- Portion of the vehicle is an SBIC fund
- Two pools to invest side by side
- Lower middle market targeted
One part of the effort, Midwest Mezzanine Fund V SBIC LP, disclosed in July that it has raised $22.5 million from 13 investors. Structured as a small business investment company, commitments to this fund can be leveraged with debt equal to twice the amount of private capital raised, but its lending is restricted according to federal Small Business Administration rules.
The other element of the fund, Midwest Mezzanine Fund V LP, does not face the same lending restrictions but will not have access to the SBIC debenture program, a source of inexpensive, long-term capital. This piece of Fund V held an initial close in December and has raised $47 million from six investors, filings showed. The person familiar with the fundraising said the two funds would invest side by side on deals.
If the current fundraising reaches its goal of $200 million (including leverage), the firm will match the $200 million committed to Midwest Mezzanine Fund IV, which closed in December 2007.
Founded in 1992 as a unit of LaSalle Bank in Chicago, Midwest Mezzanine became independent after Bank of America Corp. bought LaSalle in October 2007 from LaSalle’s Dutch owner, ABN Amro. The firm has three senior managing directors, David A. Gezon, J. Allan Kayler and C. Michael Foster. The firm’s website lists eight investing professionals.
Midwest Mezzanine typically invests $5 million to $15 million in subordinated debt or equity in companies in the United States and Canada with EBITDA of at least $3 million per year. The person with knowledge of the fundraising said about three-quarters of the firm’s business is in support of financial sponsors at the lower end of the middle market.
CrossBay Capital Partners LLC and Equus Financial Consulting LLC are assisting the firm with its fundraising, a filing showed.