Partners Group raises over $1bn for mezz

The Swiss private markets investment manager’s eighth mezzanine fund is its largest to date.

Zug-based private markets investment firm Partners Group has raised over $1 billion in commitments for its latest global mezzanine fund, Partners Group Direct Mezzanine 2013, according to a statement from the firm.

The commitments cover both a euro-denominated pooled fund and a separate account, partner and co-head of private debt, Juri Jenkner told PDI, declining to put figures on the split.

A global LP list includes institutions from the US, Europe and Asia with a large number of pension funds committing to the fund, said Jenkner.

The fund is already 22 percent invested and is a successor to the firm’s €500 million 2011 mezzanine investment vehicle, PDI understands.

The fund is the firm’s eighth and largest subordinated credit fund. It has a global mandate and will focus on mid-market companies.

“Origination is at the core of successful mezzanine investment. … I would have sleepless nights if we were restricted to one geography. You don’t want to be a niche within a niche,” said Jenkner, adding that continued opportunity in the wake of retreating banks means the fund is likely to be slightly overweight on Europe.

So far, the fund has invested mezzanine financing into nine companies, including the £150 million ($235 million; €191 million) Partners Group-led subordinated portion of Caffé Nero’s £275 million refinancing.

However, deals for non-sponsor backed companies like Caffé Nero will remain the exception, said Jenkner. Partners Group’s credit team use the firm’s sprawling private equity network to help source lending opportunities helping to keep the focus on leveraged deals. With a sponsor in place, Partners Group benefits from having in-depth due diligence and strong corporate governance already in place, added Jenkner.

The Swiss-headquartered and listed firm has offices in San Francisco, Houston, New York, São Paulo, London, Guernsey, Paris, Luxembourg, Milan, Munich, Dubai, Mumbai, Singapore, Shanghai, Seoul, Tokyo and Sydney.

In the 12 months to September, Partners Group lent $1.7 billion across the capital structure.