As interest in lower middle-market deals thrives, Capitala Group has closed a $125 million fund that focuses on investing in that space.
The fund, CapitalSouth SBIC Fund IV LP, received investments from existing and new investors, including public and private pensions, fund of funds and family offices. The fund will invest between $2 million and $10 million in business services, health care, consumer and retail, building products and manufacturing businesses. The firm's current investments include Tender Greens Holdings LLC, Merlin International Inc. and Sequoia Healthcare Management LLC.
Charlotte, North Carolina-based Capitala provides money to lower middle-market and middle-market companies through its funds. The company manages public capital through Capitala Finance Corp. (Nasdaq: CPTA) and private capital through the CapitalSouth Growth funds.
The lower middle-market fund comes two days after the group announced a joint venture with Trinity Universal Insurance Co. (NYSE: KMPR) to create Capitala Senior Liquid Loan Fund I LLC, which will invest in senior secured loans made to middle market companies.
Several private equity funds have closed recently. Palo Alto, California private equity firm HGGC held a final close on its second fund in earlier in March, with $1.33 billion in commitments. (HGGC won our M&A Mid-Market Private Equity Firm of the Year award for 2014). In January, Five Point Capital Partners closed its first fund with $450 million in commitments. Last September, BV Investment Partners closed a $487 million fund that focuses exclusively on lower middle-market investments.
For more on investing in the lower middle market, see Life in the Lower Middle Market.