AEA Investors has held an oversubscribed closing of its fifth small business private equity fund (SBPE), AEA Investors SBF V LP (Fund V), with more than $1.3 billion in total equity commitments surpassing its $1.0 billion target.
Fund V represents an increase of over 50% of third-party capital from the firm’s earlier fund which closed in March 2019. Demonstrating alignment with its investors, the general partner committed approximately $175 million in capital to Fund V alongside its limited partners.
Fund V received support from both new and existing investors including public and private pension plans, asset managers, financial institutions, insurance companies, fund-of-funds, endowments and foundations, family offices and high net worth individuals.
“We are grateful for the continued support from so many new and existing investors,” said Baron Carlson, a partner and co-founder of SBPE at AEA. “In response to a more dynamic and challenging market, our team has worked diligently to underscore our track record of enabling our companies to take share through all economic environments and position them for long-term growth. We believe this highly successful close will enable us to grow our platform, capitalize on the numerous compelling opportunities ahead and continue to provide critical, strategic support and resources for our partner companies.”
AEA’s Fund V, like its earlier funds, makes control investments in North American-headquartered companies that are active in the value-added industrial, consumer and services sectors. The new fund will generally pursue control equity investments ranging from $50 million to $100 million in companies with enterprise values of less than $500 million.
“We believe our conviction in the lower-middle market, combined with our partner-oriented mindset and distinct differentiators – including our leading executive network and extensive track record – continues to position SBPE as a strong partner for quality family- and founder-led companies,” said John Cozzi, a partner and co-founder of SBPE at AEA. “The close of our largest SBPE fund to date is a testament to our team’s ability to source and support attractive lower middle market companies and strong management teams to build stronger, higher-performing businesses that are positioned for success through all market cycles.”
AEA’s SBPE utilizes an executive partner strategy that uses industry executives with domain and sector experience for sourcing new transactions, providing industry insight and hands-on support for management teams from purchase through exit. Over the last decade, nearly 70% of SBPE’s investments have involved an executive partner.
AEA SBPE also has a history of partnering with family- and founder-led businesses. Since establishing the platform in 2004, approximately 70% of its investments have been in support of family- or founder-led companies, including PLZ Aeroscience, Colony Hardware, National Rehab Equipment, Implus Footcare, Phillips Pet Food & Supplies, The Evans Network of Companies, Flow Control Group, SGL TransGroup, Barnet Products, Montway, 50 Floor, Meritus Gas Partners, Unisyn Precision Components, Rees Scientific and Chemtron RiverBend.
In addition to the successful close of Fund V, the SBPE also closed on $384 million in total capital commitments earlier this year for its first continuation fund, AEA SBP CF LP, bringing aggregate total capital commitments to more than $1.7 billion for recent fundraises across the SBPE strategy.
To date, Fund V has invested in three portfolio companies including Crane Engineering, a Wisconsin-based distributor of pumps, valves and other flow control and fluid handling products (August 2023); Chemtron RiverBend, a Missouri-based provider of water and wastewater treatment products and services (March 2023); and Singer Industrial, a Dallas-based value-added distributor of industrial rubber and fluid power products (March 2023). Fund V partnered with other AEA funds – including a $384 million continuation fund – to acquire Singer which AEA had acquired in 2011 through its second SBPE fund and made more than 30 add-on acquisitions during its hold period. Fund V will continue executing this consolidation strategy for Singer.
AEA invests across three sectors – value-added industrials, consumer, and services – and has 70 investment professionals at its headquarters in New York City with additional offices in Connecticut, London, Munich, and Shanghai. AEA was founded in 1968 by the Rockefeller, Mellon, and Harriman family interests and S.G. Warburg & Co.
Fund V did not use a placement agent and Kirkland & Ellis provided legal services.
© 2023 Private Equity Professional | October 13, 2023