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Penfund V to close in coming weeks above $525 mln target

Canadian private debt and equity investor Penfund has banked the $525 million target set for its fifth mid-market fund and is now raising additional capital for a final close, a person with knowledge of the matter told Buyouts.

Penfund Capital Fund V is expected to wrap up appreciably above its target in July or August, the source said.

At its current total, the fund is already the largest in Toronto-based Penfund’s 37-year history, surpassing by 14 percent the $460 million secured by its predecessor in March 2012.

Penfund’s fundraising overcame a major hurdle early on when a key limited partner elected not to reinvest.

HOOPP Capital Partners, the PE arm of the $63.9-billion Healthcare of Ontario Pension Plan, previously accounted for roughly half of Penfund Capital Fund IV. But it declined to commit to Penfund’s latest offering, the source said.

Jim Walker, managing partner of HOOPP, told Buyouts that the decision reflected the pension system’s strategy to shift more assets to direct second-lien and mezzanine opportunities.

Penfund compensated by raising larger commitments from its other existing Canadian institutional LPs, most of them pension funds, and signing on a number of new investors from Canada, the United States and Asia.

Penfund declined to comment for this story.

Penfund provides junior capital to mid-market companies in a range of North American industries. It has already begun investing the proceeds of Fund V, putting $200 million to work in five deals so far, the source said.

This story originally appeared in affiliate magazine Buyouts, which is published by Buyouts Insider. Subscribers can read the full story by clicking here. To subscribe to Buyouts, click here.

Photo courtesy ©iStock/Michal Krakowiak