Allied Capital manages private
funds that invest in the debt and equity of middle market
companies. These funds complement the investment activity
within our BDC portfolio. Allied Capital may benefit from
our managed funds in three distinct ways: by investing in
the managed fund where we may earn both current income and
gains on our investment, by co-investing with the managed
fund in a middle market company, and by earning fees for
our investment management activities. Through the growth
of our privately managed capital base, we seek to diversify
our investment capital under management, leverage our investment
expertise in core asset classes, and increase fees and other
income from asset management activities.
Allied Capital’s managed funds currently have committed
capital totaling $4.9 billion, and include the following
funds:
Unitranche Fund LLC
Unitranche Fund LLC, co-managed by affiliates of Allied Capital and GE Commercial
Finance, was launched in December 2007. The fund is a private fund that generally
focuses on providing first lien unitranche loans to middle market companies
with EBITDA of at least $15 million. A unitranche loan blends senior and
junior debt pricing and terms into a single first lien debt facility.
GE has committed $3.075 billion to the Unitranche Fund,
consisting of $3.0 billion of senior notes and $0.075 billion
of subordinated certificates. Allied Capital has committed
to $525 million of subordinated certificates. The Unitranche
Fund is capitalized as transactions are completed. At September
30, 2008, the Unitranche Fund had total assets of approximately
$702 million.
Click here to view recent Unitranche
Fund transactions.
Allied Capital Senior Debt Fund, L.P.
Allied Capital Senior Debt Fund, L.P. (“ACSDF”) is a private
fund that generally invests in senior, unitranche and second lien debt.
ACSDF closed on $125 million of equity capital commitments to the fund
in 2007, and had total assets of $424 million at September 30, 2008. Allied
Capital from time to time offers to sell loans from its balance sheet to
ACSDF. ACSDF also purchases loans from other third parties.
Allied Capital is a special limited partner of the fund.
AC Corp, a wholly-owned subsidiary of Allied Capital, is
the investment manager of ACSDF, and Callidus Capital Corporation,
a portfolio company of Allied Capital, acts as special manager
to the fund.
Knightsbridge CLO 2007-1 and Knightsbridge CLO 2008-1
Knightsbridge CLO 2007-1 (“Knightsbridge 2007”) and Knightsbridge
CLO 2008-1 (“Knightsbridge 2008”) are collateralized loan obligation
funds that invest primarily in middle market senior loans. Allied Capital,
through a wholly-owned subsidiary, assumed management of Knightsbridge 2007
in March 2008. In June 2008, we formed Knightsbridge 2008 and upon its formation,
completed the initial purchase of assets from a third party. At September 30,
2008, Knightsbridge 2007 had total assets of approximately $500 million, and
Knightsbridge 2008 had total assets of approximately $241 million. The Knightsbridge
funds may purchase loans from Allied Capital or from other third parties.
AGILE Fund I, LLC
AGILE Fund I, LLC (“AGILE”) is a private fund which is majority
owned by a fund managed by Goldman Sachs. Allied Capital is the managing member
of the AGILE fund and owns a minority interest.
In January 2008, Allied Capital entered into an Investment
Agreement with Goldman Sachs Private Equity Group by which
we sold to AGILE a pro-rata strip of private debt and equity
investments totaling $167 million. In addition, AGILE was
given the right to co-invest in its proportional share of
any future follow-on investment opportunities with these
portfolio companies.
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