Chatham launches $500m mezz fund

The Atlanta-headquartered firm is targeting $150m more than its 2007 predecessor fund and will continue to target healthcare, manufacturing and service companies in the US lower mid-market.

Atlanta-headquartered mezzanine investor Chatham Capital has launched its fourth fund targeting $500 million, according to documents filed with the US Securities and Exchange Commission.

The fund will continue Chatham’s strategy of investing in healthcare, manufacturing and service companies in the US lower mid-market, primarily in the Southeast, Midwest and Mid-Atlantic. The firm invests in companies with at least $10 million in revenue, and does not make early-stage, venture capital or real estate investments. Typical investments range between $2 million and $60 million.

Chatham was unavailable for comment at press time.

The firm’s previous mezzanine vehicle, a 2007 vintage fund, collected $350 million. Chatham later collected an additional $30 million in a 2009 mezzanine fund. The firm’s portfolio companies include salon chain Palm Beach Tan, vending services company Five Star Food Service and healthcare finance company Preferred Medical Claim Solutions.

Chatham was founded in 2000 by Brian Reynolds, a former managing director at KPMG Corporate Finance, and Nick Anacreonte, a former principal at mid-market investment bank Cardinal Ventures.

Mezzanine funds have continued to attract interest from limited partners in recent months, especially as traditional lenders to mid-market businesses such as banks and other financial institutions have scaled back lending.

Last month, the Pennsylvania State Employees’ Retirement System committed $50 million to The Carlyle Groups energy mezzanine opportunities fund, which is targeting $750 million, and in March, The Blackstone Group’s debt affiliate GSO Capital Partners closed its second mezzanine fund on $4 billion.