Boston-based Capital Resource Partners raised $354 million last month and held a first close on its fourth mezzanine fund.
While many G.P.s largely ignored the mezzanine market until last August, they now are following mezzanine fund raisings so that they can better access hard-to-find financing, G.P.s and L.P.s said.
Conversely, Capital Resource has invested mostly in growth companies through its $250 million third fund raised in 1996 but now is becoming interested in investing alongside buyout firms.
“We’re certainly going to be more active in the buyout area,” said Fred Danforth, a managing partner. The firm believed investing alongside buyout firms had become too expensive and too competitive in recent years, although the firm had looked at many opportunities, Mr. Danforth said.
The group launched Capital Resource Partners IV, L.P. in September with a $425 million target. It expects to wrap the vehicle by the end of January. Capital Resource is charging L.P.s a management fee of 1.75% on committed capital in the new effort and is using the Monument Group as its placement agent.
Typically, the firm lends capital to attain an equity stake in its investments, and Capital Resource likes to have the opportunity to acquire equity stakes of 20% if it exercises its warrants. The firm on average charged interest in the last fund at a rate of a little over 12%, said Robert Mast, a director at the Monument Group.
The firm’s investments, as of late, include a $17 million commitment to Odyssey Health Care, a company that provides health care and counseling for terminal patients and their families; and investing in Foto Fantasy Inc., a manufacturer of self-service photo booths.
Besides Capital Resource, Hancock Mezzanine Investments, LLC in November also wrapped the $425 million Hancock Mezzanine Partners, L.P. to invest alongside management buyouts.