Carlyle raises $553m for second mezzanine fund

The Washington, DC-based mega-firm has already made investments from Carlyle Mezzanine Partners II and bought some mezzanine investments on the secondaries market.

The Carlyle Group has raised its second mezzanine fund with commitments of $553 million, and has been buying mezzanine investments at discounts on the secondaries market.

The Washington DC-based firm previously raised $436 million for its first mezzanine fund, Carlyle Mezzanine Partners I, which closed in 2006. Fundraising for Carlyle Mezzanine Partners II began in 2007.

“The lack of debt financing alternatives in the market provides CMP an opportunity to get very high risk-adjusted returns in its mezzanine portfolio,” Leo Helmers, Carlyle Mezzanine Partners co-head, said in a statement.

More than 90 percent of the investors from the first fund returned for the second fund, a Carlyle spokeswoman said. Investors in the fund include one endowment and several state pensions. Carlyle did not use a placement agent for the fund.

The new fund is targeted at mid-market companies through junior debt and minority equity securities in leveraged buyouts, recapitalisations and growth financings. It has already made investments, including financing new leveraged buyouts and buying mezzanine investments at discounts on the secondaries market.

The firm has invested in several companies from Carlyle Mezzanine Partners II in 2008, including management consulting giant Booz Allen Hamilton, distressed casino operator Harrah’s and heating and ventilation and air conditioning manufacturer Goodman Global. The firm also made several investments from the fund in 2007, including in Firth Rixson Ltd., which Carlyle has exited.

Carlyle’s mezzanine arm was established in 2004 and is co-headed by managing directors Helmers and James Shevlet Jr. The business is based in Los Angeles and New York.