The provider of senior, subordinated and one-stop debt facilities officially ended the capital raise for Maranon Mezzanine Fund on March 31, having raised $207 million from 17 institutional investors, Tom Gregory, a managing director with the firm, told Buyouts, an affiliate publication of PE Week.
Regulatory filings with the Securities and Exchange Commission note that the fund had a “total offering amount” of $250 million.
About $65 million [or 31% of the new vehicle] has already been deployed in five deals, Gregory said. Typical mezzanine investments from Maranon Capital range from $5 million to $30 million. Expect 10% to 15% of the fund to be allocated to equity co-investments, he added.
The Chicago lender launched its mezzanine fund-raising effort in January 2008 and held a first close on $100 million in July of that year. Credit Suisse Customized Fund Investment Group was a lead investor in that early push, and a follow-up close was expected in short order, Gregory said.
“We had a very strong book of interest—primarily from insurance companies—and expected to do our second close in September 2008,” he said.
But by then the financial sector had already begun to deteriorate, and insurance companies were among the hardest hit.
“When we started dialing [the insurance companies] to try to organize for the September close, it was very obvious the world had changed in a dramatic way,” Gregory said. “None of them were able to transact even though several had circled and were ready to go.”
Not until June 2009 did commitments once again start to make their way to the fund. Public pensions, including the Arizona State Retirement System and the Teachers’ Retirement System of the State of Illinois, make up about 64% of the vehicle’s total commitments. Corporate pensions represent about 17% of the fund, while insurance companies—originally expected to occupy a significant portion of the fund—make up 10 percent.
“We’re really very proud of the fact that we got it done, and that it was an institutional fund,” said Ian Larkin, a managing director at Maranon Capital.
Mallory Capital Group was tapped as placement agent for the fund-raising effort and Kirkland & Ellis served as fund formation counsel.
Maranon Capital was formed in 2007, and the firm closed a $350 million senior debt fund in November of that year. Since they began doing deals in January 2008, the firm has committed $240 million of its senior and subordinated debt capital to lower mid-market companies, Gregory said. —Ari Nathanson