American Capital Strategies has in the past two days announced four deals worth more than $172 million (€128 million), which comes on the heels of a $1 billion public offering completed in four days.
The publicly traded alternative asset manager’s flurry of recent deals include: an $8.9 million investment in female-focused medical device company HALT Medical; a $125 million investment in Velocity Financial Group, which provides equipment financing and capital to middle market and venture-backed companies; a $38 million investment in CAMP Systems International, a provider of subscription-based maintenance tracking information services to the corporate aviation market; and an investment of an undisclosed amount into One Stop Buyout, a division of Imaging Business Machines that provides document scanning hardware and software. In all but the CAMP deal, 30 percent of the equity investment was provided by American Capital’s first traditional private equity fund, which closed last year on $1 billion.
Last week, American Capital raised $1 billion in its 29th and largest initial public offering after four days of marketing. The equity raise among its institutional and retail investors was “dynamic”, said Amanda Cuthbertson, American Capital’s director of investor relations.
“We had three teams traveling to meet with various investors around the country,” Cuthbertson said. Retail investors comprise approximately 70 percent of the firm’s shareholder base, she said.
The size of the raise is a good indicator in terms of American Capital’s deal pipeline, as the firm typically raises equity to be deployed within three to six months.
“Because we’re able to lever one-to-one debt to equity,” American Capital is likely to do $2 billion in deals within the next six months, Cuthbertson said.
Its first quarter deal activity proved rewarding: the firm realised $10 million in net gains from portfolio exits, while it received $570 million in proceeds from portfolio investments.
A publicly traded firm since 1997, American Capital is also profiting from the IPO craze sweeping more traditional private equity firms like The Blackstone Group, which began trading today on the New York Stock Exchange.
“We really view it as a benefit that there are more funds out there going to the public markets,” Cuthbertson said. Private equity is “becoming more of an asset class for the public, people understand private equity a little bit better,” all of which helps when American Capital raises equity.