Financial services firm Mesirow Financial‘s private equity division is in the process of raising Mesirow Private Equity Partners (MPEP), a new investment vehicle that will invest in funds-of-funds and make direct investments in private companies. The fund, which is expected to raise a maximum of $500 million, held a first close this month on $233 million.
Over the next nine months, the firm plans to continue its fund raising, holding additional closes to meet the $500 million target. The fund raising began last fall.
Mesirow will make investments either through its fund-of-funds vehicle or its direct investment program, both of which are affiliated with the current fund. Each investor in the fund will determine their allocation to the two programs. The fund-of-funds will invest in private equity across the board, including buyouts, venture capital, special situations and international funds. The direct investment program will also span the private equity spectrum including investments in buyouts, middle-market expansion financing and by providing venture capital in larger acquisition transactions with the partnerships of the fund-of-funds, said Tom Galuhn, a senior managing director at Mesirow.
The fund-of-funds will invest between $3 million to $15 million each time, whereas the direct investment program will likely invest between $3 million and $7 million per deal.
“We are saying that we will invest less than 45% in venture, less than 40% in buyouts, and less than 30% in special situations,” said Paul Rice, a managing director at Mesirow. “We know that does not add up to 100% . . . we are giving ourselves a little room to maneuver, while giving a broad range as to what we will be investing in.”
Investors in the fund include mainly public pension funds, Taft-Hartley funds and other institutional investors.
Mesirow raised its first fund-of-funds last year, Mesirow Partnership Fund I, which totaled $217 million to invest in buyout, venture capital and special situation funds. Mesirow Partnership Fund I, which held its final close in January 2000, is fully committed. That fund was originally expected to take two years to invest, however, abundant deal opportunities allowed the firm to put that capital to work faster than anticipated.
Mesirow’s private equity division was started in 1982. The firm is based in Chicago.