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American Capital Closes $1.1B Lower Middle Market Private Equity Fund

September 25, 2014, 07:56 AM
Filed Under: Industry News

American Capital, Ltd. has closed American Capital Equity III, LP ("ACE III"), its new private equity fund focused on investing in U.S. companies in the lower middle market.  The transaction further expands American Capital's asset management business and diversifies its investor base, adding new private equity limited partners and increasing American Capital's earning assets under management.

The investor group, which was led by funds advised by Coller Capital, Goldman Sachs Asset Management and StepStone Group, also includes select sovereign wealth funds, state retirement and pension systems, high net worth family offices, superannuation funds and foundations, totaling 39 limited partners.

ACE III is managed by American Capital's wholly-owned portfolio company, American Capital Asset Management, LLC ("ACAM"), through an affiliate, and will earn a management fee and a carried interest in the net profits of ACE III, subject to certain hurdles.  As previously announced, ACE III acquired a portfolio of equity investments from American Capital and an option to purchase the equity interest of another portfolio company.  ACE III has an additional $445 million of capital commitments generally to fund the purchase of new control equity and equity-related investments in companies with $5 to $25 million of EBITDA.

Following the closing, American Capital's asset management affiliate, American Capital Asset Management, manages nine private funds and three public funds with approximately $13 billion of earnings assets under management and $83 billion of total assets under management (including levered assets).  ACAM manages publicly traded American Capital Agency Corp. American Capital Mortgage Investment Corp. and American Capital Senior Floating, Ltd.  In addition, ACAM manages private funds American Capital Equity I, LLC, American Capital Equity II, LP, ACAS CLO 2007-1, Ltd., ACAS CLO 2012-1, Ltd., ACAS CLO 2013-1, Ltd., ACAS CLO 2013-2, Ltd., ACAS CLO 2014-1, Ltd. and European Capital Limited.

American Capital Equity III, LP is a $1.1 billion private equity fund ("ACE III") focused on investing in companies in the lower middle market.  In addition to managing a secondary portfolio of equity investments acquired from American Capital, ACE III has a $445 million capital commitment to fund the purchase of new control equity and equity-related investments in companies with $5 to $25 million of EBITDA.  ACE III is managed by an affiliate of American Capital Asset Management, LLC, including ten investment professionals based in Bethesda, MD.

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