Capitala Group, coming off a $1 billion fundraise that was finalised last month, now plans to launch three new funds this summer that will target another $1 billion, including leverage.
“We are about to launch two more closed-end comingled funds. One will be a growth fund strategy, focused on the sub-$5 million EBITDA space, and one [fund] in senior debt,” Capitala chief executive Joe Alala III told Private Debt Investor. The third fund will also focus on senior lending with a “first out fund” structure, he added. Capitala ran a similar fund structure in 2014 and 2015, which “performed well”, according to the CEO.
The Charlotte-based credit manager recently raised $1 billion for Capitala Specialty Lending Corporation (CSL), a vehicle that is composed of permanent capital from institutional investors and will invest in senior loans. CSL encompasses both the firm’s growth and lower mid-market lending strategies.
In addition to CSL, CapitalSouth Growth Fund IV also makes growth investments. The strategy consists of taking control and minority equity positions, typically alongside a credit investment, in companies that have a sub-$30 million enterprise value.
The firm’s lower mid-market lending strategy consists of its business development company, Capitala Finance Corporation, and Capitala Private Credit Fund V as well as CSL. The strategy targets companies with an enterprise value of less than $250 million.
“At this point in the cycle, we are moving up the [capital] structure and no longer doing mezzanine loans,” Alala said. “We expect to get back to it, once the cycle turns. Right now, we’re focused on first liens, unitranche, and we will still do equity co-investments.”
Capitala recently announced the opening of its New York office and hired former Czech Asset Management head of loan originations Kelly Stotler as director for its new outpost. Capitala’s foray into New York expands its footprint to a fifth city. Capitala’s other offices are located in Charlotte and Raleigh, North Carolina; Beverly Hills, California; Atlanta, Georgia and Fort Lauderdale, Florida.
“We wanted to expand into the Northeast, and we think New York is the place to be for that. The next place will likely be in Chicago or Dallas,” said the CEO.
“Our firm currently holds assets which are 60 percent sponsored and 40 percent non-sponsored. We expect Kelly to execute a similar strategy,” Alala said.
Founded in 1998, Capitala manages $2.7 billion in asset under management. Almost half of those assets, or $1.3 billion, is dry powder.