Downtown-based merchant banking group Iroquois Capital has launched an investment banking division focused on middle-market companies and named a former Avondale Partners and Paine Webber executive to lead it.

Iroquois officials said setting up a dedicated investment banking team is "a natural progression" in the group's lineup of services, which has until now focused on capital raising and investment banking advisory services. Linda Costello, who left Avondale after six years in 2011, will head up the group and be joined by fellow Managing Director Rick Gernert and vice presidents Leighton Liles and Charlie Morgan.

Costello has more than 30 years of investment banking experience and also has been a senior banker at Paine Webber and UBS. She began her career at Dean Witter Reynolds in New York and also worked at the former J.C. Bradford.

“It is a tremendous opportunity to join the Iroquois team,” Costello said. “The executives at Iroquois have immense experience, providing our clients with the skill and talent to identify and execute strategies that will enable them to grow and excel.”

Gernert has more than 30 years of industry experience. He was a founding partner of acquisition vehicle Forsch Corp., as well as vice president of business development at EDS and managing director of VC firm Koch Ventures.

Before joining Iroquois, Liles worked at Harpeth Capital and Renasant Bank in Nashville. Morgan previously worked with JPMorgan Chase & Co.’s investment banking group in New York.

Iroquois recently closed on a $25 million second-lien debt deal for surgery center chain Covenant Surgical Partners, which is eyeing more acquisitions.