Stellus Capital raising private credit fund – exclusive

The second private credit fund from the Houston-based D.E. Shaw spin-off is understood to be seeking $750m.

Stellus Capital Management is in the process of raising a private credit fund, according to PDI market sources. The fund is understood to have a $750 million target and plans to pursue a mixture of predominantly senior debt and some mezzanine investments.

A Stellus representative declined to provide more detail on the fund.

Stellus Capital is a mid-market focused investment firm that provides private credit and energy focused-private equity capital through two distinct platforms. The firm was spun-off in 2012 from the direct capital unit of the D.E. Shaw Group, a New York-based multi-strategy hedge fund.

Stellus' founding partners include D.E. Shaw veteran Robert Ladd. Ladd serves as managing partner and chief investment officer at Stellus and was president of Duke Energy North America and Duke Capital Partners before joining D.E. Shaw in 2004. Prior to joining Duke in 2000, he led the worldwide restructuring practice at Arthur Andersen and served in various capacities for First City Bancorporation of Texas.

The Stellus credit platform typically offers loans of between $10 million and $50 million to companies in North America with between $5 million and $50 million of EBITDA. Stellus focuses on originated loans and is typically the sole lender in the tranches in which it invests, but the firm does occasionally partner with small numbers of lenders in club deals.

Based in Houston, the firm maintains an office in the Washington, D.C. area and has approximately $1 billion in assets under management.