Debt Managers Go Public, Goldman Underwrites

Chidem Kurdas

Secured business loans is a hot investment area. That probably helped MCC Advisors, a hedge fund that makes direct loans, to go ahead with its plan to float a fund on the New York Stock Exchange. The initial public offering is expected to raise $185 million to $212 million, to make loans of $10 to $50 million to small and medium businesses.

Apparently the MCC team had no trouble getting book runners for the IPO—Goldman Sachs, Citigroup and RBC Capital are among the underwriters.

The idea was hatched several months ago to transfer some of the loans in the hedge fund to a new public vehicle, as reported by HedgeFundAlert in May.

Brook Taube, Seth Taube and Andrew Fentress are the managers. The investments to be transferred to the public fund have an average yield to maturity of around 15%, according to an investor.  This person says new loans should have high yields because there are fewer lenders in the market. Commercial banks have not gone back to lending as much as they did before the credit bust and hedge funds, which are an alternative source of loans, have less money.

MCC Advisors is an affiliate of Medley Capital, founded by Richard Medley, a former partner of George Soros.

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