TCW/Crescent Vets Launch New Fund

Firm: Newstone Capital Partners

Fund: Newstone Capital Partners LP

Target: $500 million

Amount Raised: $374 million

Placement Agent: PTP Securities

Former TCW/Crescent Mezzanine vets Timothy Costello and John Rocchio have launched the debut fund from their new firm Newstone Capital Partners, seeking as much as $500 million, according to filings submitted with the Securities and Exchange Commission. The fund has already accumulated $374 million in limited partner commitments, with 20 investors signing on so far.

The Prudential Life Insurance Co. and Metropolitan Life Insurance Co. are two LPs in the new fund, according to the SEC filings, which identified PTP Securities as the placement agent.

The Newstone fund launch comes as TCW/Crescent Mezzanine, the mezzanine debt arm of Trust Company of the West, is raising its fourth fund, seeking up to $1.2 billion.

After a rough few years for the mezzanine space, the segment is returning to favor as second lien financing has taken a back seat amid rising interest rates. With the demand for mezzanine again climbing, mezzanine groups continue to raise larger sums of capital. The Blackstone Group raised $690 million for its second mezz vehicle in May, while The Carlyle Group put together its debut mezz vehicle in the same month, raising $436 million. Others recently in the market include Oaktree Capital Management, seeking $1.25 billion for its second fund, and BB&T Capital Partners, which in May closed its debut mezz vehicle.

Calls to Newstone were not returned by press time. However, the firm’s Website identifies private equity groups as its primary customer base. The firm seeks to participate in financings for leveraged buyouts, recapitalizations and later-stage growth investments, and will invest between $20 million and $100 million in companies with revenues ranging from $100 million to $1 billion. Newstone will invest in senior notes, second-lien and subordinated debt and both preferred and common stock.

Both Costello and Rocchio came to Newstone directly from TCW/Crescent Mezzanine, where they each served as a managing director at the firm, also based in Los Angeles. While there, the pair oversaw investments by the firm in Samsonite, Jefferson Smurfit Group, American Residential Investment Trust and Color Spot Nurseries, among others. At Newstone, the firm describes its sector focus as broad, and identifies the manufacturing, services and consumer product industries as areas in which it will invest.

In addition to Costello and Rocchio, Robert Brougham also sits as a managing director at Newstone. He was previously a principal at KZC Catalyst Partners. —K.M.