AEA has finalized two funds with the hard cap close of its seventh flagship fund, AEA Investors Fund VII LP (Fund VII), with total equity commitments of $4.8 billion, and its fourth small business fund, AEA Investors SBF IV LP (Fund SB), with total equity commitments of $877 million.
Fund VII was oversubscribed and backed by both new and existing limited partners including more than 130 public and private pensions, sovereign wealth funds, endowments and foundations, insurance companies, financial institutions, asset managers, fund of funds, and family offices. Fund VII’s general partner committed $275 million of capital, representing the largest single investment in the new fund. AEA’s earlier flagship fund, AEA Investors Fund VI LP, closed with $3.2 billion of capital in 2015.
Fund SB was oversubscribed and received commitments from investors in earlier funds as well as first-time commitments from new institutions. Fund SB’s general partner committed $115 million of capital, representing the largest single investment in the new fund. AEA’s earlier small business fund, AEA Investors SBF III LP, closed in 2015.
With the closing of these new funds, AEA has announced the transition of Brian Hoesterey from president to CEO. AEA’s former chairman and CEO, John Garcia, will remain as executive chairman and continue to serve on the investment committees of all AEA funds with Mr. Hoesterey. Mr. Hoesterey and Mr. Garcia both joined AEA in 1999.
“We are thrilled to close AEA Fund VII at its hard cap, marking yet another important milestone in the firm’s history,” said Mr. Garcia. “The enthusiasm we saw from both our new and existing limited partners around the globe is a testament to the hard work of our team and further solidifies our position as a preferred source of private equity capital for leading management and family-led companies. I look forward to working together with Brian to build upon the firm’s overall strategy, growth and, importantly, its culture which has been core to AEA delivering attractive returns to our investors for many years.”
Fund VII will make control investment of $150 million to $450 million in North American and European-headquartered companies that are active in the value-added industrial, consumer and services sectors.
Fund VII has already closed on two investments with the buys of Jack’s Family Restaurants, a Birmingham, Alabama-based quick-service restaurant serving Southern-inspired food 
across 162 company-owned units in Alabama, Tennessee, Georgia, and Mississippi (acquired from Onex in July 2019); and Haltom City, Texas-based BMS Enterprises, the second-largest non-franchised provider of property restoration and reconstruction services to commercial and residential end markets in the United States (acquired in September 2019).
Like its larger sibling, Fund SB also makes control investments in North American and European-headquartered companies that are active in the value-added industrial, consumer and services sectors, However, Fund SB targets smaller companies that have enterprise values between $25 million and $250 million. Alan Wilkinson and John Cozzi, both partners at AEA, are the co-heads of the small business funds.
Fund SB closed its first investment in July 2019 with the buy of Allied Power Group (APG), a Houston-based provider of maintenance and repair services for industrial gas turbines, from OFS Energy Fund.
“While our firm has grown, we have maintained our investment philosophy over many years and economic cycles to deliver meaningful returns to our investors,” said Mr. Hoesterey. “We continue to build upon our established investment strategy by leveraging the deep industry/subsector knowledge of our investment and operating partners. Further, our extensive network and global resources are important in identifying and adding value to middle-market businesses that are poised for their next stage of growth. We view ourselves as providing these companies with transformational capital; helping them improve operationally, strategically and financially. As evidenced by our deployment so far, there are substantial opportunities to put capital to work addressing the significant demands across the value-added industrial, consumer and services sectors.”
AEA was founded in 1968 by the Rockefeller, Mellon, and Harriman family interests and S.G. Warburg & Co. as a private investment vehicle for a select group of industrial family offices. The firm, with 80 investment professionals, is headquartered in New York with additional offices in Connecticut, London, Munich and Shanghai.
Kirkland & Ellis provide legal services to AEA on both Fund VII and Fund SB, and AEA did not utilize a placement agent for either of the new funds.
© 2019 Private Equity Professional | December 20, 2019
