About This Fund
Farragut SBIC Fund III, LP is the third Small Business Investment Company (SBIC) fund managed by Farragut Capital Partners, a privately held investment firm headquartered in Chevy Chase, Maryland. The fund closed at $263 million in April 2025, making it the firm's largest SBIC vehicle to date and surpassing its fundraising target with an above-target final close. Farragut Capital Partners was established in 2011 as the continuation of a long tradition of investing subordinated debt and private equity capital in leading US lower middle market businesses, with its founders building expertise across multiple investment cycles.
Farragut SBIC Fund III pursues a time-tested strategy of providing subordinated debt (mezzanine capital) and private equity capital to profitable, growing US-based lower middle market companies, typically alongside strong ownership groups including private equity sponsors and independent sponsors. The fund targets businesses with revenues of $10 million or more, deploying investments of $4–30 million per transaction across a portfolio of approximately 25–35 companies. The SBIC license provides the fund with leveraged capital from the US Small Business Administration (SBA), enhancing returns by supplementing private LP capital with long-term government-backed senior debt at favorable rates — a structural advantage unique to SBA-licensed investment vehicles that allows managers to earn enhanced returns without additional LP capital at risk.
Farragut SBIC Fund III attracted a diverse LP base including US commercial banks (community, regional, and national), family offices, high-net-worth individuals, and institutional asset managers, reflecting the broad appeal of SBIC-licensed mezzanine vehicles. The above-target final close demonstrates strong investor confidence in Farragut's origination capabilities and portfolio management track record from prior SBIC funds. The fund continues a consistent investment playbook applied successfully in earlier vintages, targeting the same segment of the US lower middle market where relationship-driven origination and flexible capital structures generate differentiated returns versus broadly syndicated credit alternatives.