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L.A. Firm Nears Close On First Mezz Fund

Firm: Kayne Anderson Capital Advisors

Fund: Kayne Anderson Mezzanine Partners LP

Target: $500 million

Placement Agent: The Forbes Private Capital Group

Kayne Anderson Capital Advisors has already surpassed its $500 million target for its first mezzanine fund, and expects to close the fund at close to $600 million by the end of the month, sources familiar with the fundraising effort told Buyouts.

The Forbes Private Capital Group, a new placement agency led by Guggenheim Partners co-founder Todd Morley, is helping Kayne Anderson raise the fund.

Kayne Anderson Mezzanine Partners LP invests in mid-market companies with $100 million to $500 million in sales, and $10 million to $50 million of EBITDA. The group’s typical investment range is $10 million to $35 million and invests in both sponsor-backed companies and those without private equity backers.

The Los Angeles-based firm has done mezzanine investing in the past, but this is its first pure mezzanine fund. The firm formed the mezzanine group last year when it recruited Ed Cerny and Dave Petrucco from The Blackstone Group as co-managing partners. At Blackstone, both were managing directors in the corporate debt group, but saw their roles diminish after Blackstone’s 2008 acquisition of GSO Capital Partners, according to peHUB, which first reported the launch of Kayne Anderson’s mezzanine fund in October 2009.

Other senior members of the eight-person mezzanine finance group include three managing directors: Thomas Archie, formerly a director at Guggenheim Partners; John McNulty, formerly an executive director in the leveraged capital markets group at UBS Securities; and Kurt Prohl, a former vice president in the energy investment banking group at BMO Capital Markets.

Kayne Anderson is better known for its energy investments. In July 2009, it closed its fifth energy-focused investment fund with $820 million in commitments, and since 1998 it has invested in more than 50 energy companies. The firm, which manages a total of $9.8 billion in investments, also manages a $136 million real estate fund, Kayne Anderson Real Estate Partners I LP.