It had been more than four months since a US firm closed a buyout fund with at least $5 billion in commitments. These days, that counts as a drought. Now, thanks to American Securities, it's over.
The New York-based buyout shop has closed its eighth flagship vehicle on a hard cap of $7 billion, exceeding a $6 billion target. It's the firm's second massive fundraise in quick succession, following a $5 billion predecessor that wrapped up in 2015. It's also the first mega-fund to close in the US since GTCR announced a $5.25 billion vehicle last October, one of a series of huge recent funds:
The close comes less than a week after Stockholm-based EQT closed its latest fund on €10.75 billion (about $13.1 billion), the globe's largest vehicle so far this year. After an abundant 2017 for private equity firms seeking to raise new funds, it's looking more and more like 2018 may be capable of producing a similar bounty.
American Securities usually invests in large businesses with up to $2 billion in revenue and $250 million in EBITDA. The firm's previous vehicle, American Securities Partners VII, aimed to make investments of between $200 million and $500 million. Dating back to the start of 2008, more than 28% of the firm's investments have been in the B2B sector, according to the PitchBook Platform, with nearly 19% in materials & resources and another 15% in healthcare.
With $12 billion now raised in less than five years, it makes sense that the rate of American Securities' activity is accelerating. The firm sealed 17 deals during 2017, per PitchBook data, its highest total of the decade.
Those investments are getting bigger, too. Last April, American Securities completed a $2.5 billion take-private buyout of Air Methods, a provider of air medical transportation and air tourism, in what was the firm's first deal worth more than $1 billion in the past 10 years. With its bankroll newly fattened, it would make sense if other billion-dollar deals are in the offing.