Babson closes Asia mezzanine fund at $177m
Babson Capital Management has reached a final close of $177.2 million on its latest Asia-focused mezzanine fund.
A US regulatory filing dated February 2014 indicates that Gateway Mezzanine Partners II was launched in late 2013 with a target of A$200 million (then $176.1 million). According to another filing, its predecessor closed at approximately $70 million in April 2013.
Managed by Babson's teams in Sydney and Hong Kong, the new fund will primarily focus providing mezzanine financing for private equity-sponsored transactions involving middle market companies. These opportunities tend to be available in Asia's more developed markets, including Australia, New Zealand, Singapore, Japan and Hong Kong.
The fund is currently approximately 18% committed with investments in five platform companies, one of which has been fully realized.
"We believe this is a recognition of Babson's track record of more than 20 years as an active investor in the mezzanine asset class, and the outstanding work of our Asia Pacific private credit group, led by Adam Wheeler in Sydney and Shane Forster in Hong Kong," said Eric Lloyd, head of global private finance for Babson, in a statement.
The firm provides senior secured and second-lien loans, mezzanine debt with equity features, and unitranche debt that combines characteristics of senior and mezzanine debt tranches.
Australia has been a challenging market for mezzanine players since the global financial crisis, in part due to difficulties negotiating intercreditor agreements. However, in the past couple of years they have gained traction with holdco PIK, which is held at holding company rather than operating company level and requires no intercreditor agreement.
Babson has more than $217 billion under management globally, of which $29 billion is within the firm's private credit platform.
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