Sankaty Advisors, the Boston-headquartered credit arm of Bain Capital, has started raising money for a new direct lending fund that will focus exclusively on senior secured debt and invest in mid-market companies globally. The firm is targeting $700 million to $1 billion for the fund and plans to hold its first close at the end of this year with final close scheduled for the first quarter of 2015, said a source close to the firm’s plans.
Sankaty has invested in senior secured debt since its founding in 1998, but hasn’t yet managed a fund solely dedicated to this strategy. The firm wants to start one as it expects more opportunities to come to fruition as banks have been reducing their lending activities in the sector, the source explained. Sankaty declined to comment.
The Sankaty Direct Lending Fund will invest in the US, Europe, Australia and Asia and is industry-agnostic, the source said. The firm likes to invest globally and without specific industry targets, so it can better source opportunities as they arise and avoid missing lucrative opportunities, the source explained.
The new fund will be managed by Sankaty’s direct lending team, which is led by Michael Ewald, who has been with Sankaty since its founding in 1998. He has 22 people on his team and will also lean on the firm’s research team, which is comprised of 30 people who are aligned by industry sector.
The fund is targeting lower double digit returns and will have a six-year lifecycle and a three-year investment period.
The bulk of Sankaty’s business has involved investing in mid-market companies via mezzanine debt. The firm closed its Middle Market Opportunities Fund II in late 2013 at $1.4 billion and its Credit Opportunities Fund V in mid-2012 at $3.4 billion. The former invests in mezzanine, as well as some equity co-investments and senior loans. The latter invests in cash bonds, senior secured loans, subordinated debt, mezzanine notes and debtor-in-possession facilities. Both these funds are still being invested.
Jeff Robinson, a managing director at Sankaty, told PDI in July that the Credit fund was about 50 percent invested and the Middle Marked fund was 25 percent invested.
The firm has about $24 billion in capital under management and was started in 1998 by Jonathan Lavine, who spun the group out of Bain and is now Sankaty’s managing partner and chief investment officer. He had joined Bain in 1993. Sankaty has additional offices in New York, Chicago, London, Luxembourg and Melbourne.