Star Mountain collects $300m for direct lending

The fund will also invest in other credit vehicles as well as secondaries transactions.

Star Mountain Capital has closed its latest fund, which will target lower mid-market companies without a private equity sponsor, above target.

The New York-based asset manager’s second fund, Star Mountain Diversified Small Business Access Fund II, raised $300 million in limited partner contributions, inclusive of separate LP funds raised, Brett Hickey, Star Mountain’s chief executive officer and founder, told Private Debt Investor. It exceeded its internal goal of $250 million, he said.

The fund’s investors include insurance companies, foundations, family offices and asset managers as well as high-net-worth individuals, which were a specific focus of the fund, he said. Alongside direct lending, the firm will also act as a fund of funds platform for other smaller private credit funds and provide liquidity to LPs in other smaller private credit funds.

The fund, which will invest primarily in first and second lien loans in non-private equity sponsored lower mid-market business, will target US companies in a number of sectors, including business services and niche manufacturing, Hickey said. So far, the fund is almost two-thirds deployed, with close to $200 million having been invested across 140 companies, he added.

Star Mountain also has hired multiple advisors this year, bringing on multiple senior-level personnel.

Last month, Alvarez & Marsal senior managing director Tom Jones joined Star Mountain as a senior advisor, and in March James McIntire, former Washington State treasurer and chairman of the Washington State Investment Board also joined the firm as a senior level advisor.

The firm also added Corey Baylor as a strategic advisor in March, while George Mattson, formerly of Goldman Sachs, joined as a strategic investor and industry advisor in January.