Private equity giant the Carlyle Group has raised its second fund in the asset class but fallen short of raising the US$600m planned.
Carlyle Mezzanine Partners (CMP) II closed on US$553m, and was funded by its existing LP base, which included state pension plans, insurance companies, university endowments and high net worth individuals.
It will invest US$15m to US$50m per transaction in the debt and equity securities of companies with revenue between US$50m and US$1bn. CMP invests in middle market companies through junior debt and minority equity securities in leveraged buyouts, recapitalisations and growth financing.
Co-head of Carlyle Mezzanine Partners, Leo A. Helmers, said: “The lack of debt financing alternatives in the market provides CMP an opportunity to get very high risk-adjusted returns in its mezzanine portfolio.”
Reflecting the all but stagnant buyout market, the Washington DC-based buyout firm recently wrote down the value of the investments in its buyout fund Carlyle Partners IV by 13.8% during the fourth quarter of 2008, according to Reuters.
In contrast, mezzanine funds have received a surge of interest in recent months. According to the latest LP allocation survey conducted by Almeidia Capital, the number of investors rating secondary funds as attractive has increased by 18%. CMP II surpassed Carlyle’s first mezzanine fund, Carlyle Mezzanine Partners I, which closed in 2006 with US$436m in equity investments.