Summit Partners has surpassed the $750 million target set for its second credit fund, according to US Securities and Commission documents filed Friday. The firm has yet to hold a final close on the vehicle, an industry source confirmed to Private Debt Investor.
Summit declined to comment on the fundraising.
Limited partners in the fund include the Pennsylvania Public School Employees’ Retirement System (PSERS) and the Maine Public Employees Retirement System, according to Private Debt Investor’s research and analytics division.
“The investment thesis for investing in the middle market lending area of the high yield market is based upon a significant need for debt capital providers in the middle market space where capital … has been constrained due to a reduced appetite from banks and hedge funds for junior lending,” wrote PSERS portfolio manager Joseph Sheva in a September memo detailing the fund. “This financing need creates opportunities for non-bank lenders and investors to secure attractive risk/reward opportunities.”
The fund’s primary investment focus will be on North American companies, though as much as 25 percent of aggregate commitments may be invested in non-US issuers, according to PSERS. A Portfolio Advisors memo recommending the investment to PSERS indicates that Fund II will target mezzanine returns while lending to structurally senior levels in companies’ capital structures.
The Boston-based firm closed its Summit Partners Credit Fund I on $520 million in 2012, well over its $300 million target. As of 3 September, the average blended coupon across that fund’s first 13 investments was 13.8 percent, according to the Portfolio Advisors memo.
Summit was founded in 1984 and has raised approximately $15 billion in capital. The firm maintains offices in Boston, Menlo Park and London.