Since launching in July 2019, the Charter Growth Capital Fund has made five investments and raised $31 million to make minority investments in growing, middle-market companies that need growth capital.
The investments and activity to date validates John Kerschen’s view that there was an existing market gap and need for a new mezzanine fund in Michigan that targets the lower end of the middle market. Mezzanine funds typically serve a market upstream from the segment the Charter Growth Capital Fund intended to target.
Charter Capital Partners created the mezzanine fund to make debt or equity investments — or a combination of both — in lower middle-market companies in the Great Lakes region that need $1 million to $5 million in capital to grow, recapitalize the business, or make an acquisition. The fund targets profitable companies with annual revenues of $10 million to $50 million.
In addition to the $31 million raised from more than 40 investors, predominantly from Michigan and the Midwest, the fund has secured another $10 million in available debt financing to support deals.
The Charter Growth Capital Fund’s formation earned Kerschen the 2021 MiBiz Dealmaker of the Year Awards as an investor.
Investments through the five deals collectively total about $15.5 million in subordinate debt and minority equity, Kerschen said. Focusing on the lower end of the middle market where there’s demand for capital and less competition for deals has enabled the fund to “pick our spots where it fits our criteria and we connect well with the entrepreneur,” he said.
Kerschen expects the fund to invest in 12 companies by late 2022, and “then we’d have to think about what’s next.” Read more at MiBiz.