Merit raising $600m mezzanine fund

The Chicago-based firm is aiming for the same target as its previous fund and has so far won a commitment from the Minnesota State Investment Board.

Chicago-based Merit Capital Management is raising $600 million for its sixth mezzanine fund, according to a recent filing with the Securities and Exchange Commission (SEC). 

The Merit Mezzanine Fund VI is targeting the same amount of capital commitments as its predecessor Fund V. That fund closed slightly above target on $612.5 million in August 2010.

So far, the $78.6 billion Minnesota State Investment Board committed up to $100 million to Merit's sixth fund in December. The pension fund had also invested $75 million in the fifth fund.

Other limited partners included the British Columbia Investment Management Corporation, the State of Wisconsin Investment Board, the Maryland State Retirement and Pension System, the Teachers Retirement System of Louisiana, Allstate Investments and the Nebraska Investment Council, according to PDI Research & Analytics.

The US firm invests both in mezzanine debt and equity and acts as a lender and a shareholder, according to its website. Merit is focused on mid-market companies primarily in the manufacturing, distribution and services industries.

The firm was founded in 1993 as a partnership with Chicago-based investment management firm William Blair & Co. Its first fund, the William Blair Mezzanine Capital Fund launched with $114.6 million at the time. Merit Capital spun out from William Blair in 2005. The firm has invested across 75 transactions since its founding and raised a total of $1.7 billion in capital.