Northlight Financial, a New York-based firm, is launching a credit fund focused on corporate credit in the fourth quarter.

The fund will invest in first lien, senior secured syndicated loans in U.S. and in Canadian companies, Ajay Nanda said.

“This is a pure play on corporate credit,” Nanda said.

Nanda will officially join Northlight as the fund's portfolio manager pending the capital raise for the fund.

The funds will use leverage, but in a relatively small amount of 2.7 times the equity, at the most. Nanda and Northlight will target returns in the mid-teens.

The firm is in the process of raising capital commitments for the onshore and offshore versions of the fund, with an initial target of $50 million for each fund. Combined with the leverage, each fund will have $135 million to put to work totaling $270 million altogether.

Management will invest an “appropriate amount” of its own capital in the funds relative to the amount of capital raised from outside investors, according to Chris Jahrmarkt, a partner at the firm.

That process has just begun, with Northlight management approaching investors in other vehicles. The firm has $260 million in assets under management.

Nanda spent the last six years with Avenue Capital where he was a senior vice president of the firm’s $3.5 billion collateralized loan obligations business. Nanda has 11 years of experience investing in the sector.

The minimum investment in either of the two funds is $1 million. Fees are 1% maintenance and 15% performance.

Jahrmarkt, who is in charge of business development for the fund, said Northlight was planning on using Rothstein, Kass & Co. as their auditor. Anchin, Block, Anchin is the administrator for the funds and Bank of New York Mellon is the custodian.