ABS Capital Partners acquires software company

February 11, 1994|By David Conn | David Conn,Sun Staff Writer

Not content to advise companies on mergers and acquisitions, Alex. Brown Inc. has launched its own merchant banking partnership, which so far has raised $111 million to buy companies and expects to hit $150 million within the next few months.

The new ABS Capital Partners L.P. yesterday announced its first acquisition, the $70 million management buyout of Applied Communications Inc., a financial software subsidiary of Tamdem Computers Inc., and U.S. Software Inc.

Of the $70 million purchase price, ABS Capital Partners invested about $25 million, according to Donald B. Hebb Jr., a general partner. Mr. Hebb is also a managing partner of Alex. Brown Inc., which will own about 15 percent of ABS when it reaches the $150 million goal.

Mr. Hebb stepped down as Alex. Brown's president and chief executive officer in 1990. But he stayed with the company and established a merchant banking program. Through that program Alex. Brown has invested about $20 million in five small companies in the last three years, mostly management buyout situations, Mr. Hebb said.

Two of those companies -- medical supplier McGaw Inc. and trucking company Landstar System Inc. -- went public last spring. Alex. Brown still holds an equity stake in the other three -- Calbiochem-Nova biochem Inc., Medifit Inc., and JB's Restaurants. But lately the merchant banking group has had its eye on larger acquisitions.

"We were generating investment opportunities in situations that required more capital than we could invest alone," Mr. Hebb explained.

"In order to carry it out on a larger scale we've raised additional funds from outside," he said.

By Christmas, Alex. Brown had created ABS with $111 million raised from pension funds, foundations, other institutions and from individual and family investors.

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