Stellus seeking first close by Q1 2017 – exclusive

The firm is aiming to raise $750m, with a hard cap of at least $1bn.

Stellus Capital Management is planning a first close by the end of March for its second private debt fund, market sources have told Private Debt Investor.

The Houston-based investment firm expects to hold a $300 million to $400 million close that will be made up of commitments from existing investors. The private credit fund, which has a target of $750 million, is expected to have a hard-cap of between $1 billion and $1.25 billion, the source said.

A Stellus representative declined to comment.

The firm invests up and down the capital structure – first lien, second lien, mezzanine, unitranche convertible debt and equity – with investments typically ranging from $10 million to $50 million in the US and Canada. Industries targeted include healthcare, consumer products and technology. The firms Stellus targets typically generate between $5 million to $50 million in EBITDA.

A December 2014 regulatory filing showed that Stellus raised $117.6 million for its Stellus Offshore Credit Fund I. The firm was spun off in 2012 from D.E. Shaw Group, a New York-based multi-strategy hedge fund.

Stellus has announced several deals in October. One consisted of second lien debt to finance the acquisition of Solowave Design, which designs and manufactures children’s swing sets and other outdoor furniture, by KidKraft, a company backed by MidOcean Partners.

Another was a unitranche facility to back Industrial Growth Partners’ acquisition of SPL, an oil and gas services company. No amount was disclosed for either investment.