Lower mid-market mezzanine manager GMB Mezzanine Capital has raised $270 million for its third fund.
The vehicle could bring in up to another $10 million of commitments from investors before it fully closes, a source close to the firm said. The $270 million includes $120 million in equity commitments from investors topped up with $150 million of leverage under the US Small Business Administration’s lending programme.
The fund is licensed as a Small Business Investment Company (SBIC) which gives it access of up to $150 million in leverage. The two predecessor funds were also licensed as SBICs.
The vehicle closed above target, according to a statement from the manager. Investors include large institutional investors, regional and national banks, family offices and high-net-worth individuals. GMB Mezzanine II closed in 2012 on $240 million. Most of the investors in the third fund were returning LPs, said the source. Some of these institutional investors increased their commitments in the third fund, the sources added.
“We are very grateful for the confidence and support of our limited partners. The appeal of the mezzanine investment class and the opportunities offered by our middle-market focus and well-developed sponsor relationship has resonated with many investors,” said Mike McHugh, a partner at GMB in a statement.
The firm extends mezzanine lines of between $3 million-$25 million to companies with enterprise values under $200 million. As well as mezzanine, the firm also takes non-control equity stakes. It supports private equity sponsors with financing for buyouts or other growth capital needs.
GMB Mezzanine Fund III is managed by is Minneapolis-based Lakeside Capital Management, the general partnership run by McHugh, Cully Olmanson and Dan Hemiadan.
McHugh and Hemiadan are both former Churchill Capital executives who left to establish GMB Mezzanine several years before Churchill was sold.
The two predecessor funds invested $507 million in 66 portfolio companies across the US between 2005 and 2016.