With the new fund, the specialist in manufacturing, specialty chemicals, consumer products, and services plans to build a portfolio of about 10 companies based in the United States, Europe and in Asia. Expect equity commitments per deal to average $150 million.
With a taste for control stakes only, the firm tends to buy strong, free-cash-flow-generating companies that nevertheless have room to do even better. AEA Investors prides itself on a hands-on style, working closely with management teams to improve their strategies and operations.
AEA Investors closed the predecessor fund at $1.1 billion in 2003. Since then it has raised a $600 million mezzanine fund and a $285 million small business fund. In addition to its New York office, AEA Investors has offices in Stamford, Conn., London and Hong Kong.
The 2003 fund portfolio includes at least seven companies, according to its website. The most recognizable is probably Burt’s Bees, a Durham, N.C.-based company that AEA purchased in 2003 for an estimated $177 million. It sold the personal care products company to Clorox late last year for an estimated $925 million.
The firm has at least two portfolio companies in the hard-hit building products sector, although our source described both as outperforming expectations. A high-profile portfolio company from an earlier era, Rand McNally, ended up filing for bankruptcy protection in early 2003.
AEA Investors traces its history back nearly 40 years, when it was founded to manage private investments for the Rockefeller, Mellon and Harriman families. The firm’s website describes its backers as including “more than 50 of the world’s leading business executives, industrial families and influential institutional investors.” Those investors, the website adds, “assist AEA to both evaluate prospective investment opportunities and work with portfolio company management teams to achieve superior investment returns.” Among those listed on the site are Biogen Inc., Deutsche Bank AG and IBM Corp.
The firm did not use a placement agent to raise its latest partnership. —David Toll