American Capital, a financial services firm, has signed definitive agreements with a group of investors to institute a new private equity fund called American Capital Equity III (ACE III), worth $1.1bn.
The fund is aimed at investing in lower middle market companies. The company is keen to expand its asset management business and increase its earning assets under management by $0.9bn or 7%.
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The consortium of investors were advised by Coller Capital, Goldman Sachs Asset Management and StepStone Group. It also includes select sovereign wealth funds, state retirement and pension systems, high net worth family offices, superannuation funds, and foundations.
American Capital chairman and CEO Malon Wilkus said that ACE III significantly diversifies and enhances the company’s asset management franchise and expands its institutional investor base.
American Capital intends to put in all of its equity and equity-related investments in seven portfolio companies, alongside an option to acquire American Capital’s equity investment in an additional portfolio company to ACE III following the closure of the fund scheduled within 90 days.
Upon leveraging the option, the company would be liable for an agreed value of investments of around $640m.
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By GlobalDataThe investor group, besides American Capital, also will offer capital commitment of $445m to fund the acquisition of new control equity and equity-related investments in companies with $5m to $25m of EBITDA.
American Capital senior vice president, Finance Tom McHale, said: "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."
With this latest fund, American Capital Asset Management’s business portfolio expands to eight private funds and three public funds with nearly $13bn of earnings assets under management and $84bn of total assets under management.
