Allied Cap Raising First LBO Fund

Allied Capital Corp. (ALD) plans to raise a traditional limited partner-supported buyout fund this year, with Goldman Sachs serving as a cornerstone investor.

The publicly-traded business development company has not yet begun raising cash from other investors, but hopes to have the fund closed by the end of the year, a source familiar with the effort told Buyouts, a sister publication of peHUB. Allied Capital plans to raise around $500 million and will use the fund to take both control and minority positions in target companies.

The fund, which has not yet been named, will be a departure of sorts for the $5.2 billion, Washington, D.C., corporation. Traditionally, the BDC relies on raising capital from the public equity market to finance its debt and equity investments in mid-market companies. But the firm has been known to diversify its offerings. Last year it raised a $125 million senior debt fund and committed to supply junior debt to a $3.6 billion unitranche fund in partnership with GE Commercial Finance, which is responsible for the senior debt.

“[The company is] not changing [its] business. It’s a new source of capital,” our source said.

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