Commercial lender Northlight Financial LLC wants to do more buyout deals.
Northlight, which currently manages manages more than $450 million, primarily asset-based senior secured loans, raised a new $100 million fund in June, called Northlight LP, Chris Jahrmarkt, a managing director of the firm, told Buyouts.
The firm, founded in 2002 by a group of lenders who had backgrounds at Heller Financial and GE Capital, historically has not worked extensively with sponsors, nor does it plan a departure from its strategy of investing $5 to $15 million per loan targeting the mid-market and distressed segments.
“We have done work with the sponsor community but it isn’t a primary driver of our strategy, [since] we typically search out opportunities that slip through the cracks,” Jahrmarkt said. “We want to be looking at the best opportunities for our investors,” primarily in the senior secured space, “where we are in a control position as a lender.”
The new fund represents a followup to the firm’s Northlight Fund LP, which closed in March 2006 at $40 million. The firm also took over managing and servicing a number of other funds from other managers with “transitional problems” during the financial crisis, Jahrmarkt said, including a $50 million distressed real estate portfolio in 2008, primarily commercial real estate debt, and a couple of food franchise related funds.
Northlight’s founders—including Chris Jahrmarkt’s father, Michael H. Jahrmarkt, who is managing partner and founder, along with Robert B. Woods and Mark P. Hirschhorn, partners and co-founders—had been together more than 20 years, first at Heller Financial and then GE Capital, before founding Northlight Financial in November 2002. They got their start at a firm called Gilman Investments, an arm of a paper and forest products company.
Credit market conditions have become more competitive, Jahrmarkt said.
“Transaction competition has increased as more institutional capital has been allocated to less liquid investments,” he said. “We try to be patient and select investments with the best risk reward metrics for our fund investors.”