute of New Jersey-RWJ Medical School.
Maclellan serves as the COO of StHealth Capital and concurrently practices and teaches translational medical research as an adjunct professor at both Harvard Medical School and Boston Children’s Hospital. He is managing partner of Crimson Veritas Consulting Group, which specializes in sourcing and performing due diligence on deals primarily in the biotech, medtech, and pharmacology spaces.
He received his medical degree from the University of Alabama School of Medicine, and a post-doctoral master in medical sciences degree in translational medical research from Harvard Medical School.
Saint-Pierre is the CFO of StHealth Capital and previously served as CFO of Guggenheim Credit Income Fund, a master-feeder fund organized as a BDC. He has served as CFO of Carey Credit Advisors, a registered investment advisor, and senior vice president of W.P. Carey Inc. (NYSE: WPC), the initial co-sponsor of Carey Credit Income Fund.
Saint-Pierre also served as CFO of Corporate Capital Trust Inc, a BDC sponsored by CNL Financial, and CNL Fund Advisors Company. He received his bachelor’s degree from Michigan State University and a master’s degree in finance and real estate from the Haas School of Business at the University of California, Berkeley.
First Capital Investment Corporation is a $500 million offering that seeks to invests in private U.S. small- and middle-market companies. The BDC invested approximately $6.6 million in seven portfolio companies and raised approximately $6.1 million in investor equity, as of September 2017.