Asset-based lenders underwrite first and foremost to collateral rather than earnings. Larry Klaff, senior managing director and head of asset-based lending, and Lisa Galeota, managing director and head of ABL portfolio management and underwriting, have led that strategy at First Eagle’s alternatives arm, Napier Park Global Capital, since launching the business in 2020. The two began working together at Gordon Brothers Finance Company nearly 20 years ago and have kept their partnership going throughout the years.
The business is heading into a new ownership structure. On 26 August, Victory Capital agreed to acquire First Eagle in a deal worth about $7bn and said First Eagle’s $41bn CLO and alternative credit platform will serve as the combined company’s alternative investments platform. The transaction is expected to close by the end of the first quarter of 2027.
9fin sat down with Klaff and Galeota to discuss how they build ABL deals, how the platform has scaled under Napier Park, what the Victory Capital deal means for the team, and how they tell a genuine rescue financing from someone else’s bad exit.
1. You two have worked side by side for close to 20 years. What's the origin story?
Klaff: We started working together at Gordon Brothers Finance Company. I was focused primarily on sourcing and structuring transactions, while Lisa concentrated on underwriting and portfolio management. We are both credit focused and while those roles require different instincts, they also need to be tightly connected.
2. What's kept the partnership together?
Galeota: What has kept it working is trust, thoughtfulness in the approach and a willingness to challenge each other. Larry may see a way to structure a difficult situation, and my job is to work through the details and pressure-test what has to go right and what could go wrong. We have worked through enough cycles and complicated credits together that we can be very direct with one another. There is no ego around who has the better answer. The objective is to arrive at the right answer for the borrower and our investors.
3. You launched First Eagle's ABL business in July 2020, a few months into the pandemic. What did you see in the market that made a from-scratch build the right move at that moment?
Klaff: The pandemic accelerated a liquidity problem that was already developing. Companies with valuable assets suddenly found that their historical cash flows were not very useful predictors of the next six months. Banks were becoming more selective, while borrowers needed flexible capital to manage inventory, working capital and, in some cases, a complete transition in their businesses.
We saw an opportunity to build around collateral rather than wait for earnings visibility to return. It was a new business line, but we were not starting from zero. Lisa and I brought longstanding relationships with sponsors, banks, advisors and appraisers, and First Eagle brought a substantial credit platform. That combination allowed us to enter the market at a moment when flexible, asset-focused underwriting was particularly valuable.
4. How much of the original platform you designed still applies today? What's changed?
Galeota: The foundation has not changed. We still begin with the downside and ask what the collateral would be worth in a difficult, time-constrained sale. We still focus on controls, reporting, intercreditor rights and our ability to act if performance deteriorates. We continue to focus on the underlying business and the liquidity profile. Those disciplines are not cycle-dependent.
What has changed is the breadth of what we can address. We have more capital, a wider sourcing network and access to colleagues across Napier Park who can provide other forms of private credit. We are seeing larger and more varied pools of collateral, as well as more situations in which ABL is one component of a broader financing solution. The platform has scaled, but we have been careful not to let scale turn a bespoke strategy into a commoditized one.
5. How has the macroeconomic picture impacted client interest in ABL versus other Napier Park private credit options?
Galeota: ABL tends to receive more attention when liquidity becomes conditional. Rates remain relatively high, input and labor costs are uneven, and tariffs and policy uncertainty are making it harder for companies to forecast margins. At the same time, lenders are less willing to overlook a missed plan.
That backdrop has increased interest in financing based on identifiable assets rather than projected cash flows alone. Investors also value the diversification and potential downside risk mitigation that collateral can provide. We do not view that as ABL replacing Napier Park's other private credit strategies. Often the right answer depends on where a company is in its lifecycle. A cash-flow loan may be appropriate in one period, while an asset-based facility becomes more useful when the company needs incremental liquidity or greater structural flexibility.
6. In August, First Eagle agreed to be acquired by Victory Capital. With a new ownership structure on the horizon, what are your ambitions for growing the ABL business?
Klaff: For Napier Park’s ABL business, the most important point is continuity. Following the transaction’s close, the team will continue to operate autonomously, with no changes to its investment philosophy or process. Napier Park will serve as Victory Capital’s alternative investments platform, creating an opportunity to pair that continuity with greater scale and broader distribution.
ABL remains a specialist, relationship-driven market, so our objective is not simply to pursue more transactions. It is to broaden the range of situations we can address, support borrowers as their needs evolve and introduce the strategy to more investors seeking differentiated private credit exposure. Any growth must remain grounded in the disciplined underwriting, strong collateral protections and structural controls that have long defined our approach.
7. ABL is also increasingly showing up as rescue capital. In the current market, where in the capital structure are you most often being asked to sit?
Klaff: We are most often asked to provide first-lien capital on selected assets such as real-estate or Intellectual Property or a “FILO” (First Lien Last Out) alongside an existing revolving lender. Depending on the situation, ABL can also support a debtor-in-possession facility or an exit financing.
8. How do you distinguish a legit rescue from being the exit from someone else's bad deal?
Klaff: A legitimate rescue has a clearly defined liquidity need, sufficient collateral coverage and a credible path to stabilization or repayment. Management understands the problem, stakeholders are contributing to the solution, and the structure gives the new lender the visibility and control needed to protect capital.
We become skeptical when the financing simply takes out an incumbent lender without addressing the underlying issue, when every projection depends on an immediate operating turnaround or when collateral is deteriorating faster than the proposed plan can work. A high coupon does not compensate for weak collateral or an unenforceable position in the capital structure.
9. You've spent your careers appraising stuff. What's an item you own, maybe in the garage, the basement or the office, that you'd never let an NOLV appraiser near?
Klaff: I am going to exercise lender discretion and keep that asset undisclosed. The minute an appraiser gets involved, sentimental value gets a very aggressive haircut.
Galeota: Agreed. We spend enough time applying discounts to other people's prized possessions. At home, we reserve the right to be completely irrational.
