Star Mountain Capital has announced the final close of its inaugural collateralised fund obligation (CFO), providing insurance companies and institutional investors with investment grade-rated access to its direct lending strategy.

The employee-owned investment firm partnered with global investment bank Evercore on the transaction, the details of which have not been disclosed.

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Star Mountain CFO I provides exposure to a portfolio of US lower middle-market investments across the firm’s direct lending funds, with a focus on established businesses in “recession-resilient” industries with robust covenant protections and no direct exposure to software companies, real estate or energy.

The vehicle has been structured to accommodate investors as both horizontal buyers and vertical strip investors, and has an investor base spanning blue chip institutional investors and wealth management platforms.

Star Mountain confirmed it continues to develop rated structures for its direct lending and secondaries strategies.

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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. “This transaction demonstrates our continued commitment to developing innovative solutions that meet investors where they are, and we are proud of the strong execution and institutional interest this offer has received.”

Star Mountain, which oversees $5bn (£3.7bn) in assets under management, has completed more than 100 direct platform investments and 50 secondary/fund investments in the North American lower middle-market since 2010.

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