INVESTING/PORTFOLIO STRATEGIES

Crescent Capital closes $4.6 billion mezzanine fund 53% over fundraising target

Crescent Capital Group closed Crescent Mezzanine Partners VII at more than $4.6 billion, raising 53% more capital than its $3 billion fundraising target.

The fund also raised 35% more capital than Crescent Capital's prior mezzanine fund, the $3.4 billion Crescent Mezzanine Partners VI, which closed in 2013.

The fund is expected to make loans to companies with enterprise values in excess of $300 million.

“We are very fortunate to have the support of LPs around the globe,” said Jean-Marc Chapus, managing partner and co-founder, in an interview.

Slightly more than half of the investors are non-U.S. institutions. The new fund has the most diverse investor base than any prior Crescent funds, he added. Raising the fund took almost the entire 2016 calendar year, he said. Already, Crescent has invested about $900 million in nine transactions.

Although Crescent keeps a tight and consistent investment strategy, the larger fund size will allow the firm to invest in some larger deals, Mr. Chapus said.

Crescent successful fundraising “speaks to the search for yield,” he said. “Investors are valuing securities that are not broadly syndicated. … It speaks to a regulatory environment where there is pressure on the banking system … globally … with banks tending to be less aggressive in providing debt financing.”

Investors in the fund include Michigan Department of Treasury, Bureau of Investments, which invests on behalf of the $55.7 billion Michigan Retirement Systems, East Lansing; and Florida State Board of Administration, Tallahassee, which oversees a total of $180.6 billion, including the $143 billion in assets of the Florida Retirement System.