New Mountain Capital has held a first close on its in-market private fund, an investment vehicle that will primarily target first and second lien deals.
The New York-based asset manager has garnered total commitments of $220 million, almost one-third of the way to its target for New Mountain Guardian Partners II, according to a source familiar with the situation. The firm is seeking $750 million for that fund, as Private Debt Investor exclusively reported.
The fund will pursue an investment strategy similar to the publicly traded New Mountain Finance Corporation, the business development company through which New Mountain currently runs its credit strategy, according to the firm’s website. That entity invests in mid-market businesses, a space which the firm defines as companies making between $20 million and $200 million in EBITDA. Its investment sizes range from $10 million to $50 million.
Alongside first and second lien deals, Guardian II will also invest in unitranche loans along with some subordinated debt, equity warrants and preferred shares, a US Securities and Exchange regulatory filing showed.
A spokesman for New Mountain could not be reached for comment.
NMFC recently reported earnings for the first quarter, posting an adjusted net investment income of $23.4 million, a year-on-year increase from $21.5 million at the same time in 2016. The firm also increased its net asset value per share by 10 cents from 31 December to 31 March, up from $13.46 to $13.56. Last month, it also completed a stock offering that raised proceeds of $81.5 million.
While discussing the credit market conditions on its first-quarter earnings call, NMFC executives noted tightening credit spreads in the direct lending market, something recent data on pricing shows. For a first lien loan with covenants, credit spreads stood at 2.71 percent over the benchmark interest rate in March, compared with 4.49 percent in August, according to Debtwire data.