ABS Capital closes fund VI with at least $400M

ABS Capital Partners has closed its sixth buyout fund, according to a source familiar with the fund-raising effort.

The Baltimore-based firm reached the $400 million target it set for fund VI, but the source declined to disclose the total amount of commitments raised by the firm.

Executives at ABS Capital declined to comment for this story. However, the firm is expected to issue an announcement about its fund-raising within the next few weeks.

The firm raised $286 million for its fifth fund, which closed in 2005. However, ABS Capital’s third and fourth funds, raised in 1999 and 2000, were $427 million and $450 million, respectively.

The firm’s most recent deal was announced on June 9 when it bought Tarpon Towers, a Sarasota, Fla.-based manufacturer of cell phone towers, for $45 million. ABS Capital invested $25 million from fund VI to close the deal.

Although buyout firms are dealing with the most difficult fund-raising environment in recent memory, it’s not surprising that ABS Capital reached its target without much difficulty, given some of the stellar returns it’s posted.

The firm earned at least 6x its money on its investment in Rosetta Stone Inc., a foreign language learning software business that went public in a $112 million offering in April.

Before that, ABS Capital generated a 17.1x return on capital and a 75.6% gross IRR on its investment in American Public Education Inc., an online college, through a series of public offerings that culminated in 2008.

ABS Capital typically invests between $10 million and $30 million in U.S.-based later stage growth companies in the business services, health care, media & communications, and software sectors. Its investments include acquisitions, growth capital, capital for shareholder liquidity, and capital to help companies make acquisitions.

Donald Hebb, a former CEO of investment bank Alex. Brown & Sons Inc. who helped that firm form industry-specific investment banking units, founded ABS Capital in 1990. —Bernard Vaughan