Evercore to receive $270m from Japanese bank

The New York-headquartered boutique asset manager, currently raising $1bn for its third mid-market fund, will sell to Mizuho Corporate Bank $120m in debt and warrants while collecting up to $150m across its funds.

Evercore Partners will sell debt and warrants worth $120 million (€81 million) to Mizuho Corporate Bank, a subsidiary of Japan’s Mizuho Financial Group.

The sale proceeds of the newly issued senior unsecured notes and warrants will fund “a number of specific investment management opportunities”, a portion of which Evercore plans to announce prior to year’s end, according to a statement.

The capital will also fund general build-out and geographic expansion for both its investment management and advisory businesses.

Evercore’s relationship with Mizuho goes back to early 2006 when the firm forged a “strategic alliance” with Mizuho Securities and its wholly-owned US advisory subsidiary The Bridgeford Group to provide cross-border M&A advisory services to clients in North America and Japan.

Mizuho Corporate Bank and Mizuho Securities will also jointly commit up to $150 million to Evercore-affiliated funds, subject to approvals.

The capital commitment would significantly bolster Evercore’s fundraising efforts. The firm is currently raising $1 billion for its third middle-market private equity fund as well as $100 million for the firm’s second Mexico fund, according to the Probitas Partners 2008 Private Equity Deskbook.

Earlier this month, Evercore accessed additional liquidity though a secondary transaction worth $110 million. The firm sold minority interests in five portfolio companies from its second private equity fund to direct secondary investment firm Accretive Exit Capital Partners.

“I can’t think of a reason a control-investing PE group would sell off minority chunks in their entire portfolio other than to have a reason to re-mark their carrying values,” said a secondary investor uninvolved in the transaction. The move was likely intended to generate “realised” returns, improving the firm’s track record in support of its fundraising efforts, the investor added.

Based in New York with offices in Los Angeles, San Francisco, London and Mexico, Evercore consists of an advisory business, as well as an investment management unit including institutional asset management, private equity and venture capital.