17Capital provides portfolio finance facility to Investcorp

The size of the facility is in excess of $200m, according to a source close to the situation. In return, 17Capital will be getting exposure to a portfolio of private equity, real estate and credit assets in the US and Europe, it said in a statement.

Mercury Capital Advisors, a fund placement and secondary advisory firm, served as exclusive financial adviser to Investcorp on the transaction.

17Capital typically provides portfolio financing in return for exposure to cashflow from a diversified basket of at least four underlying portfolio companies, management fees, or carried interest payments, which are accrued as payment-in-kind (PIK) notes. 17Capital receives back its investment and the proceeds of the accrued PIK when the underlying assets are sold.

Previously popular with secondaries funds, preferred equity enjoyed a significant boost in popularity for buyout vehicles following the coronavirus outbreak, Unquote reported last year.

17Capital reviewed $15bn's worth of potential dealflow in 2020, compared with $10bn for the whole of 2019, and closed 10 portfolio financing deals worth an aggregate $1.5bn in 2020, the source added. The firm notably provided a £125m preferred equity facility to Exponent Private Equity Partners III last July, as reported by Unquote.

17Capital has raised four preferred equity funds to date, with the most recent vehicle closing on its hard cap of €1.2bn in 2017. The firm is reportedly in the process of raising its fifth fund for the strategy, with a target of €1.8bn.

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• Topics
• Financing
• GPs
• 17Capital
• Investcorp
• Fund financing