Firm Looks to Focus On Middle-Market Investment Opportunities in the Southwest

Growth Capital Partners, L.P. ("GCP"), a Southwest based merchant and investment banking firm, today announced the first closing of Southwest Mezzanine Investments (the "Fund"), its $50 million debut mezzanine fund. Southwest Mezzanine Investments is a partnership formed to make $3 to $5 million subordinated debt investments in middle-market companies, based in the Southwest, requiring capital to accelerate growth internally or through acquisitions.

Since 1992, GCP has assisted its clients with over 15 subordinated debt with warrants transactions. The Fund was formed to take advantage of the favorable environment for subordinated debt securities created by the conservative lending pattern among senior lenders and the lack of mezzanine providers funding transactions in the $3 to $5 million range. In recent years, most mezzanine funds have seen a significant increase in size, forcing fund managers to increase their minimum investment size to $10 to $20 million, creating an opportunity for smaller funds, like Southwest Mezzanine Investments, to target an underserved segment of the capital markets.

Southwest Mezzanine Investments is now actively seeking investments. In evaluating potential investments, the Fund is particularly interested in companies generating revenues in excess of $15 million, with a history of profitable operations, and possessing meaningful competitive advantages. The Fund will be flexible relative to industry focus, with a significant portion of the Fund targeted toward business services, outsourcing, manufacturing/value-added distribution, later stage technology and healthcare services, where GCP has experience with existing clients. The Fund seeks to make investments in both equity sponsored and unsponsored transactions for companies based in the Southwest, seeking capital to accelerate growth internally or finance add-on acquisitions. The Fund will utilize its limited partners or co-invest with other mezzanine funds to complete subordinated debt transactions greater than $5 million.

Southwest Mezzanine Investments will be run by James F. Forrester, formerly an Executive Vice President with Silicon Valley Bank. Mr. Forrester brings to the Fund over 20 years of experience in commercial and mezzanine lending. Mr. Forrester is also a director of GCP. "The success of our fund raising efforts in these very difficult times is indicative of the perceived need for this type of capital in the Southwest," said Mr. Forrester.

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