Freeport closes first fund since 2013 – exclusive

The Moelis & Co. affiliate said it garnered commitments from pension plans, insurance companies and foundations and endowments.

Freeport Financial Partners has locked down its latest fund that will target the top of the capital stack.

The New York-based mid-market lender closed its Freeport First Lien Loan Fund III at $960 million, the firm announced Wednesday, a sum that comprised $518 million in equity commitments with an additional $442 million in leverage.

Investors include a $70 million commitment from the Arizona Public Safety Retirement System alongside pledges from Main Street Capital Corporation and HMS Income Fund. The fund reached a first close for $160 million in April 2015, as Private Debt Investor exclusively reported.

The fund mainly will invest in senior secured, first lien, floating-rate debt for mid-market companies that generate between $3 million and $25 million in EBITDA and are backed by a private equity sponsor, Freeport said. So far, about 35 percent of the fund has been invested in the business services, industrial components and healthcare services sectors. Fund performance figures were not immediately available.

“We are pleased with the response to our most recent fund from both our existing and new investors to achieve a diversified base of limited partners,” Josh Howie, managing director at Freeport, said in a statement.

First Avenue served as the placement agent for the fund. Paul Buckley, the agent’s founder and a managing director, congratulated Freeport on the closing of the fund. “We look forward to continuing our relationship with the team and we wish them continued success,” the firm said.

Freeport became a part of Moelis & Co. in 2012, allowing the New York-based investment bank to move into mid-market lending. At the time of the acquisition, Freeport had invested almost $1.5 billion, a total now more than $2 billion. The company's top principals – Matthew Gerdes, Stephen Papalas, Joseph Walker and Josh Howie – followed their firm to Moelis. Terms of the deal had not been disclosed. 

Among its first fundraises following its Moelis acquisition was a $230 million SBIC fund, a 2013 vehicle that is backed by the US Small Business Administration (SBA). The fund generated $80 million in LP commitments and $150 million of leverage, according to an announcement at the time. Main Street also put money into that fund alongside THL Credit. An SBIC fund allows the firm to use its pool of capital to supplement loans offered by the SBA.