Star Mountain Capital has closed its inaugural US direct lending collateralised fund obligation (CFO).

Star Mountain CFO I will give insurers and institutional investors access to a portfolio of KBRA-rated US lower middle-market investments across Star Mountain’s direct lending funds.

The $5bn (£3.7bn) alternatives manager has partnered with investment bank Evercore on the transaction.

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“We are pleased to have partnered with Evercore to complete Star Mountain CFO I, which reflects growing institutional demand for rated, structured access to the US lower middle-market,” said Brett Hickey, founder and chief executive of Star Mountain Capital.

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The news comes as US asset manager Churchill Asset Management and Temasek’s main asset management platform Seviora Holdings have closed a CFO at approximately $400m in July.