Star Mountain Closes $1.2 Billion Direct Lending Fund IV Above Target

Star Mountain Capital, a private credit and secondaries specialist investment firm focused on delivering systematic alpha and uncorrelated market returns from the harder to access U.S. lower middle-market, announced it closed its direct lending Fund IV above its $750 million LP capital target at approximately $1.2 billion (committed capital including debt facilities). Star Mountain also raised additional capital through separate accounts alongside Fund IV.

Read the full press release on Business Wire here.

Read The Wall Street Journal’s coverage here.

NEW YORK – (BUSINESS WIRE) – Star Mountain Capital, LLC (“Star Mountain”), 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 (the “lower middle-market”), is pleased to announce 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 both 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 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 robust platform, Fund IV is over 90% deployed. 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 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 has achieved its target diversification of approximately 50 portfolio companies.

Fund IV provides strategic financing to assist high quality, established private businesses finance acquisitions and organic growth, often capitalizing on the aging demographic universe of business owners looking to exit at potentially compelling valuations for buyers. 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 has generally shown to be uncorrelated to the performance of larger U.S. companies, other asset classes and geopolitical risk factors.

Star Mountain’s differentiated origination platform includes team 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. 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. It’s first lien loans with structured equity targets 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 highly experienced and aligned investment team who in many cases have working relationships with each other for over 20 years, as well as credit investment experience dating back to the 1980s.

“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,” says Star Mountain Capital Founder & CEO, Brett Hickey. “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.”

“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,” says Star Mountain CFO, Chris Gimbert, who joined Star Mountain in 2010.

About Star Mountain

With approximately $3.75 billion in assets under management (committed capital including debt facilities as of 10/31/2023), Star Mountain takes a data-driven approach to investing into the North American lower middle-market through two complementary investment strategies: (i) direct debt and equity investing and (ii) secondaries (acquiring LP interests and direct assets and making primary LP commitments) and NAV loans to funds.  Star Mountain believes these complementary strategies provide data-enhanced, scalable, diversified, and customizable access for its institutional and high-net-worth investors to established businesses that generally have at least $15 million in annual revenues and under $50 million in EBITDA. Its investors include public pensions, private pensions, insurance companies, commercial banks, asset managers, endowments, foundations, family offices, RIA/wealth management firms and high-net-worth individuals. Star Mountain is 100% employee-owned and shares its profits with 100% of its U.S. full-time employees as part of its focus on maximizing value for its stakeholders and investors through alignment of interests.

Since 2010 through November 2023, Star Mountain has made over 200 direct investments in businesses and over 40 secondary / fund investments within its Collaborative Ecosystem®, focused on the North American lower middle-market. One of Star Mountain’s specialties is seeking current cash income for investors that is materially above the typical yields found in the public markets, often accompanied with potential long-term capital gains equity returns and low correlation to public markets through its distinctive origination, underwriting and value-added investment capabilities.

Star Mountain was recently named one of the Inc. 5000 fastest-growing private companies in America.

For the fourth straight year, Star Mountain was again named one of the 2022 Best Places to Work by Crain’s New York Business as well as once again one of the 2022 Best Places to Work by Pensions & Investments.

Star Mountain believes its focus and dedication has been productive for job creation and economic development, specifically found in the underserved areas and communities. Star Mountain is dedicated to this large market of underserved businesses to address the challenges and opportunities of these companies. As part of its commitment, Star Mountain has trademarked Investing in the Growth Engine of America ®.

Star Mountain’s Charitable Foundation, a not-for-profit 501(c)3 focuses on improving lives through economic development, including job creation, health & wellness and cancer research. Notable missions include helping match veterans and women with high quality small and medium-sized business career opportunities across the country, including within Star Mountain’s portfolio.

Note: This does not constitute an offer to sell or a solicitation of an offer to purchase interests in any investment product. Awards and recognitions by unaffiliated rating services, companies and/or publications should not be construed by a client or prospective client as a guarantee that he / she / it will experience a certain level of results if Star Mountain is engaged, or continues to be engaged, to provide investment advisory services; nor should they be construed as a current or past endorsement, testimonial endorsement, recommendation or referral of Star Mountain or its representatives by any of its clients or any other third party.  Rankings published by magazines and others are generally based exclusively on information prepared and / or submitted by the recognized advisor.  Moreover, with regard to all performance information contained herein, directly or indirectly, if any, readers should note that past results are not indicative of future results. The description and the selection methodologies of each award and recognition are subjective and will vary.

Awards and recognitions by unaffiliated rating services, companies, and/or publications should not be construed by a client or prospective client as a guarantee that he/she/it will experience a certain level of results if SMFM is engaged, or continues to be engaged, to provide investment advisory services; nor should they be construed as a current or past endorsement, testimonial endorsement, recommendation or referral of SMFM or its representatives by any of its clients or any other third party. Rankings published by magazines and others are generally based exclusively on information prepared and/or submitted by the recognized advisor.

Crain’s two-part survey process consisted of evaluating each nominated company’s workplace policies, practices, philosophy, systems and demographics. The second part involved an employee survey to measure the employee experience. The combined scores determined the top companies and the final ranking. Star Mountain must pay a fee to Crain’s only for survey collection purposes. Detailed eligibility criteria can be found here: https://bestcompaniesgroup.com/best-companies-to-work-for-in-new-york/eligibility/

To be named to P&I‘s Best Places list, all firms met Best Companies’ high threshold for inclusion and were evaluated against others of similar size. Individual firm profiles, which were compiled based on survey results, reflect U.S. employment numbers and were confirmed by Best Companies in the summer. Company and employee comments were edited for space, style and clarity.  Assets under management or advisement are as of June 30, unless otherwise noted. To participate, companies had to have at least 20 employees in the U.S., at least $100 million of discretionary assets under management or advisement and be in business for at least one year. An anonymous employee survey, which aimed to evaluate employee engagement and satisfaction, accounted for 75% of a firm’s score; an employer survey, which evaluated workplace policies, practices, benefits and demographics, made up 25%. https://bestcompaniesgroup.com/best-places-to-work-in-money-management/eligibility/

Companies on the 2023 Inc. 5000 are ranked according to percentage revenue growth from 2019 to 2022. To qualify, companies must have been founded and generating revenue by March 31, 2019. They must be U.S.-based, privately held, for-profit, and independent–not subsidiaries or divisions of other companies–as of December 31, 2022. (Since then, some on the list may have gone public or been acquired.) The minimum revenue required for 2019 is $100,000; the minimum for 2022 is $2 million. As always, Inc. reserves the right to decline applicants for subjective reasons. Growth rates used to determine rankings were calculated to four decimal places. https://www.inc.com/inc5000

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