American Capital to launch new private equity fund for US lower middle market
American Capital has signed definitive agreements with a group of investors to launch a new private equity fund focused on investing in companies in the lower middle market.
Called American Capital Equity III (ACE III), the fund further expands the company's asset management business and diversifies its investor base by adding new private equity limited partners and increasing its earning assets under management by 7%.
Led by funds advised by Coller Capital, Goldman Sachs Asset Management and StepStone Group, the investor group also includes select sovereign wealth funds, state retirement and pension systems, high net worth family offices, superannuation funds and foundations.
Commenting on ACE III, American Capital chairman and CEO Malon Wilkus said: "This is another example of using our well capitalized balance sheet to incubate new funds under management."
Subject to standard conditions, the transaction is expected to close in 90 days, prior to which the company will contribute all of its equity and equity-related investments in seven portfolio companies and an option to acquire its equity investment in an additional portfolio company to the fund.
The aggregate agreed upon value of the investments is around $640m, subject to adjustments, provided the option is exercised.
In addition, the investor group and American Capital will provide an aggregate $445m capital commitment to fund the acquisition of new control equity and equity-related investments in companies with $5 to $25m of EBITDA.
The proceeds from transaction are expected to be used by the company for general corporate purposes, including for its investment and lending activities.
After the transaction is complete, American Capital's asset management affiliate, American Capital Asset Management will manage eight private funds and three public funds with $13bn of earnings assets under management and $84bn of total assets under management.