Bain Capital credit affiliate Sankaty Advisors has surpassed its $1 billion target for its second mid-market fund, according to documents filed with the US Securities and Exchange Commission on Monday.
The filing represents a first close, a source with knowledge of the firm told Private Debt Investor. The firm expects to hold a final close in October.
Sankaty has raised approximately $1.01 billion across three vehicles; $437.6 million through Sankaty Middle Market Opportunities Fund II; $70.2 million through Sankaty Middle Market Opportunities Fund II-A and $501 million through Sankaty Middle Market Opportunities Fund II-F, according to the filing.
Sankaty attributes the wide availability of mid-market deals to the amount of investment capital yet to be put to work by sponsors with dedicated mid-market vehicles, according to a Portfolio Advisors report to the Pennsylvania Public School Employees’ Retirement System. Those opportunities are strengthened by the fact that many mid-market companies struggle to access public debt markets.
“In Europe in particular, bank balance sheets have both constrained lending and created opportunities for secondary purchases,” according to Portfolio Advisors’ report. “These factors have increased the supply of investment opportunities to those with flexible capital dedicated to the space while at the same time maintained attractive pricing premiums and transaction structures as compared to public debt-like high yield bonds.”
Approximately 50 percent to 70 percent of Fund II’s capital will be dedicated to the origination of mezzanine and senior debt investments. The remainder of the fund’s investment capital will perform rescue financings and make secondary purchases of single assets, according to Portfolio Advisors. Investments will range from $10 million to $50 million in size in companies with EBITDAs ranging from $10 million to $150 million.
PSERS approved a $200 million commitment to the vehicle in June.
Sankaty’s first mid-market opportunity fund had delivered a 15.1 percent IRR as of 31 December, according to a PSERS presentation. The mid-market group is led by managing director Michael Ewald.
Sankaty had approximately $20.1 billion under management as of 31 March, according to its website. The firm maintains offices in Boston, Chicago, New York, London, Luxembourg and Melbourne.