After more than a year spent raising money, ABS Capital Partners announced it has closed its new fund at $420 million, handily exceeding its goal of $400 million despite last fall's downturn. The firm says that several of its limited partners, particularly college endowments, passed on the investment due to the economy, but a few new parties made up the difference.
This is ABS' sixth fund, which it will use primarily to back later-stage startups. The bulk of the money came from returning partners like the Pennsylvania State Employees' Retirement System, Partners HealthCare and fund of funds Park Street Capital. And Abbott Capital Management and WP Global Partners joined the fold for the first time.
While ABS only raised $300 million for its fifth fund, it says investors were probably attracted by the highly successful $450 million fourth fund it raised in 2000 -- which kicked out returns of 2.5 times the investment. That fund spanned five initial public offerings, including Rosetta's recent IPO in April, and those of American Public Education, Double Take Software, Liquidity Services and NeuStar. During that time, it also saw two lucrative sales: Advanced Disposal for $470 million and US Pathology Labs for $155 million. This explains a lot about why the firm was able to keep its head above water when other firms ran aground.
Specializing in developed companies, ABS says it will distribute the newest fund in chunks ranging from $15 to $40 million to companies that have already pulled in at least $20 million in revenue and are seeing 25 percent growth from year to year. In the past, it has backed about five companies every year -- and it has already committed sixth-fund dollars to four startups: $25 million to mobile tower company Tarpon Towers; $15 million for salesforce automation software maker O4 Corp.; $30 million for digital signage company Zoom Media; and an undisclosed investment in its former holding Liquidity Services.
ABS started raising financing in March 2008, and had secured $350 million before Wall Street crumbled in October. Few funds have successfully raised as much since then and even fewer have been oversubscribed.