Falcon Investment Advisors, the private equity firm and mezzanine debt investor, is raising its first structured equity-focused vehicle as the financing product has been gaining steam.
The Boston-based firm is seeking $725 million for its Falcon Structured Equity Partners, which appears to be its debut fund for the strategy. Some $600 million is slated for the sleeve targeting US investors and $125 million for the sleeve focused on international investors, Securities and Exchange Commission filings showed.
A representative for the firm could not immediately be reached for comment.
Falcon is currently investing its latest subordinated debt fund, the $1.25 billion Falcon Strategic Partners V. The firm provides $25 million-$75 million per deal and will provide acquisition financings, recapitalisations and refinancings, management buyouts and leveraged buyouts, growth capital financings and structured finance.
The firm currently takes an equity position in most deals, according to its website. It will take warrants with its subordinated debt investments, convertible subordinated debt or preferred stock, paid-in-kind preferred stock with warrants and non-control common equity alongside a mezzanine investment.
Structured equity has become a more established financing source over the past several years, sources have told Private Debt Investor. It has “matured” and become attractive to both private credit and private equity managers, Houlihan Lokey structured equity advisor Heather Smith said earlier this month. The former appreciate the strategy because it offers a higher yield, while the latter have pursued it to reduce their equity risk.