Star Mountain Capital, LLC – a private credit and secondaries specialist investment firm with approximately $3.75 billion in assets under management (committed capital including debt facilities as of 10/31/2023) focused on generating premium returns from the less efficient and labor-intensive market of U.S. private small and medium-sized businesses – recently announced that it has closed its Value-Added Direct Lending Fund IV above its $750 million LP capital target at approximately $1.2 billion (committed capital including debt facilities).
The Fund was supported by existing and new investors, including public pension funds, insurance companies, asset managers, banks, endowments, foundations, family offices, and RIA/wealth management platforms and their clients. There was strong support from new and longstanding clients from over 25 U.S. states and approximately 20 countries, including from regions such as Canada, Europe, the Middle East, Australia, South America, and Asia.
As a result of the current market opportunity and Star Mountain’s platform, Fund IV is over 90% deployed. And Fund IV follows Star Mountain’s previous funds’ direct lending investment strategy to provide primarily senior secured loans with potential equity upside (generally via warrants and / or structured preferred equity) across a diversified pool of over 50 companies in recession-resilient industries throughout the U.S.
Investors will also potentially benefit from Fund IV, often co-investing alongside Star Mountain’s private BDC and SBIC fund, which provides it with additional buying power for portfolio diversification. Fund IV achieved its target diversification of approximately 50 portfolio companies.
Fund IV offers strategic financing to assist established private businesses in financing acquisitions and organic growth, often capitalizing on the aging demographic universe of business owners looking to exit at potentially compelling buyer valuations. And Star Mountain believes it can continue to generate above-market cash yields with tax-advantaged equity upside, giving investors diversified access to this large and fragmented marketplace. This strategy is generally uncorrelated to the performance of larger U.S. companies, other asset classes, and geopolitical risk factors.
Star Mountain’s origination platform includes teams in 20+ cities nationwide, 100+ hosted/participated events annually, and a branded digital media content platform to maintain frequent contact with business owners and their advisors. And its private equity-style, value-added lending approach aims to align Star Mountain with its borrowers to help them become “middle-market ready,” increasing enterprise value at exit while also helping optimize capital protection. Its first lien loans with structured equity target asymmetric returns, including capitalizing on the valuation arbitrage that is often available from growing companies into a more competitive marketplace and further professionalizing them.
Star Mountain is proud of its heritage of capital protection with its talented investment team, who, in many cases, have worked with each other for over 20 years, as well as credit investment experience dating back to the 1980s.
KEY QUOTES:
“We appreciate and are honored by the trusted partnership with all our investors, team, and portfolio companies and remain highly aligned with 100% of our U.S.-based full-time team sharing in profits. Our focus on investing in high-quality small and medium-sized businesses that are the backbone of the U.S. economy has proven compelling to our aligned network of over 1,000 investors across our funds representing nearly every U.S. state and over 30 countries worldwide.”
— Star Mountain Capital Founder & CEO, Brett Hickey
“We are pleased with our investment results delivered to date and continue to work hard to provide high quality, transparent investor reporting which assists with the long-term partnerships we are committed to.”
— Star Mountain CFO, Chris Gimbert, who joined Star Mountain in 2010
