Golub Capital Holds First Close On Mezz Fund

Mid-market lender Golub Capital has raised $58.3 million in a first close of a new mezzanine fund, GC 2009 Mezzanine Partners LP. The fund includes commitments from 75 investors, according to a regulatory filing.

The fund has a $350 million target, a source said. Golub Capital invests in senior debt, second-lien debt, subordinated debt and equity co-investments, and its own brand of “unitranche” financing.

Golub Capital benefitted from a short revival of interest in mezzanine debt in the early days of the credit crunch. The firm’s president, Lawrence Golub, told Buyouts in November 2007 that before the credit crunch, “It was a depressing time to be a traditional mezzanine provider.” At the time, the firm had put its plans to go public on hold.

Prior to the credit crunch, senior lenders aggressively beat subordinated debt providers in speed, rate of closing and flexibility of terms. Mezzanine lending came to the forefront as sources of senior debt dried up, but the high cost of mezzanine financing to equity sponsors has held the asset class back from expanding as rapidly as expected.

In the first quarter, Golub Capital placed first in league tables comparing lead bookrunners of LBO debt facilities up to $100 million, according to Thomson Reuters LPC.

Earlier this year Golub Capital raised $200 million for GC Opportunity Fund II LP, earmarked to make secondary purchases of broadly syndicated first-lien bank loans. By March it was already 50 percent invested.