News & Analysis

Exclusive: Monroe closes senior secured fund on $500m

Orange County voted to boost its commitment to Monroe by $20m earlier this week.

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Monroe Capital has closed its senior secured direct loan fund on a $500 million hard-cap, the firm confirmed to Private Debt Investor onWednesday.

Earlier this week, the Orange County Employees Retirement System voted to boost its commitment to Monroe by $20 million, a retirement system spokesperson told PDI. The retirement system indicated Monroe was targeting a final close for the fund on Tuesday or Wednesday of this week.

OCERS committed $50 million to the firm in April. Retirement system investment staff explored the possibility of increasing its commitment in September, but were unable to do so at the time because the firm could not accommodate an enlarged commitment. However, since then, a few potential investors failed to have their structures in place to commit in time for the final close, opening the door for OCERS to increase its investment, the retirement system said.

“Monroe Capital (Monroe) was one of the higher conviction managers for staff and [investment advisor] NEPC,” according to OCERS.

Monroe held a second close just above the fund’s $400 million target in October. The fund has attracted commitments from approximately 40 US and non-US institutional investors, Monroe president and chief executive officer Ted Koenig told PDI.

As of 1 December, Monroe had completed six investments using the fund, which is now 50 percent invested. Koenig expects the fund to be 80-90 percent invested by mid-2014.

“We’ll have 10 deals funded by year end,” Koenig said. “It’s a large, solid pipeline.”

Monroe will make its first distribution through the fund on 31 March and expects quarterly distributions to fall in the 2-4 percent range. The fund specialises in providing capital in support of mid-market companies with between $5 million and $20 million EBITDA.

Earlier this week, the Chicago-based firm announced it had funded a $50 million unitranche credit facility to support the acquisition of MSD Performance Group by Hot Rod Brands, an affiliate of Z Capital Partners.