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Interview with Jonathan Rosen, Divisional CEO, Specialty Finance, Synovus Bank
By Eileen Wubbe
Interview with Jonathan Rosen, Divisional CEO, Specialty Finance, Synovus Bank
Synovus Bank recently announced a new Specialty Finance Division, focused on providing debt capital financing and commercial banking solutions to fund companies operating in niche asset classes. The division includes a structured finance team and builds on the expertise of Global One Financial, the insurance premium finance lender acquired by Synovus in October of 2016. The division is led by Jonathan Rosen, who founded Global One in 2003 and continues to manage it as chief executive officer of the Specialty Finance Division at Synovus.
A group of industry veterans have joined the firm to spearhead this new effort: Sal Carvo, managing director; Jayan Krishnan, managing director; Roman Mazo, managing director and Mehul (Mel) Patel, director. Carvo and Mazo are based at the Specialty Finance offices in Atlanta and Krishnan and Patel are based in the New York office.
Here, Jonathan Rosen discusses opportunities and growth late in the credit cycle.
Jonathan Rosen bio:
Mr. Rosen began his entrepreneurial career during high school, as the founder of EVI Medical Management Systems, a consulting firm specializing in the optimization of medical practices. After experiencing success as a young entrepreneur, he attained his bachelor’s degree in Economics from the Wharton School of Finance and Commerce of the University of Pennsylvania and then attended Emory Law School.
He went on to found several companies, including Entaire Global Companies, Inc., a financial services holding company and Global One Financial, a specialty lender focused on leveraged strategies for insurance planning and wealth creation. Rosen structured more than $1B in cumulative funding for Entaire and Global One, and is an inventor on 3 patents in the structured finance area.
Mr. Rosen sold Entaire Global together with its Global One subsidiary to Synovus Bank in October of 2016 and now serves as the CEO of Synovus’ Specialty Finance Division, which includes the former Entaire and Global One businesses. He is also the Founder and Managing Trustee of the Jonathan D. Rosen Family Foundation and its Wealthy Habits program, a 501(c)(3) that is dedicated to financial literacy education for children.
Please provide some history around Synovus and Global One and background on your career.
ROSEN: Several years ago, I started Entaire Global, a premium finance lender that was ultimately acquired by Synovus Bank. Global One was the lending division of that entity. We also had an intellectual property holding company, an insurance agency, a third-party administrator and a couple of other components that rolled into that business that Synovus bought in late 2016.
This was my first real opportunity to work at a bank, and so as you might guess, as we were in the process of selling the company we went through a very selective process because we thought we needed an appropriate organizational fit more than anything else from a cultural perspective. My team is entrepreneurial, they tend to be innovative and creative, and so the most important question was which bank fit in terms of what we’re trying to do. Synovus stepped up and was interested in our platform, and the innovation that we could bring to the institution.
We entered into an arrangement with Synovus and they bought the company. It was Synovus’ first significant acquisition since the credit crisis in specialty finance outside of traditional bank lending. And the results have been amazing.
What can be attributed to Global One’s rapid success since being acquired by Synovus three years ago?
ROSEN: Shortly after the Synovus acquisition closed, I began talking with a group of senior executives, including Synovus’ chief operating officer, Kevin Blair, and about what was next. I said I’d really like to build new and interesting businesses within the bank. I think the entrepreneurial culture we bring is synergistic to what we have at Synovus and I wanted to see if we could create some significant incremental businesses that are innovative and can shift some paradigms in traditional banking.
I also took the position that we would be late in the credit cycle by the time the new business launched, so we would need to find ways to engage in lending activities that were either acyclical or counter cyclical, and heavily asset dependent instead of cash-flow dependent. I think we’re now looking down the barrel of a circumstance where we’re going to see increased credit pressure. How we mitigate that risk is important as we grow. From a growth perspective, we’re seeing a circumstance where everybody is fighting for assets and growth.
With the number of banks getting into the commercial finance business increasing, how will commercial lenders respond to the pressure of evolving their business and finding new ways to attract clients?
ROSEN: I think we have a lot of capital actively chasing the market. From a credit cycle perspective, I think that represents a dangerous time for all of us. When I approached Kevin Blair about the challenge of achieving meaningful growth in the bank, given where we are in the cycle, our specialty finance division was the answer to that challenge. We went off and built a business to go out into the market and de-risk the balance sheet by creating diversification and heavily relying on structure to mitigate risk. Late in the cycle, we think this is a great way to grow without commoditization.
There’s a lot of pricing pressure in the market, and we’re seeing it all over the place. And my hypothesis and strategy in developing this business was to say we’re not going to participate in that pricing pressure. We’re here to add structural value to deals and we want to do deals wherein we bring new value to a customer that that customer didn’t have before, make a difference in their business and mitigate risk on our balance sheet at the same time.
From our standpoint, we’re not about chasing yield, we’re not going to be the cheapest game in town, that’s not our niche. Our purpose is to add value, add relationship and add structure and creativity to achieve profit.
What would you say are some of those ways that you go about doing that in general?
ROSEN: One of the interesting things about this is I’ve spent much of my career on the other side of the table, trying to find funding for Global One and going to banks and building structures with banks to find ways to lend to Global One when Global One might not have had the strongest balance sheet. And to do it in a way that was largely risk mitigated or risk free to the lender.
So how do you take something that’s a small company, and get $700 or $800 million of financing from a bank or from a series of banks? The answer was structural enhancement. We were very focused on that. So now I’m on the other side of the table, but I’m applying the same concepts that were the ones that got Global One here in the first place and made it successful. And what we want to do is now go out to those entrepreneurial, innovative companies that need financing and build more complex structures that are safe and secure to meet their needs. It’s just flipping around to the other side of the table from where we have historically lived.
It’s also an opportunity for us to look at potential acquisition targets through a different lens. So as we are engaged in M & A in the specialty finance space, being the senior lending structure to some of these companies allows us a first look in established relationships and to establish relationships with those people and companies to evaluate what Synovus’ next acquisition might look like in specialty finance.
Synovus CEO Kessel Stelling said on a recent earnings conference call, “If I could find ten more Global Ones that would be great.” This is a way to do just that by first being the senior lender, and, later as relationships develop, by evaluating the possibilities from an M & A perspective.
The Synovus structured lending team offers senior secured loans targeting companies that require a consultative approach to transaction structure in unique asset classes or situations. What are some examples of unique asset classes or situations?
ROSEN: Anything from commission finance to life insurance finance. We’re really focused on innovative asset classes or niche type asset classes. We’re not going to do CMBS, auto loans or real estate finance. We are focused on the more unusual assets that might not have been securitized yet or where they’re not pursuing a term ABS. Or maybe they’re headed down the road and have a long-term plan of doing a term ABS but are not quite there yet. Or an issuer who is doing a term ABS, but they are only doing one a year or one every two years, and they need more permanent warehousing. Or they have some longer dated assets that are a little unusual — those sorts of things are what interest us.
We try to add structural value and apply our creativity to something, because we think that’s what differentiates us, and commoditized businesses are not where we’re headed. We’ve looked at commercial PACE transactions, for example. We’ve looked at medical loans. We’ve looked at attorney settlements, settlement financing and intellectual property cash flow streams. All of those are more unusual assets. Yes, we’ll do your traditional trade receivables financing, but it’s more something a little unusual that we’re after.
What do you enjoy doing in your spare time outside of Synovus?
I started a 501(c)(3) that focuses on financial literacy education for kids, called Wealthy Habits. (www.wealthyhabits.org) So I spend a fair amount of time with that. And I do some other entrepreneurial things, serve on some boards and committees, and watch a lot of kids’ soccer games and climbing competitions because those happen to be the activities of my nine- and 11-year old’s.
What are the goals for the future?
Synovus is focused on finding exciting niche businesses that need a partner to build something great. We want to continue the entrepreneurship that was Global One by providing structural value to these other businesses out there in a senior secured lending structure.