DB Capital Partners Inc, a private equity affiliate of Deutsche Bank AG has set up a $1 billion mezzanine debt fund, one of the largest of its kind. The fund will be investing in North American and Western European companies seeking alternative sources of debt financing.
The fund will be internally capitalised and be a fully integrated part of DB Capital Partners, investing primarily in companies seeking sponsor related capital, growth capital or liquidity capital.
Greg Margolies, managing director, will head the venture. He joined DB Capital Partners from the Carlyle Group, where he was co-head of Carlyle High Yield Partners’ mezzanine and equity investment efforts. Before joining Carlyle, he was a director in the High Yield Capital Markets and Syndicate Group at Merrill Lynch and held prior positions in leveraged finance at Citibank.
The team will draw upon existing DB Capital Partners clients, Deutsche Bank’s investment banking relationships and external relationships with sponsors, investment and commercial banks as well as other mezzanine funds for its investments.
In the past 18 months, DB Capital Partners has made five mezzanine investments totalling over $95 million including financing for Jostens Inc and Outsourcing Solutions, Inc.
Charles Ayres, head of DB Capital Partners in North America, said: “DB Capital Partners has always sought out creative ways to finance high-potential companies. The Mezzanine fund is a logical extension of our efforts at DB Capital Partners.”
Margioles added: “DB Capital Mezzanine Partners was established to capitalise on the excellent opportunities that exist in the mezzanine market as a result of the evolution of the high yield and leveraged loan markets.”
He said: “The resulting financing void for many of our clients provides an opportunity for DB Capital Mezzanine Partners to achieve superior risk adjusted returns on mezzanine investments while simultaneously helping meet the capital requirements of Deutsche Bank’s clients.”