Are mezzanine funds making a comeback?

The total amount of funds raised at final close shrunk from €4bn in 2010 to €850m in 2011 and just €275m in 2012 so far.

However, the number of mezzanine-financed investments has maintained a steady pace, with 38 in 2009 to 43 in 2010, 45 in 2011 and seven in 2012 so far. Mezzanine is expected to be of growing importance in funding buyouts in the future as diminishing senior debt EBITDA multiples encourage GPs to use it - sometimes in unitranches - even though it is still a costly solution.

Finally, the attractiveness of sponsorless mezzanine, which enables managers to regain control of the company after having participated in one or several LBO's, as well as "corporate mezzanine", used to finance external growth, also shows that mezzanine funds are likely to evolve in the future and becoming more active in the investee business.

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• Buyouts
• Market Insight
• Mezzanine
• 123Venture
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