Deerpath targets $500 mln-plus for senior secured loan fund

  • Deerpath targets net returns in 6 pct to 9 pct range
  • Fund IV to provide senior secured loans to sponsor-backed companies
  • Philadelphia retirement system backs fund for $25 mln

Deerpath Capital Management expects to raise more than $500 million for a private debt fund that will be used to invest in the capital structures of private equity-backed companies.

The fund raised $243.8 million as of March 22, according to Philadelphia Board of Pensions & Retirement CIO Christopher DiFusco.

Philadelphia’s retirement system committed $25 million to Deerpath Capital IV in March.

Deerpath typically invests $5 million to $40 million in middle-market companies. The firm can structure its investments a number of ways, including through first-lien senior secured loans and unitranche loans as well as minority equity and revolving credit facilities.

The typical portfolio company has annual revenue in the $10 million to $200 million range and annual Ebitda of $2 million to $20 million.

Deerpath, founded in 2007 by former GE Capital Chairman and Chief Executive Gary Wendt, has relationships with more than 250 PE sponsors, Philadelphia documents show.

The firm’s relatively conservative investment strategy is expected to generate an unlevered net return in the 6 percent to 9 percent range.

In the past, Deerpath provided financing for deals led by firms like Great Hill Partners, Moelis Capital Partners and Source Capital, its website shows.

In Q4 the firm participated in at least six transactions, all backed by PE sponsors. Deerpath did not identify any of the companies or sponsors involved in its recent investment activity.

Deerpath could not be reached for comment.

The firm’s management committee is chaired by Wendt and includes James Kirby, John Fitzgibbons and Tas Hasan.

Deerpath has offices in New York, Fort Lauderdale, Houston, Los Angeles and Chicago.

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A stag stands in the undergrowth in Richmond Park in west London on Dec. 27, 2017. Photo courtesy Reuters/Hannah McKay