Final Close for Nordic Mezzanine Fund

Finnish mezzanine provider Nordic Mezzanine has reached a final close on Nordic Mezzanine Fund III at €320m, marking a 30% increase in size from its predecessor.

The LP base consists mainly of pension funds, family offices and insurance companies from the Nordic region and continental Europe. Most prior investors committed to the new fund, and a good number of new institutions signed on as well.

Nordic Mezzanine Fund III is earmarked for investments in mid-market buyouts and expansion capital. The firm invests in the Nordic Region, German-speaking countries and the Benelux Countries. The firm’s first fund Nordic Mezzanine Fund, which closed at €102m in 1999, is fully invested, fully exited and wound up in 2007. Its second fund Nordic Mezzanine Fund II, which raised €240m in 2003, is fully invested.

It has been a relatively good time to raise a mezzanine fund. Since January 2009, 13 mezzanine funds reached final closes in Europe, raising $5.2bn in capital commitments. Alcentra Mezzanine II was the largest mezzanine fund to close in 2009, having raised €800m earmarked for investments in Western Europe and the Nordic countries. Californian public pension fund San Bernardino County Employees’ Retirement Association backed the fund.

According to research firm Preqin, there are 58 mezzanine funds on the road targeting some $25bn worldwide. North America-focused mezzanine funds account for 72.5% of these funds, aiming to raise $15.9bn. Europe-focused mezzanine funds account for 19% of all mezzanine funds on the road, targeting $7.6bn in capital commitments. Funds targeting Asia and the rest of the world account for 8.6% of all mezzanine funds in the market, targeting $1.5bn. Park Square Capital II is the largest vehicle on the road; its fund manager is courting investors for a €2bn fund.

The Nordic Mezzanine fund is structured as an English limited partnership. Manager Nordic Mezzanine UK Limited, with more than €570m under management, has offices in London, Frankfurt am Main and Helsinki.