Mezzanine debt is broadly defined as subordinated debt. It ranks behind senior debt, but as second secured debt ahead of unsecured debt, other claims, and equity.

Because it is a debt instrument, it produces a steady stream of monthly or quarterly current income. Both of the aforementioned factors substantially mitigate mezzanine risk over other private equity risk. Statistics have shown that with lower returns in a strong economy and stronger returns in a weak economy, mezzanine debt averages returns only a little lower than leveraged buy-out (“LBO”) funds over an economic cycle, which is a favorable value on a risk adjusted basis, with a significantly lower risk profile.

FIS Group and Greater Philadelphia Venture Capital Corporation are partnering to organize a mezzanine debt strategy focused on the mezzanine sector of the private equity market.  Through skillful selection and diversification among regular unlevered mezzanine funds and SBIC funds licensed by the US SBA, this experienced mezzanine management team will be well placed to provide strong returns uncorrelated to the public markets.

As the strategy will be implemented through a fund of funds structure, we are very interested in sourcing skilled underlying mezzanine funds.  The strategy will employ a very stringent due diligence process for the underlying funds; however, we believe that this will result in a win-win for the both parties.  Please feel free to contact our strategy specialists at mezzstrategy@fisgroup.com


Management Team

Fred G. Choate, Managing Director

James V. Schermerhorn, Managing Director