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American Capital realizes USD16m from portfolio company exit

American Capital has announced that on 14 August, in connection with the sale of one of its portfolio companies, its debt investment in the company was repaid and it sold associated war

American Capital has announced that on 14 August, in connection with the sale of one of its portfolio companies, its debt investment in the company was repaid and it sold associated warrants.

American Capital realized a gain of USD16m from the transaction, subject to postclosing adjustments.

American Capital’s total inception to date realized gain on this investment was USD17m and its compounded annual rate of return, including interest and fees earned over the life of its investment, was 39 per cent.

American Capital entered into a confidentiality agreement with the buyer of the company, which prohibits American Capital from announcing the company name and certain other transaction information.

American Capital received total proceeds of USD37m from the transaction. The proceeds received by American Capital were greater than the second quarter 2009 valuation of the investment by USD1.5m, or four per cent.

"We are very pleased with this outcome, along with the many other exits we’ve experienced over the past eleven months. Since the beginning of the fourth quarter of 2008, we’ve received approximately USD700m of proceeds from realizations of portfolio investment repayments and exits, including over 20 exits of portfolio companies," says Darin Winn, senior vice president and senior managing director. "Though this exit volume is far lower than prior years, it represents a significant amount of liquidity in today’s market. Our proceeds for these exits during this period were 1.8 per cent higher than the prior quarter’s GAAP fair value of each investment, which speaks well of our quarterly valuations."

Since American Capital’s August 1997 IPO through the second quarter of 2009, the company has earned a 15 per cent compounded annual return, including interest, dividends, fees and net gains, on 264 realizations of senior debt, subordinated debt and equity investments, totalling USD12bn of committed capital. These realizations represent 49 per cent of all amounts invested by American Capital since its August 1997 IPO.

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