Monroe Capital closes Fund III on $250m

The Chicago-based firm took about a year to raise its third fund, which will invest in a ‘target rich’ deal environment.

Monroe Capital has closed its third fund on $250 million to provide senior and mezzanine debt and equity co-investments in lower and mid-market companies in North America.

The fundraising took about a year and the firm did not use a placement agent, according to Ted Koenig, president and chief executive officer of Monroe.

The firm targets investments across a range of manufacturing, distribution and service industries, as well as women and minority-owned businesses and companies located in underserved communities. Specifically, the firm will target companies generating more than $3 million in earnings before interest, taxes, depreciation and amortisation.

The current environment for deals is “target rich”, Koenig said.

Monroe has more than $700 million under management. Fund II was an open-ended fund and Fund I collected $400 million in 2006.

While the firm took about “90 days” to raise the first fund, the third fund encountered a tougher run with potential limited partners not as willing to open their wallets, Koenig said.

“People were more concerned with lock-ups and liquidity than in 2006,” Koenig said.

Institutional investors from outside the US have been expressing more interest in getting exposure to the US mid-market, he said.

“Throughout the crisis, the mid-market has been the most stable, from a return standpoint and a default standpoint,” Koenig said, comparing the space to the large-cap and small-cap segments of the market.