Middle-market firm American Securities has closed its fifth private equity fund – which has a 25-year life – on $2.3 billion (€1.6 billion).
The firm’s chief executive Michael Fisch told PEO the ability to hold investments for such long periods differentiated it from other fund managers “as people who have the capital, if you will, to put their money where their mouth is and be long-term investors”.
We run … much less levered capital structures and have a much higher probability of closing deals.
Previous American Securities funds were in line with traditional private equity funds, with investment periods of around four to six years, according to Fisch. The firm also has a fund with a 10-year life with two or three optional extra years.
The fund, which targeted $2 billion, began fundraising a year ago and was raised independently with support from Credit Suisse, said Fisch. Fund IV has recently agreed its final deal after which Fund V will begin its investment period. Fund IV closed on $1 billion in 2004.
The investment strategy of American Securities will remain the same, investing in North American companies with revenues ranging from $100 million to $1 billion. Fisch added that the size of latest fund will allow the firm to carry out slightly larger transactions. American Securities uses only equity and senior debt in its acquisitions, avoiding subordinated debt, he added.
“We run relative to competition much less levered capital structures and have a much higher probability of closing deals particularly in today’s sometimes troubled financing environment,” Fisch said.
The limited partner base of Fund V also remains the same as previous funds, made up largely of high-net-worth families and endowments which tended to be longer term investors, said Fisch.
American Securities, founded in 1947, has its roots as the family office of Sears Roebuck heir William Rosenwald. The firm began accepting third-party money in the 1980s and formalised its private equity activity in 1994.