Cerberus Business Finance Raises $2.05B For Third Middle Market Direct Lending Fund

Mar 2 2017 | 10:56pm ET

Cerberus Capital Management’s Business Finance (CBF) affiliate has raised $2.05 billion in total capital commitments for its third middle-market direct lending fund, beating its $2 billion target.

The new fund, named Cerberus Levered Loan Opportunities Fund III, is an extension of the company’s loan opportunities strategy, the company said in statement. Beginning in 1995 with predecessor entities, CBF has managed funds and accounts focused on the direct origination of senior secured loans predominantly to U.S. middle-market companies across broad industry categories. 

Fund III was supported by new and repeat investors that include government and corporate pensions, endowments, insurance companies, family offices, foundations, non-profit organizations, fund of funds, and high net worth individuals.

The vast majority of CBF’s borrowers are owned by private equity sponsors. Since the founding of its direct lending business, CBF has deployed over $20 billion in the U.S. middle market and currently manages 22 funds with over $13 billion of capital dedicated to its middle-market direct lending business. In 2016, CBF completed over 70 transactions, primarily as lead agent, totaling $5.3 billion of credit facilities.

“The close of Fund III is the latest milestone in over 21 years of work establishing our successful direct lending platform which serves U.S. middle-market companies,” said Daniel Wolf, CEO of Cerberus Business Finance, in the statement. “Our broad array of PE sponsors and other client relationships consistently turn to us for certainty of transaction closure and terms, flexible capital structures, and speed of execution through a reputable, well-known franchise.”

New York-based Cerberus Capital Management was co-founded by Steve Feinberg and William Richter in 1992. The company has become one of the world's leading private investment firms, with more than $30 billion under management invested across three complementary strategies: global credit opportunities (which includes non-performing loans, corporate credit & distressed debt, mortgage securities & assets, and direct lending); private equity; and real estate. 

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