American Capital has completed the sale of its portfolio company Imperial Supplies to W.W. Grainger.
American Capital received USD66m in proceeds and realised a loss of USD5m during the fourth quarter from the transaction, subject to post-closing adjustments.
Its compounded annual rate of return, including interest, dividends and fees earned over the life of its investment was nine per cent.
The proceeds received by American Capital were greater than the second quarter 2009 valuation of the investment by USD16m, or 34 per cent.
"We are very pleased with the results of our equity and subordinated debt investments in Imperial Supplies," says Jeff MacDowell, managing director, buyouts. "Since our initial investment in October 2007, the company has performed well, expanding its market reach, broadening its product offering and consistently increasing its market share despite the challenging macro-economic environment. Imperial Supplies’ deep management team, efficient sales process and new partnership with Grainger, North America’s leading broad line distributor of facilities maintenance products, will all position the company to build on its impressive history of excellence."
Imperial Supplies is a distributor of after-market components to fleet and facility-based markets. American Capital first invested USD112m in the One Stop Buyout of Imperial Supplies in October 2007. Its investment took the form of a revolving credit facility, a senior term loan, senior and junior subordinated debt and preferred and common equity. In December 2007, American Capital syndicated USD46m of the senior term debt and revolver commitment.
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. Proceeds from these realizations exceeded the total associated prior quarter valuation of the investments by less than one per cent. American Capital earned a 30 per cent compounded annual return on the exit of its equity investments, including dividends, fees and net gains.
