Caltius closes mezzanine fund on $500m

The middle market-focussed mezzanine firm has closed its rapidly raised fourth fund as demand for mezzanine financing rises.

Caltius Mezzanine has closed its fourth fund on a $500 million (€320 million) hard cap only three months of fundraising. The original target was $400 million.

Around 60 percent of the investors, a mix of European and US limited partners, have previously invested with Caltius while 40 percent are new investors, according to Caltius president Jim Upchurch. Credit Suisse acted as placement agent.

The limited partners include global fund of funds Adams Street Partners, AlpInvest Partners, Pathway Capital Management and Portfolio Advisors. US pension funds, State of Wisconsin Investment Board and New York State Teachers’ Retirement System, have also invested.

“It’s an attractive mezzanine opportunity today tempered a bit by concern over the overall economic health of the country,” Upchurch told PEO. “It’s hard to predict the pace [of investment] but the market today for deploying capital is much better than it has been over the past two or three years.

“I think we’ll stay in our sweet spot,” Upchurch said of target investment sizes. Average deal size for Caltius is approximately $20 million to $25 million. The mandate of Fund IV is to provide junior capital investment of $10 million to $75 million to middle market companies.

Caltius’s previous mezzanine fund targeted smaller investments of $5 million to $30 million. Fund III closed on $300 million in July 2004.

Recent investments made by Los Angeles-based Caltius include $9.5 million in material handling systems manufacturer Bulk Handling Systems and $18.3 million in technology-focussed investment bank Pacific Crest Securities.