New York Life closes $980m mezz fund

New York Life Capital Partners has held a final close on its third mezzanine fund, which attracted nearly twice as many LPs as its previous $800m vehicle, says CEO Thomas Haubenstricker.

New York Life Capital Partners, the private equity arm of New York Life Investments, has held a final close on $980 million for its third mezzanine fund.

The group typically invests in subordinated debt associated with buyouts of mid-market companies in the US and Europe, and is sector agnostic. Fund III, which was in market for roughly 18 months, received commitments from 41 limited partners, nearly double the number of LPs in the firm’s second fund that collected $800 million in 2007.

“Much of the increase was driven by smaller investors – individual high-net worth investors – but even if you strip that segment out, we did add a number of large institutional investors as well as sovereign wealth funds,” NYLCAP chief executive officer Thomas Haubenstricker told Private Equity International.

Other investors in the fund include financial institutions and insurance companies. Approximately 60 percent of third-party capital in Fund III was sourced from US institutions.

Thomas
Haubenstricker

“The other very important market for us from an investor sourcing perspective is Asia, more specifically Korea and Japan,” Haubenstricker said. “This has traditionally been an important source of capital for a mezz programme, and really continued to be so for the current fund.”

Fund III has invested $235 million of capital in 10 portfolio companies to date. NYLCAP engaged five placement agents to help raise capital, targeting specific geographies such as Asia, Australia, Latin America and insurance companies in the US.

“In the end, approximately 20 percent of the fund was raised through this [placement agent] initiative,” NYLCAP managing director and head of business development Alan Weinfeld told Private Equity International. “We know private equity firms quite well and are able to source very effectively from them given out relationship to them as limited partners..we continue to see a very active and attractive opportunity set.”

New York Life Capital Partners’ debut mezzanine fund closed on $475 million in 2002. The team has invested $1.9 billion in 90 mezzanine transactions on behalf of its three funds.