ACI Capital garnered $335 million in commitments for its second fund, ACI Capital Investors II, more than double the size of the firm’s first fund, a $150 million SBIC vehicle. Weil Gotshal & Manges served as legal counsel and the firm did not use a placement agent.
ACI began raising the fund in the end of 2005 and stopped marketing it in March. It manages funds mostly from high net worth families and institutions, with about 100 LPs in total. The firm began investing in the 1950s as an alterative investment vehicle for a New York-based high net worth family. Managing Director Kevin Penn said ACI likes having high net worth individuals as limiteds because “they tend to be entrepreneurs and seasoned executives.”
ACI made 14 investments out of the first fund and more than half of the capital from it remains committed. Already, the fund has returned more than 2.5x original invested capital to its investors, said Penn. The firm targets companies with sales of between $50 million and $500 million and that have greater than $5 million in profit. It looks to put between $10 million and $50 million in capital into the deals.
Though it calls itself a generalist fund, ACI prefers to “go into industries people don’t like or invest in them at moments that are less understood,” said Penn. The firm’s best known deal is the huge success it had earlier this year exiting Jenny Craig.
ACI, which took the diet company private in 2002 for $75 million with MidOcean Partners, sold it this year to Nestle for $600 million and 11.5x invested equity. The two firms put in $45 million in total equity through the course of the investment. The success came through simplifying the brand and getting Kirstie Allie on as spokeswoman, said Penn.
In another investment, ACI set up an ethanol business which it called Cornhusker Energy Lexington, which is now is reaping the benefits of an industry that is heating up. Other portfolio companies include Accent Energy, which markets natural gas and electricity, and Excel Polymers, a maker of rubber compounds.—M.C.