THL Credit Advisors LLC has raised a third debt fund. Valued at $511, the THL Credit Direct Lending Fund III focuses on lower middle-market companies in the financial services, healthcare, media and consumer sectors.

"The capital raise enviroment is strong. There's a huge demand for yields," THL Credit co-CEO Chris Flynn tells Mergers & Acquisitions. The firm's second fund raised $187 million in 2013. THL Credit can make loan sizes of up to $50 million in busiesses that have between $10 million to $50 million in Ebitda. "There's a lot of capital available from a debt and equity perspective," adds Flynn.

THL Credit was founded in 2007 and manages about $10 billion in assets. The firm focuses on first and second lien senior secured loans for portfolio companies of middle market private equity firms.

Lenders have been in raising capital. Antares Capital raised a debut CLO Fund; the Carlyle Group (Nasdaq: CG) closed a fourth CLO fund; GoldPoint Partners LLC has raised a fourth mezzanine fund; and Littlejohn's Wellfleet closed a $406 million fund.

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