New $465m sub-debt fund for Summit

Summit Partners, the private equity firm with offices in Boston, Palo Alto and London, has closed a new $465 million subordinated debt fund.

Summit Partners has raised its third subordinated debt fund and now has combined capital of approximately $940 million in the asset class.

Summit Subordinated Debt Fund III will co-invest with Summit Partners private equity funds – which have combined capital of $4.7 billion – and will provide up to $70 million of mezzanine debt per transaction in private, profitable companies in emerging growth industries.

Summit’s London-based general partner Scott Collins said having a subordinated debt fund allows the firm to be a single source of private equity and mezzanine financing. “This allows us to provide two-thirds of the capital structure – everything but senior debt – with the speed, confidentiality and certainty that come from dealing with a single relationship,” he said.

Investors in the fund included public and private pension funds, university endowments, financial institutions, corporations, and previously financed entrepreneurs. More than 95 percent of limited partners have invested in previous Summit funds, including Virginia Retirement System, which first invested in Summit Ventures III in 1991.

Formed in 1984, Summit Partners has provided growth equity, recapitalisation and leveraged buyout financing to more than 250 companies which have gone on to complete more than 100 public offerings and more than 80 strategic sales or mergers.

Summit provides private equity and subordinated debt financing for deals worth between $2 million and $250 million in the technology, healthcare, business/financial services, and industrial and consumer products sectors.