VSS expands debt team

The firm hired former Merrill Lynch executive James Dunleavy as it expands its ‘internal capabilities’ around providing senior debt. The firm also has plans to launch a fifth private equity fund.

Veronis Suhler Stevenson has been expanding its capabilities around providing senior debt to small and mid-market businesses in the media and communications sector, with the intention of raising a fund for the strategy.

The firm on Tuesday announced it hired former Merrill Lynch veteran James Dunleavy as a managing director.

Dunleavy held senior level positions at Merrill Lynch Capital and IBJ Whitehall, with responsibilities including developing, underwriting and monitoring mid-market loan opportunities involving media and communications companies.

VSS has been building its senior debt team since last year, when it entered a partnership with debt specialist Ares Capital to provide “flexible” debt capital to small and mid-market companies in the information, education, media and marketing services sectors.

For now, Ares provides actual financing and VSS sources deals through its network of contacts in the sectors, a source told Private Equity International. However, VSS is building up its “internal capabilities” to providing senior debt financing to small and mid-market companies in the sectors it knows well, according to Jeffrey Stevenson.

“One of the first things we did was set up the arrangement with Ares … that’s a stepping stone toward having an internal capability,” Stevenson said. It’s not clear when the firm intends to launch a senior debt fund.

The two groups also on Tuesday announced a deal in which Ares provided $86.5 million to a company that provides educational resources and services in the medical space.

VSS has also raised mezzanine funds called VSS Structured Capital funds. The firm closed its most recent private equity fund on $1.3 billion in 2006. That fund is just about fully invested, and the firm has plans to launch a fifth fund, though it’s not clear when that fund will be launched. Stevenson declined to comment.

Last year, VSS lost the co-head of its European operations Marco Sodi, who left after the firm shut down fundraising on its VSS European Communications Partners, which had collected about $104 million and reached a first close. That fund was targeting $836 million.