American Capital Strategies Ltd.

Nasdaq knockouts

Bethesda-based American Capital Ltd., formerly American Capital Strategies, is one of the largest business development companies (BDC) or public buyout firms in the world.  The firm's influence spreads throughout the globe with 12 offices located in North America and Europe.  American Capital's primary business is senior debt, mezzanine debt and equity in the buyouts of private companies, investing anywhere from $5 million to $800 million in a single transaction.  The company also functions as independently as an alternative asset manager with $21 billion in assets under management as of March 31, 2008.  The company earned $1.05 billion by the end of 2008, down from the previous year's $1.2 billion revenue.

American Capital went public in August 1997 and has maintained a steady and impressive track record ever since.  Since the launch of its IPO on the NASDAQ stock exchange, American Capital has paid $28.20 per share in dividends and provided an 18 percent annualized return and a 490 percent total return to its shareholders. That is,  until the subprime crisis hit and stocks plunged to as low as 58 cents in March 2009 from as high as $40 in 2007, or a loss of $8.13 per share.  Since 1997, American Capital has invested around $32 billion in more than 515 different portfolio companies, spanning a diverse range of industries.  But analysts raised several red flags, including its heavy exposure to the middle-market companies, the sector badly hit by the credit crunch; its conservative business model (a trend-follower rather than a trailblazer); bloated workforce; lax discipline and ambiguity in its real earnings.

The maverick under the radar

American Capital CEO Malon Wilkus doesn't get the same press as big-time players like Blackstone's Steve Schwarzman, but a recent Forbes profile of Wilkus shows that he's just as interesting as these Wall Street bigwigs and perhaps twice as savvy.  Born Edward Frank Wilkus, American Capital's CEO changed his name to Malon at the age of 18, creating a new persona for himself far more exotic than his Kansas upbringing would imply.  After leaving home, Wilkus' storied history included two failed attempts at college, working on a shrimp farm in Costa Rica and nine years on a commune in the Ozarks.  In the early 1980s, Wilkus made the shift to capitalist society and found that he was amazingly competent at the business of buying and selling.  Wilkus made history by taking American Capital public in 1997, long before it was a trend for private equity firms to launch IPOs.

Rolling the dice

Never one to shy away from opportunity, American Capital took a chance in mid-2008 to expand its portfolio in the midst of a dismal market.  In March of that year, the firm announced that it would be putting 8.7 million common stock shares up for sale at $36.41 per share.  The reason for this second public offering was to raise funds for aggressive expansion of its invested assets.  At the time of the public offering, American Capital had lost nearly a third of its stock value due to conditions from the credit crisis.  By July 2008, the stock had lost approximately 60 percent of its value.  Collectors, however, were not as understanding as they put the company on notice for $393 million in debt representing all privately placed notes issued by American Capital.  Despite its difficulties, American Capital forecasted that it would continue with its program of quarterly dividends to shareholders.  With government backing the company's portfolio, shareholders are wont to hold on to their stocks for the time being.

Wheeling and dealing

American Capital stayed fairly active in the first half of 2008 with deals over a wide spectrum of industries.  In conjunction with its overseas partner European Capital, the company invested $85 million in Qioptiq Group, a solutions provider for the defense, medical and industrial markets in Europe.  The company also invested $66 million in Avalon Laboratories, a supplier of disposable cardiopulmonary vascular cannulae--medical devices that provide connections between patients and life support machines.  In other types of transactions, American Capital provided One-Stop Buyout services for CIBT Holdings, a travel company that expedites visas and passports.  American Capital's One-Stop Buyout program provides the majority of the senior debt, subordinated debt or equity financing in any transaction.  The financial crisis forced the company to unload its fat portfolio to pay off debts.  On September 15, 2009, American Capital sold Axygen BioScience Inc., including its subsidiaries to Corning Inc. for $400 million.  That's in addition to the $16 million it earned when it closed the deal for one of their portfolio companies in August 2009 and the $31 million gained after unloading Piper Aircraft Inc. in May 2009.



American Capital Strategies Ltd.


2 Bethesda Metro Center
14th Floor
Bethesda, DC 20814
Phone: (301) 951-6122
Fax: (301) 654-6714
www.american-capital.com

STATS


  • Employer Type: Public
  • Stock Symbol: ACAS
  • Stock Exchange: NASDAQ
  • Chairman & CEO: Malon Wilkus
  • 2008 Employees: 384

Key Financials

  • 2008 Income: $-3,115 million
  • 2008 Revenue: $1,051 million

Career Update Newsletter

Tips and tools to help you manage your ideal career.