Tom Lee, Gores enter BDC fray

Thomas H. Lee Partners and Gores Technology, two US private equity firms, have in recent days filed with the SEC to launch business development companies – publicly traded vehicles that make loans to and equity investments in companies.

Boston-based Thomas H. Lee Partners and Los Angeles-based Gores Technology Group have filed with the SEC to raise public capital for business development companies.

Thomas H. Lee is seeking $500 million (€423 million) for THL Investment Capital, according to the prospectus. The vehicle, which if successful offered will trade on the public market, will ‘generate both current income and capital appreciation through debt and equity investments,’ according to filing documents.

THL Investment will make mezzanine and senior secured loans to middle-market companies, as well as direct equity investments.

In language similar to that found in the prospectus for the proposed vehicle sponsored by New York buyout firm Kohlberg Kravis Roberts, the Thomas H. Lee vehicle will ‘have access to THL’s pipeline of proprietary transactions,’ according to filing documents.

Gores Technology is seeking $250 million for Gores Investment Corporation, a business development company that will make mezzanine, senior secured and debtor-in-possession loans to middle-market ‘technology and telecommunications companies,’ according to the prospectus.

Gores closed its debut third-party private equity fund just last November on $400 million. The firm, which focuses on technology and telecom investments, was founded by technology entrepreneur Alec Gores.

Since April, a number of US private equity firms have filed to take public BDCs, including KKR, Blackstone, Kelso/BlackRock, Evercore, Prospect Street and Porticoes. These filings follow the successful April IPO of Apollo Investment, which raised $930 million for a vehicle tied to New York private investment giant Apollo Advisors.