(Bloomberg) -- Star Mountain Capital is planning to sell bonds backed by stakes in its private credit funds, according to people familiar with the matter.
The sale of senior and junior notes — via a so-called collateralized fund obligation — is likely to raise less than $500 million, the people said, adding the amount was still being decided.
Bespoke securitizations have been gaining in popularity as private fund managers look for ways to raise cash amid a slump in dealmaking and fundraising. Carlyle AlpInvest, GCM Grosvenor and Dawson Partners are among funds that have marketed CFOs this year.
New York-based Star Mountain, which focuses on lower-middle-market companies, runs both direct lending and secondary funds. It closed its $1.2 billion Direct Lending Fund IV in 2023, according to a press release.
Evercore Inc. is advising the firm on the process.
Representatives for Star Mountain and Evercore did not immediately respond to requests for comment.
CFOs are finding a receptive audience in insurers, which have been buying larger amounts of illiquid assets. That makes them a key new investor base for such deals.
These CFOs let insurers get economic exposure to private funds at lower capital charges than if they were to buy shares of the funds directly.
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