Armada closes fourth mezz fund on €103m

The majority of capital in the new fund, which was launched in May 2014, was raised from existing investors’ of the Nordic-focused lender.

Nordic credit investor Armada Mezzanine Capital has reached a final close of €103 million on its fourth fund. Armada Mezzanine Fund IV attracted new and existing investors and is the same size as the firm’s third fund which closed in spring 2009, managing partner, Pettri Nurmio (pictured) told PDI

Most of the investors are from within the Nordic region, said Nurmio, but there are continental European investors in the group including Access Capital Partners. Existing investors make up the bulk of the Fund IV commitments and the money came from public and corporate pension funds, public institutions, fund of funds, insurance companies and family offices.

Target returns are around 12 percent, PDI understands. 

The fund, like its predecessor, will provide subordinated financing to lower mid-market companies in the Nordic region. The vehicle has a five-year plus one investment period and is already one third invested. The vehicle has funded three companies in Finland, Sweden and Norway. 

Though Armada focuses on mezzanine deals with equity kickers, it has a flexible mandate and can provide unitranche financing with a combination of senior and junior debt also an option, explained Nurmio. 

Mezzanine opportunities in Europe dropped dramatically following the financial crisis but by targeting the lower mid-market and specifically companies with an enterprise value of under €100 million, Armada can source borrowers in need of the higher yielding subordinated debt the firm provides, explained Nurmio. At the smaller end of the market, there is little competition from larger debt funds which typically seek to do ticket sizes of €25 million to €50 million, he said.

Bank lenders can be very aggressive in larger leveraged finance deals but are much more conservative when it comes to financing the lower-cap end of the market, Nurmio added. 

Though the firm’s investors have not yet co-invested with Armada in this fund, it is something that they offer investors, particularly when the facility is on the larger size. Nurmio added that offering investors co-investment opportunities is an important element these days. 

One of the deals executed out of the new fund was in support of the buy-out of a Norwegian cloud-based storage and software company called Admincontrol by Herkules Private Equity. Most of Armada’s deals involve a private equity sponsor but it also provides growth financing for non-sponsor backed corporates. 

Armada Mezzanine Capital manages three active mezzanine funds with combined capital of more than €250 million and has offices in Helsinki and Stockholm. It was established in 2000.