Funds

Arlington smashes target for fourth fund

The government sector-focused mid-market firm beat its $575m target for Arlington Capital Partners IV, closing on its $700m hard-cap.

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Washington, DC,-based Arlington Capital Partners has closed Arlington Capital Partners IV on its $700 million hard-cap, beating its $575 million target, the firm said in a statement.

The fund was oversubscribed and in market for just three months. Its final close follows a strong first quarter for fundraising in private equity, having reached the record post-financial crisis amount of $136 billion, as previously reported by Private Equity International.

Fund advisory Triago believed strong fundraising was in part due to the rise in shadow capital, which is money raised for co-investment, direct investment and separate accounts.

According to a US Securities and Exchange Commission filing from 14 July, the fund accepted a minimum of $5 million in commitment from each investor. Investors in the fund include public pension funds, corporate pension funds, insurance companies, fund of funds, and foundations, the firm said. Arkansas Teacher Retirement System committed $30 million to the fund, according to PEI data.

The previous fund, Arlington Capital Partners III, closed on $415.5 million in 2010 and is currently investing, according to PEI data, which indicates Arizona State Retirement System, The Hartford insurance company, Brederode SA, New York City Police Pension Fund, and Arlington Partners family office as some of its investors.

Arlington Capital Partners II generated a 10.5 percent net internal rate of return as of 31 March 2015, according to documents from the New York City Police Pension Fund. This fund closed in 2006 on $575 million, surpassing its $500 million target.

Arlington, founded in 1999, focuses on mid-market government-related sectors such as aerospace and defence, government services and technology, healthcare services, and business services and software. It targets companies with enterprise value of between $50 million and $500 million, according to its website.

Arlington’s current portfolio includes orthopaedic medical device manufacturer Avalign Technologies, defence and intelligence solutions provider EOIR Technologies, and revenue and accounts receivable management software provider Ontario Systems.

Evercore served as the exclusive global placement agent and Kirkland & Ellis served as legal counsel for Arlington’s latest fund.