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Prudential Capital Raises 5th Fund, Underscoring Strength in Mezzanine Financing

Mezzanine debt funds ruled in 2016 with capital raises from Audax and Carlyle

Prudential Capital Partners has closed its fifth mezzanine fund with $1.8 billion in capital commitments. The fund, called Prudential Capital Partners V LP, received support from more than 70 percent of existing investors.

The new fund, like preceding funds, will make investments ranging from $10 million to $100 million to fund acquisitions, recapitalizations, growth capital financings and management-led buyouts for North American middle-market businesses. Prudential Capital Partners V exceeded its initial target of $1.4 billion.

Prudential Capital, founded in 2000 and sponsored by Prudential Financial Inc.’s (NYSE:PRU) global investment management business PGIM, is a middle-market mezzanine fund business. The firm has raised more than $5.3 billion and invested nearly $3.2 billion in 125 companies since inception. Prudential Capital raised its first mezzanine fund in 2001. In 2016, Prudential Capital completed nearly $260 million in investments across 11 manufacturing, services and distribution companies.

The resurgence of mezzanine funds is more apparent now than in previous years. In Nov. 2016, the Carlyle Group LP (Nasdaq: CG) doubled down on its commitment to the energy sector by raising a $2.8 billion mezzanine fund. The Audax Group also raised a mezzanine fund valued at $1.2 billion to invest in middle-market companies across a variety of industries, including: aerospace and defense, consumer, health care, logistics, manufacturing and software. Debevoise & Plimpton LLP advised Prudential Capital Partners on the fund raise.

 

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