American Capital Ltd. (ACAS) Update: Share Purchases; Investment; and Sale

American Capital Announces the Purchase of 9 Million Shares

ACAS Logo 2American Capital Ltd. announced [Source] that during the first quarter of 2013, it purchased 9.0 million shares of American Capital common stock, or 3% of the company’s outstanding shares.  The shares were purchased at an average price of $14.23 per share, totaling approximately $128.3 million.

The company’s share repurchases and dividend policy is to purchase shares when they sell at a discount to net asset value and pay a dividend when selling above net asset value. This is a wise capital allocation policy, beneficial to shareholders.

Since the start of the policy in 3Q11 the company has purchased a total of 61.4 million shares or 17.8% of the company for shareholders. We now own 21.2% more of the company than what we originally purchased. At the average price of $10.16/share totaling $623.5 million these purchases have increased the net asset value of our shares by $1.09/share. Thank you management!

American Capital Invests in Service Experts

Service Experts LogoOn March 25 American Capital announced [Source] the acquisition of Service Experts, LLC, from Lennox International. Service Experts is a leading provider of sales, installation, maintenance and repair of heating, ventilating, and air conditioning (HVAC) systems for the residential and light commercial markets.  American Capital’s investment took the form of preferred and common equity and a revolving credit facility. Terms of the sale and a two year equipment supply agreement were not disclosed.

Headquartered in Richardson, TX, Service Experts owns and operates 108 branch locations in the United States and Canada with approximately $385 million in annual sales. They offer complete HVAC services and a full line of indoor air quality and energy saving green solutions.

American Capital will provide the funding for Service Experts to solidify its leading market position, enhance operations; introduce lean management and business planning expertise under the leadership of Scott J. Boxer the newly appointed President and CEO of Service Experts. Scott Boxer, an industry expert, retired from Lennox International, Inc. in 2010, where he held various executive positions, including President and Chief Operating Officer of Service Experts from 2003 to 2010.

American Capital Sells Paradigm Precision Holdings for $127 Million

Paradigm Precision LogoOn February 20 American Capital announced [Source] the sale of one of its portfolio companies, Paradigm Precision Holdings to Dynamic Precision Group a portfolio company of Carlyle Group. ACAS received $127 million showing a compounded annual return of 11% over the life of the Paradigm investment since acquiring it in 2007.

Back on Track:

American Capital was founded in 1986 and became a public company with an IPO in 1997 under the leadership of Malon Wilkus the founder, Chairman, and CEO. After many years of successful performance ACAS was punished severely during the economic crises. Management’s attention was redirected to turning the company around and was successful. We are benefiting from the results.

Management’s expertise and experience is in change of control and buyout transactions for private equity firms. American Capital and its affiliated funds have invested $31 billion in over 550 portfolio companies. It is encouraging to see this experience focused again on building value for shareholders in private equity transactions like Service Experts and Paradigm Precision.

Disclosure: Long ACAS

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