Star Mountain Capital, a private credit and secondaries specialist investment firm, has closed its Value-Added Direct Lending Fund IV, securing approximately $1.2bn in committed capital, including debt facilities.
The fund exceeded its initial target of $750m.
Focusing on the less efficient and labour-intensive US private small and medium-sized businesses in the lower middle-market, the fund received strong support from both existing and new investors. Notable contributors include public pension funds, insurance companies, asset managers, banks, endowments, foundations, family offices, and RIA/wealth management platforms and their clients.
With widespread backing from clients across more than 25 US states and approximately 20 countries, including regions such as Canada, Europe, the Middle East, Australia, South America, and Asia, the successful fundraise underscores Star Mountain’s global appeal and confidence in its investment strategy.
As a testament to the current market opportunity and the strength of Star Mountain’s platform, Fund IV is already over 90% deployed. The fund follows Star Mountain’s established direct lending investment strategy, primarily providing senior secured loans with potential equity upside across a diversified portfolio of over 50 companies in recession-resilient industries throughout the US.
Fund IV is designed to strategically finance high-quality, established private businesses, supporting them in acquisitions and organic growth. Star Mountain aims to capitalize on the demographic shift among business owners looking to exit, potentially offering compelling valuations for buyers.
Investors in Fund IV stand to benefit not only from its strategic financing approach but also from the opportunity to co-invest alongside Star Mountain’s private BDC and SBIC fund, enhancing buying power for portfolio diversification. The fund has successfully achieved its target diversification of approximately 50 portfolio companies.
Star Mountain’s differentiated origination platform, spanning 20+ cities nationwide, includes over 100 hosted/participated events annually and a branded digital media content platform. This approach ensures frequent contact with business owners and their advisors, further aligning Star Mountain with its borrowers.
The private equity-style, value-added lending strategy aims to help businesses become “middle-market ready,” increasing enterprise value at exit and optimising capital protection.
Fund IV’s success reinforces Star Mountain’s commitment to generating above-market cash yields with tax-advantaged equity upside, providing investors with diversified access to the large and fragmented marketplace. This strategy has historically shown resilience, demonstrating low correlation to the performance of larger US companies, other asset classes, and geopolitical risk factors.
Star Mountain Capital founder and CEO Brett Hickey said: “We appreciate and are honoured 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.”
