Leeds Equity Expands Into Mezzanine Through Alliance

Leeds Equity Partners, a buyout firm with a focus on education and affiliated industries, has broadened its focus by allying with a fledgling mezzanine lender whose leadership came from Allied Capital Corp., a well-known business development company.

Through what is described on the Leeds Equity Web site as a joint venture, the new firm, Leeds Novamark Capital LLC, will lend to companies with less than $20 million of EBITDA. And although it will invest primarily via mezzanine debt, it also will make investments in senior loans, subordinated notes, unitranche debt, preferred equity and common equity.

Leeds Novamark has a broader mandate than New York-based Leeds Equity, investing not only in the knowledge Industries, such as education, training and information and business services companies, but also government services, health care, financial and insurance services, consumer products and services, niche manufacturing and diversified products and services.

Novamark Capital also has its own Web site, separate from the Leeds Novamark brand, showing its headquarters as Vienna, Va., outside Washington, D.C. The firm’s managing partners and co-founders are identified as Robert Monk, who formerly was a managing director and investment committee member of Allied Capital; Matt Kelty, who had been a principal at Allied Capital; and Mark Raterman, who had been a managing director at Ares Management LLC, another BDC, and before that a principal at Allied Capital.

Other investment professionals at Novamark Capital include Adrian Fenty, principal, a former mayor of the District of Columbia until this year, who is a special adviser to Leeds Equity and who focuses on fundraising for Leeds Novamark and sourcing new investment opportunities for both Leeds Novamark and Leeds Equity Partners; and Dan Higgins, associate, who had been a vice president at Allied Capital for six years.

Apart from Fenty, who has responsibilities at both firms, the Web sites give little indication whether the joint venture has received funding from Leeds Equity, for instance, or whether both organizations plan to invest in the same deals in education-related targets.

Leeds Equity had been interested in recruiting a mezzanine team, said an executive recruiter who was knowledgeable about the effort but who was not authorized to discuss it. But it appears that what Leeds Equity found was a group already in the formative phases of establishing their own firm and struck this alliance instead.

Neither Leeds Novamark Capital nor Novamark Capital appear in the Thomson One database, a fairly extensive repository of private-equity information. Monk referred questions back to the firm’s Web site. Jeffrey Leeds, who founded Leeds Equity in 1993, could not be reached for comment.