Firm: Brookside Mezzanine Partners
Fund: Brookside Mezzanine Fund III LP
Target: $225 million, including leverage
Amount Raised: $250 million, including leverage
“The unitranche appetite is fairly strong and increasing,” Buttolph said. Two of the six deals that the firm has done in the past six months have been unitranche transactions, which offer features of both senior and subordinated debt in a single transaction.
“Sponsors want one person who can get the deal done and not to have to deal with a junior lender and a senior lender,” Buttolph said.
The Stamford, Connecticut-based mezzanine investor announced that it has closed its third fund, Brookside Mezzanine Fund III LP, at $250 million, well above its $225 million target. Like its predecessor funds, Fund III is a small business investment company, licensed by the U.S. Small Business Administration and eligible to take two turns of leverage on the capital raised by its funds, up to a $225 million limit.
That means that a firm can take $75 million in LP commitments and combine that with $150 million of leverage. In the case of Fund III, Brookside Mezzanine raised $100 million from investors, but the leverage is capped at $150 million, giving the firm $250 million of capacity for new loans.
Launched in June 2001, Brookside Mezzanine raised $100 million, including leverage, for its inaugural 2002 fund, which made 19 investments, and $150 million, including leverage, for its sophomore 2008 fund, which invested in 24 deals.
The firm’s investors include family offices, insurance companies and banks, Buttolph said. Almost all its deals are sponsor-backed. In addition to its Stamford headquarters, the firm has an office in Boston. It employs seven investment professionals.
Brookside Mezzanine, which lends anywhere in the United States, favors sectors including restaurants, health care, manufacturing and services. The firm typically seeks to write checks of $5 million to $20 million, usually in the form of sub debt with an equity kicker from the co-invest, Buttolph said.