American Capital Closes $1.1B Lower Middle Market Fund

Private equity and asset management firm American Capital Ltd. said Wednesday that it has raised $1.1 billion for its latest fund, American Capital Equity III LP, which will focus on investing in U.S. companies in the lower middle market.

Bethesda, Maryland-based American Capital said it successfully closed its latest fund with an investor group 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, totaling 39 limited partners.

American Capital, which launched its fundraising efforts for ACE III in May, said 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 to fund the purchase of new control equity and equity-related investments in companies with between $5 million and $25 million of earnings before interest, taxes, depreciation and amortization, American Capital said.

The fund is American Capital’s eighth private fund.

ACE III is managed by American Capital's wholly owned portfolio company, American Capital Asset Management LLC, which now 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.

The publicly traded American Capital manages $19 billion of assets and has eight offices in the U.S. and Europe.

It has been actively selling companies in its portfolio this year, racking up three sales within the $150 million to $300 million range.

American Capital in April raked in $155 million from the sale of Specialty Brands of America Inc., the owner of the popular Bear Creek Country Kitchens brand, to New Jersey-based B&G Foods Inc.

That same month, the firm also sold its pharmaceutical ingredient manufacturer and supplier SPL Acquisition Corp. to China's Shenzhen Hepalink Pharmaceutical Co. Ltd. for approximately $291 million in debt and equity proceeds.

In March, American Capital sold drilling products provider Anchor Drilling Fluids USA Inc. to Calumet Specialty Products Partners LP for $235 million.

American Capital is represented by a Kirkland & Ellis LLP that includes Bruce Ettelson, Michael Belsley, Jeffrey Kaplan, Sarah Kirson, Scott Moehrke, Donald Rocap,  Daniel Meehan, Laura Bader, Warren Goodworth and LeighAnne Thompson, among others.

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