Monroe beats hard-cap in latest fund close – exclusive

The vehicle easily surpassed its $800m target and $1bn hard-cap and will focus on loans to the North American mid-market.

Monroe Capital, the US-based lender, has closed on $1.33 billion for its latest private credit fund.

The 2018 Monroe Capital Private Credit Fund III officially closed on 15 November and surpassed its target of $800 million and its hard-cap of $1 billion.

The vehicle will focus on senior secured and unitranche loans to mid-market companies across the US and Canada with an EBITDA between $3 million to $35 million, according to additional documents provided by Monroe Capital. The firm declined to comment further.

The fund is targeting an average loan size of $60 million to $65 million and has the capability to do up to $150 million, according to a source familiar with the situation.

The vehicle launched in late 2017 and is currently 25 percent deployed, according to the source. The fund is industry agnostic, but Monroe has experience originating loans in healthcare, technology, media, and specialty finance, among other areas, according to documents from the firm.

The fund is targeting returns between 10-12 percent, consistent with Fund II and Fund I, the source said. The source added that both prior funds brought in returns above that goal.

The vehicle received commitments from over 100 institutional investors, including 50 new investors to the fund. The fund had to turn away potential investors because of over-commitment, according to a source familiar with the situation.

The Orange County Employees Retirement System re-upped its investment, investing $75 million into Fund III, having invested $70 million into Fund II. The Alaska Permanent Fund also re-upped its investment from Fund II, investing $50 million in Fund III.

Fund II closed in 2016 with $800 million in committed capital, surpassing its $600 million target. It is currently 85 percent deployed, according to the source familiar with the situation. As of the end of the first quarter of 2018, the vehicle posted a net levered internal rate of return of 13.6 percent, according to meeting documents from the Ventura County Employees’ Retirement Association.

Monroe Capital is a Chicago-based private credit asset management firm that was founded in 2004. The firm currently has over $6 billion in assets under management.