American Capital has entered into agreements with a group of investors to establish American Capital Equity III, LP (ACE III), a new private equity fund with $1.1 billion of commitments focused on investing in companies in the lower middle market.
Prior to the closing of ACE III, American Capital will contribute all of its equity and equity-related investments in seven portfolio companies and an option to acquire American Capital’s equity investment in an additional portfolio company to ACE III. The aggregate agreed upon value of these investments, assuming the option is exercised, is approximately $640 million. An additional $445 million in capital commitments will be provided by the investor group and American Capital to allow ACE III to make new investments in companies with $5 million to $25 million of EBITDA. The closing of ACE III fund is expected to occur within 90 days.
The investor group, which was led by funds advised by Coller Capital, Goldman Sachs Asset Management and StepStone Group, also includes sovereign wealth funds, state retirement and pension systems, high net worth family offices, superannuation funds and foundations.
“We are pleased to announce the signing of ACE III,” said Malon Wilkus, American Capital Chairman and CEO. “ACE III significantly diversifies and enhances our asset management franchise and expands our institutional investor base. This is another example of using our well capitalized balance sheet to incubate new funds under management.”
American Capital (NASDAQ: ACAS) is a publicly traded private equity firm and asset manager that originates, underwrites and manages investments of $10 million to $750 million in middle market private equity, leveraged finance, real estate and structured products. Founded in 1986, American Capital has $93 billion in total assets under management and has eight offices in the US, Europe and Asia. The firm is headquartered in Bethesda (www.AmericanCapital.com).
“We welcome our new partners investing in ACE III,” said Tom McHale, American Capital Senior Vice President, Finance. “Our limited partners are diversified across various types of institutions, individuals and geographies. We thank them for their support of American Capital and look forward to continued success with them in ACE III.”
The Private Fund Group of Credit Suisse is serving as the exclusive placement agent for the transaction.
Kirkland & Ellis is serving as lead counsel to American Capital on the transaction. The Kirkland team is led by private funds partners Bruce Ettelson, Michael Belsley and Jeff Kaplan.
Fried, Frank, Harris, Shriver & Jacobson is serving as lead counsel to the funds advised by Coller Capital, Goldman Sachs Asset Management and StepStone Group.
© 2014 PEPD • Private Equity’s Leading News Magazine • 5-7-14