Private Equity's Foggy Forebears

Such BDCs function in the same ways that venture capitalists and private equity shops such as Blackstone do. The difference is that being public, BDCs don't have to go on time-intensive capital-raising campaigns to build up a war chest.

Wilkus founded Bethesda, Md.-based American Capital, a buyout and mezzanine fund, out of his two-bedroom condominium in 1986 and took it public a little over a decade later.

American Capital has invested in companies such as Nashville-based Gibson Guitar and baby products firm Evenflo. Last March, it helped Fort Washington, Pa.-based Cottman Transmission acquire Philadelphia-based Aamco Transmissions. The combined entity, which will boast 1,100 stores nationwide, will keep the Aamco moniker.

Its $6.8 billion market capitalization puts American Capital just behind $11.5 billion Fortress (FIG Quote), which earlier this year became the first hedge fund to offer shares to the public. Fortress' shares doubled in their first day of trading on the New York Stock Exchange.

American Capital started more slowly but has grown steadily. It hit the market more than 10 years ago with a modest $155 million IPO led by Friedman Billings Ramsey, but it has since had 26 additional campaigns. American Capital, since going public, has raised some $15 billion in debt and equity, using a variety of underwriters including J.P. Morgan Chase, Citigroup and Wachovia.