ABS Capital Partners HIts Final Close for $427M –

After almost a year of fund raising, ABS Capital Partners last month held a final closing on its third buyout fund that rounded up a total of $427 million.

When the fund was launched last summer, it sported a target of $400 million.

The fund will focus on buyouts and growth financings in computer services, software, health care and business services-sectors which Donald Hebb, a managing partner at ABS Capital, said currently are experiencing high-growth.

Mr. Hebb said limited partners in the third fund mostly are the same as those in the firm’s previous two funds, including BT Investment Partners, Pennsylvania State Employees’ Retirement System, Kauffman Foundation and California Public Employee’s Retirement System, the later of which committed $75 million (BUYOUTS Nov. 9, 1998, p. 8).

New L.P.s include a mixture of endowments, public pensions and wealthy family groups, though Mr. Hebb declined to name them. A number of chief executive officers of current and prior portfolio companies also contributed to the closing, he said.

ABS Capital already has completed four deals from its third fund, the most recent being an investment of undisclosed size in SciQuest.com, a North Carolina-based company which markets scientific and laboratory products on the Internet.

Although it is too early to calculate an internal rate of return for Fund II, Mr. Hebb said Fund I, which has yet to be fully exited, to date has a net IRR of 48%.

According to a statement from the Baltimore-based firm, ABS Capital will invest between $10 million and $30 million per deal. Mr. Hebb said the fund will use modest amounts of leverage in its deals, and more often than not will structure transactions exclusively with equity.

ABS Capital also has offices in San Francisco and Nashville. Mr. Hebb said Nashville is an important center of activity for the health care industry, as well as the region from which Fredrick Bryant, the lead partner in that office, hails.

In 1993, Mr. Hebb, Tim Weglicki and Mr. Bryant left the private equity arm of Alex. Brown & Sons to start investing independently. According to Mr. Hebb, BT Alex. Brown still has a close relationship with ABS Capital, and provides financing for some of its deals