Yukon raises third mezzanine fund, as debt capital remains popular

Mezzanine finance firm Yukon Partners has raised a third fund, called Yukon Capital Partners III L.P., with approximately $558.7 million in capital commitments. Fund III’s capital raise comes three years after the firm raised $400 million for its second mezzanine fund in 2014.

Fund III, which began investing in June, will continue on with Yukon’s strategy of providing mezzanine capital to middle-market companies primarily controlled by private equity sponsors. To date, the new fund has invested approximately $85 million through three completed transactions that include: Practice Insight, Centre Partners-backed Golding Farms Foods and GenNX350 Capital Partners-backed Tooling Technology Group.

“Since founding Yukon, we have remained focused on our middle market niche and have consistently generated attractive investments across all business cycles,” states Yukon managing partner William Dietz. The new fund will be invested by Yukon’s partner group, who combined have executed over 81 investments representing more than $1.3 billion in invested capital.

Yukon’s investments typically come as subordinated debt, preferred equity or minority common stock deals. Yukon has raised more than $1.3 billion in capital since the firm’s inception in 2008. Yukon is headquartered in Minneapolis, Minnesota.

Since 2012, the middle market has been seeing a rising popularity in debt funds, particularly CLOs and mezzanine funds. Other firms raising similar funds include: Gryphon Investors raising its first mezzanine fund in August; Antares Capital closing the firm’s first CLO fund in May with nearly $2.1 billion in backing; GoldPoint Partners LLC raising a fourth mezzanine fund; Littlejohn's Wellfleet closing a $406 million fund; the Carlyle Group (Nasdaq: CG) raising $1.2 billion in capital across two CLO funds this year; and Madison Capital closing its sixth CLO fund in July.