American Industrial Partners sets $5bn target for latest flagship

American Industrial Partners is targeting $5 billion for its eighth flagship fund, coming back to the market for the first time since 2019.

AIP could have an advantage fundraising as it focuses on industrial sub-sectors like aerospace, defense, automotives, chemicals, packaging and logistics. Many LPs are tech-heavy in their private equity portfolios and may look to diversify across other strategies.

Information about American Industrial Partners Capital Fund VIII was disclosed at New Jersey Division of Investment’s council meeting held April 26. Buyouts viewed a broadcast of the meeting.

New Jersey committed $150 million to the fund, according to council documents, which also revealed that AIP will charge a 2 percent management fee on committed capital during the investment period and 1.5 percent on invested capital once the investment period ends. The fund will have a 20 percent performance fee after an 8 percent hurdle.

“We’re underweight industrials, and this will address being underweight,” said New Jersey Division of Investment senior investment officer Robin Clifford about the reasoning behind the commitment.

AIP closed its seventh flagship fund in 2019 after reaching its $3 billion hard cap, according to a press release.

According to council documents, Fund VIII will seek controlling positions in North American companies with sales greater than $500 million that AIP views as underperforming, undervalued or distressed.

AIP may invest in companies generating negative EBITDA, according to council documents.

AIP’s current investments include Attindas Hygiene Partners, Commonwealth Rolled Products and GD Energy Products, according to the manager’s website.

Exits include ship-repair services company Rand Logistics, Gerber Technology and Port Arthur Steam Energy, which converts waste heat into steam used at a nearby petroleum refinery, according to the website.

According to council documents, AIP’s fourth fund, with a 2007 vintage year, earned a 21.2 percent net IRR and returned 2.1xDPI. The 2011 Fund V earned a 9.2 percent net IRR with a 1.2xDPI return.

Fund VI, with a 2016 vintage year, has a 26.2 percent net IRR and returned 1xDPI to date.

Fund VII, with a 2019 vintage year, has a 23.2 percent net IRR.

American International Partners did not respond to an inquiry by press time.