US-based fund manager Deerpath Capital Management said in a statement that it held a final close on its Fund 5 with a record $1.1 billion, exceeding its target by $100 million. Like its predecessor funds, Fund 5 pursues first-lien, senior debt financing to lower-mid-market companies with enterprise values of $50 million to $100 million.
The firm said the fund, which was launched in August 2019, received commitments from more than 50 limited partners including pensions, insurance companies, asset managers, family offices and endowments. Investors hailed mostly from North America, Europe and Asia, with the fund seeing its largest fundraise in Europe and Asia to date. According to Private Debt Investor’s database, investors included City of Philadelphia Board of Pensions & Retirement, Dallas Fort Worth International Airport, Montana Board of Investments and Santa Barbara County Employees’ Retirement System.
With leverage, Deerpath raised more than $2 billion in capital to be deployed, with the firm already committing some 75 percent of the fund’s capital to what it characterised as a large pool of portfolio companies that are diversified by industry, geography and sponsor. The fund said it emphasises investments in “high-quality, private equity sponsor-backed companies with longevity and proven profitability in their respective markets and highly cash generative business models”.
Deerpath said the fund is targeting net returns of 5 to 8 percent unlevered and 10 to 15 percent levered. Fees are 1 percent on deployed assets for all vehicles, with a carry of 10 percent for unlevered and 15 percent for levered vehicles.
Tas Hasan, partner and chief operating officer, said the fund was oversubscribed despite a challenging environment due to covid 19, and that the firm was pleased to see increased interest from new investors globally as well as sustained support from existing investors. He said the firm had “steadfastly maintained” the investment thesis it began implementing nearly 14 years ago of “prioritising safety in all economic climates to protect against the unexpected”.
Deerpath, with $2.6 billion of assets under management, was founded in 2007 by Gary Wendt, James Kirby and John Fitzgibbons.