News & Analysis

American Capital anchors $1.1bn fund with secondaries

The Maryland-based firm will offer its own private equity investments to investors in its third fund, American Capital Equity III, which will close within 90 days.

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US private equity firm American Capital has launched its third fund, which will offer investors the chance to buy into $640 million of American Capital-owned private equity interests, according to a statement.

The $1.1 billion-targeted lower middle market American Capital Equity III (ACE III) will close within 90 days, as American Capital has entered into “definitive agreements” with investors ensuring the fundraising target is met, said the firm.

American Capital said that, prior to closing, it will contribute all of its equity and equity-related investments in seven portfolio companies, including an option to acquire American Capital’s equity investment in an additional portfolio company, to ACE III. The value of this secondaries pocket could total $640 million, said the statement.

The LPs in the deal included funds advised by Coller Capital, Goldman Sachs Asset Management and StepStone Group. It also included a selection of sovereign wealth funds, state retirement and pension systems, high net worth family offices and superannuation funds and foundations, said the statement.

American Capital said the private fund group of Credit Suisse acted as placement agent for the deal.

ACE III “significantly diversifies and enhances our asset management franchise and expands our institutional investor base,” said American Capital chief executive Malon Wilkus. “This is another example of using our well-capitalised balance sheet to incubate new funds under management.”

Its previous fund, American Capital Equity II (ACE II) was established in 2007, closing at $585 million. ACE II purchased 17% of American Capital’s equity investments in 80 portfolio companies for $488 million.

American Capital Equity is a publicly listed private equity firm that trades on the NASDAQ stock exchange, according to PEI data.

Through its asset management business, it underwrites and manages investments in middle market private equity, leveraged finance, real estate, energy & infrastructure and structured products, according to its website.