Castlelake, an alternative investment manager, and Chesswood Group, a specialty finance company with 40 years of experience in the commercial equipment finance market, entered an agreement for the forward purchase of diversified equipment loan and lease receivables originated by Chesswood subsidiaries Pawnee Leasing and Tandem Finance.

Through the agreement, vehicles managed by Castlelake will acquire up to $400 million of small-ticket equipment loan and lease receivables. The funds from the forward flow agreement are expected to enable Chesswood’s subsidiaries to continue growing originations alongside market demand by providing off-balance sheet funding for loan originations.

“We are pleased to partner with the management of Chesswood, Pawnee and Tandem as they continue to expand their well-established equipment financing footprint with small and medium-sized business across the U.S.,” Armin Rothauser, partner of lending at Castlelake, said. “We believe this agreement enables us to help meet the need for capital in a growing market, support the continued growth of an experienced market participant and provide interesting exposure to our investors.”

“The industry consolidation that has taken place over the past decade in U.S. small and mid-size equipment finance has created a unique growth opportunity for both Pawnee Leasing and Tandem Finance,” Jeff Fields, CEO of Chesswood Capital Management, said. “Castlelake’s expertise in equipment finance and focus on asset-rich, cash-flowing opportunities make them an ideal partner for the Chesswood group of companies.”

“We are excited to announce this transaction as we continue to grow our equipment finance volumes in the United States. This agreement expands on our strategic initiatives, which seek to diversify revenue and earnings streams for Chesswood Group,” Ryan Marr president and CEO of Chesswood Group, said.