Star Mountain Capital, an employee-owned U.S. lower middle-market investment firm with approximately $4.5 billion in assets under management (AUM), closed its second SBIC fund above its target at $286 million of investible capital.
As part of the Small Business Investment Company (SBIC) program, SBIC Fund II, like SBIC Fund I, benefits from the full $175 million of Small Business Administration (SBA) debentures per fund. SBIC Fund II shares the same investment strategy and will invest alongside Star Mountain’s other direct investment funds, leveraging the scale and resources of the entire 130+ person firm.
Like SBIC Fund I, SBIC Fund II will make strategic debt and equity investments in established, recession-resilient and low market-correlated service-oriented U.S. small and medium-sized businesses, supported by legal agreements and maintenance covenants. SBIC Fund II has increased the number of strategic commercial bank partnerships Star Mountain has with several additional bank limited partners (LPs) coming into this fund.
“We are grateful for the partnership with the SBA, our investors, our team and our portfolio companies, and we remain highly aligned and committed to continue to grow the value we can bring to all stakeholders,” Brett Hickey, founder and CEO of Star Mountain Capital, said. “We are proud to work with the SBA in our aligned missions of supporting high quality small and medium-sized private businesses which are the backbone of the U.S. economy.”
Ryan McGovern, managing director and investment committee member, said, “We are honored by the trust that the sophisticated group of commercial banks, family offices and individual investors have placed in us, and we are excited about the continued opportunities ahead for our funds, our portfolio companies and our valued LPs.”
As a Volcker-exempt vehicle, SBIC funds allow banks to invest as LPs where they may receive Community Reinvestment Act (CRA) credits and additional opportunities to provide banking services to SBIC fund portfolio companies with SBIC funds able to potentially assist bank corporate clients with financing needs.
Star Mountain was advised by Winston & Strawn and Stifel, Nicolaus.
