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Seven New Sources of Deal Finance

And Amalgamated Capital makes seven. I’ve written so many stories about new lending groups formed to serve the “void” of financing in the middle market, that it’s time to make a list. So I give you, the recent crop of new middle market lenders (please email with any I may have overlooked).

The groups are in various stages of development-some have raised funds, others are seeking to secure credit, and even one is in registration to go public. While they’re getting their ducks in a row, someone (anyone) find them some deals to finance!

1. Sankaty Middle Market Opportunities Fund will invest in middle-market mezzanine loans with some senior debt and equity. More specifically, it would target credit for new buyouts, rescue financings and secondary purchases of mezzanine debt. See related story.

2. MidOcean Partners, the New York-based buyout firm launched a credit business called MidOcean Credit Partners in late June. It hired Steve Shenfeld, a former general partner with Avenue Capital Group, in June as well as Deerfield Capital veterans Mike Apfel and Jim Wiant. In a press release at the time, the firm’s CEO, Ted Virtue, said, “We believe that the dislocation in the credit markets will continue to bring great opportunities to deliver strong risk-adjusted returns to our investors.”

3. Thomas H. Lee Partners, a Boston-based buyout firm, filed to raise $300 million in a blind-pool offering that will take its THL Credit unit public with a business development company structure. THL Credit intends invest in private subordinated debt investments of middle-market companies, according to a filing with the Securities and Exchange Commission. See related story.

4. CastleGuard Partners launched in early July from the ashes of Freeport Financial, which earlier this year laid off all but four of its employees. The firm, which is headquartered outside of Chicago in Glenview, Ill., plans to focus on providing first lien senior secured loans to sponsor-backed companies with annual EBITDA greater than $10 million. CastleGuard is currently in the process of securing long-term capital commitments from institutional investors. See related story here.

5. Chatham Capital, a mezzanine investor based in Atlanta, recently started a separate “one-stop” fund with capabilities for both senior debt and mezzanine lending. Although the target for the pool is undisclosed, Chatham Capital has already gathered $380 million for this “one-stop” strategy. See related story.

6. Boathouse Capital, based in Wayne, Pa., was started up in late 2008 by former American Capital professionals and it’s in the process of raising a mezzanine fund that will invest in “top quality, later-stage businesses,” according to its Web site. The firm is believed to be seeking between $75 million and $225 million for its fund, as it has stated it plans to use the pool to make roughly 15 investments of between $5 million and $15 million each. See related stories here and here.

7. Amalgamated Capital is the new leveraged lending arm of Amalgamated Bank. The group will provide senior loans and one-stop financing to lower middle market companies with Ebitda under than $15 million. The group is headed by Timothy Clifford and includes Sean McKeever, both formerly with Churchill Financial.