Gryphon Investors has raised a total of $103 million for its mezzanine-focused fund, a filing from the US Securities and Exchange Commission showed.
The close of Gryphon Mezzanine Partners marks the first credit-focused vehicle at the San Francisco-based private equity firm, according to a statement. The fund surpassed its initial cap of $100 million, primarily with commitments from existing LPs.
The fund will invest in Gryphon’s own deals and two of the firm’s private equity funds – Gryphon 3.5 and Gryphon IV. The mezzanine loans will be made alongside a third-party lender that will take a majority of the mezzanine loan. The credit fund has already made investments in Gryphon portfolio companies Wind River Environmental, Orchid Underwriters and Ob Hospitalist Group this year.
“Over the past few years, a number of our limited partners seeking current-yielding investments have asked us about opportunities to participate in the debt financings of Gryphon’s portfolio companies,” David Andrews, founder and chief executive officer at the firm, said in a statement. “This fund is designed primarily to satisfy that LP demand.”
Gryphon targets lower mid-market companies across business and consumer services, industrial, and healthcare sectors and offers investments ranging from $50 million to $150 million with three- to five-year investment holding periods, including buyouts, acquisitions and growth equity deals, according to its website.
The firm has managed over $2.6 billion of equity investments and capital since 1997, the statement showed. The company was not immediately available to comment further.
Gryphon is one of several private equity shops to launch a credit arm recently. Thoma Bravo is now in the market seeking $750 million for its first debt fund, while the Sterling Group is aiming to raise up to $250 million for its initial private credit vehicle.
There are currently 139 first-time funds in the market targeting a combined $42.8 billion, with 30 initial credit vehicles launched this year alone seeking more than $7 billion, PDI data showed. So far in 2017, seven first-time funds have closed, locking down nearly $4 billion. That number is likely to surpass the $5.5 billion raised last year by debut managers.