Babson Capital Management, an investment management firm based in Massachusetts and North Carolina, has closed Tower Square Capital Partners III, a USD1.58bn mezzanine and private equit
Babson Capital Management, an investment management firm based in Massachusetts and North Carolina, has closed Tower Square Capital Partners III, a USD1.58bn mezzanine and private equity fund.
Investors include domestic and international corporate and public pension plans, insurance companies, banks, high net worth individuals and families, and funds of funds.
Tower Square III will invest in companies in the small end of the middle market, or companies with enterprise values of less than USD200m.
Mike Hermsen, managing director of Babson Capital, says: ‘We are pleased that Tower Square III is now fully committed and able to take advantage of the growing investment opportunities in this niche area of the market. Adding our office in Los Angeles a year ago has helped provide us greater access to deal flow nationwide and we look forward to investing Tower Square III funds across the country.’
Babson Capital’s 18-person mezzanine and private equity team is led by Hermsen, Mike Klofas and Rick Spencer, each of whom has more than 22 years experience in corporate finance.
The three have been active in mezzanine finance and private equity investing for more than 17 years at Babson Capital and its parent, the Massachusetts Mutual Life Insurance Company.
MassMutual has been active in mezzanine and private equity investing since the 1960s.
‘Companies with enterprise values of under USD200m have been our sweet spot since we established the mezzanine and private equity team in 1992,’ Klofas says. ‘Tower Square III allows us to continue the success that we’ve had over our team’s history, such as the launches of Tower Square I, a USD265m fund that closed in October 2002, and Tower Square II, a USD1bn fund that closed in January 2006.’
With the closing of Tower Square III, the Babson Capital team is now managing about USD5bn in direct and indirect mezzanine and private equity assets and commitments.
The investments are in North American companies and are typically structured with mezzanine financing – normally USD8m to USD50m – and equity co-investments – normally USD5m to USD15m.
Mezzanine securities usually consist of subordinated debt instruments with accompanying equity features, such as warrants or conversion rights. Private equity usually consists of common or preferred stock, but can also include other equity securities.
