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Finding the niche

Fund closing almost triples CapitalSpring AUM

A reflection of private credit investors' burgeoning affinity for the niche-ier corners of private lending strategies, branded franchise restaurant lender CapitalSpring nearly tripled its assets under management in August when it closed on $725 million for its fifth fund and sidecar capital.

The combined capital raised by CapitalSpring Investment Partners V LP and its sidecar funds, which closed oversubscribed Aug. 7, is 183% more than the total capital raised by its $255.9 million fourth fund. Capital Spring is the only alternative investment manager to focus on the branded restaurant industry, making both equity and debt investments, said Mara Engel, spokeswoman, The firm targets investments ranging from $10 million to $100 million, including lending to franchisees of restaurant chains Taco Bell, Brass Tap and Beef 'O' Brady's.

It didn't take CapitalSpring long to return to the market. The $7.8 billion Rhode Island State Investment Commission, Providence, made its $30 million commitment to CapitalSpring's latest fund two years ago.

Investors are looking for returns with less risk, and some niche strategies seem to provide it. For example, when Rhode Island's pension plan board committed to CapitalSpring in July 2015, Thomas K. Lynch, New York-based senior managing director of the pension fund's alternative investment consultant Cliffwater LLC, told the board that the consulting firm's executives expect growth and more liquidity than a traditional private equity fund, according to meeting minutes.

The $2.8 billion San Antonio Fire & Police Pension Fund committed $15 million to CapitalSpring's fifth fund in July.