Key Takeaways
- • Star Mountain Capital closed its Value-Added Direct Lending Fund IV at approximately $1.2 billion in committed capital including debt facilities, above its $750 million LP capital target.
- • Fund IV is over 90% deployed and has reached its target diversification of approximately 50 portfolio companies across recession-resilient U.S. industries.
- • The fund drew support from public pensions, insurance companies, asset managers, banks, endowments, foundations, family offices and RIA/wealth platforms across 25+ U.S. states and approximately 20 countries.
- • Star Mountain, with approximately $3.75 billion in AUM as of October 31, 2023, also raised additional capital through separate accounts alongside Fund IV.
- • The strategy emphasizes senior secured loans with equity upside via warrants or structured preferred equity, targeting established lower middle-market businesses.
Summary
Star Mountain Capital, a private credit and secondaries specialist with approximately $3.75 billion in assets under management as of October 31, 2023 (committed capital including debt facilities), announced that it closed its Value-Added Direct Lending Fund IV above its $750 million LP capital target at approximately $1.2 billion, according to a Business Wire release. The firm said it also raised additional capital through separate accounts alongside the fund.
According to the firm, Fund IV was supported by both existing and new investors, including public pension funds, insurance companies, asset managers, banks, endowments, foundations, family offices, and RIA/wealth management platforms and their clients. Star Mountain reported strong participation from investors in more than 25 U.S. states and approximately 20 countries, including Canada, Europe, the Middle East, Australia, South America, and Asia.
Fund IV is over 90% deployed and has achieved its target diversification of approximately 50 portfolio companies in recession-resilient industries throughout the U.S. The fund follows the firm's previous direct lending strategy of providing primarily senior secured loans with potential equity upside, generally through warrants and/or structured preferred equity. Star Mountain noted that Fund IV often co-invests alongside its private BDC and SBIC fund, which it said provides additional buying power for diversification.
The fund provides financing to established private businesses for acquisitions and organic growth, which the firm said often includes owners seeking to exit at potentially attractive valuations. Star Mountain stated that the strategy has generally been uncorrelated to the performance of larger U.S. companies, other asset classes, and geopolitical risk factors. Founder and CEO Brett Hickey said the firm's focus on small and medium-sized businesses has proven compelling to its network of over 1,000 investors. CFO Chris Gimbert, who joined in 2010, cited the firm's commitment to transparent investor reporting.
The firm describes its investment targets as businesses generally having at least $15 million in annual revenue and under $50 million in EBITDA. Since 2010 through November 2023, Star Mountain reports having made over 200 direct investments and over 40 secondary or fund investments in the North American lower middle market. Note that the release's performance and award claims are self-reported, and past results are not indicative of future results.
According to the firm, Fund IV was supported by both existing and new investors, including public pension funds, insurance companies, asset managers, banks, endowments, foundations, family offices, and RIA/wealth management platforms and their clients. Star Mountain reported strong participation from investors in more than 25 U.S. states and approximately 20 countries, including Canada, Europe, the Middle East, Australia, South America, and Asia.
Fund IV is over 90% deployed and has achieved its target diversification of approximately 50 portfolio companies in recession-resilient industries throughout the U.S. The fund follows the firm's previous direct lending strategy of providing primarily senior secured loans with potential equity upside, generally through warrants and/or structured preferred equity. Star Mountain noted that Fund IV often co-invests alongside its private BDC and SBIC fund, which it said provides additional buying power for diversification.
The fund provides financing to established private businesses for acquisitions and organic growth, which the firm said often includes owners seeking to exit at potentially attractive valuations. Star Mountain stated that the strategy has generally been uncorrelated to the performance of larger U.S. companies, other asset classes, and geopolitical risk factors. Founder and CEO Brett Hickey said the firm's focus on small and medium-sized businesses has proven compelling to its network of over 1,000 investors. CFO Chris Gimbert, who joined in 2010, cited the firm's commitment to transparent investor reporting.
The firm describes its investment targets as businesses generally having at least $15 million in annual revenue and under $50 million in EBITDA. Since 2010 through November 2023, Star Mountain reports having made over 200 direct investments and over 40 secondary or fund investments in the North American lower middle market. Note that the release's performance and award claims are self-reported, and past results are not indicative of future results.
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