Mercatus Finance, a cash-flow lending specialty finance company, has launched and is looking to offer loans of $20 million-$75 million to mid-market and lower mid-market businesses.
The company’s creation comes with equity from Arena Investors, a manager with approximately $3.5 billion AUM.
Mercatus CEO Robert Kiesel was formerly chief investment officer at Pillar Life Insurance.
Arena manages Arena Special Opportunities Partners Fund I, which according to PDI research launched in March 2020 with a target of $300 million and at its final close in December 2020 had more than doubled the target, at $714.47 million. Its strategy focused on subordinated debt in North American corporates.
Arena followed that with Arena Special Opportunities Partners Fund II, launched in July 2021 with a target of $750 million, and with the same strategy. It beat that target too, with a final close, 13 months after launch, at $930 million.
Mercatus is looking at a market space similar, at least, to the one occupied by the two Arena funds. A statement from Mercatus said the firm will have “the flexibility, primarily in conjunction with first-lien loans, to consider smaller second-lien and subordinated debt and equity investments”.
It will look for companies requiring liquidity for organic growth, acquisitions, restructurings and changes in ownership or control, the statement said.