Archives for July 2012

May River Capital Acquires Hi-Tech Manufacturing

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May River Capital has announced the acquisition of Hi-Tech Manufacturing in partnership with management, the Pohlad family, Yukon Capital Partners, and other co-investors. Cleary Gull served as financial advisor to Hi-Tech and the selling shareholders in this transaction.

Hi-Tech is a manufacturer of low-to-medium volume, mission-critical precision machined components and assemblies for the energy, medical equipment, scientific laboratory and industrial end markets. The company is based in Schiller Park, IL (www.hi-tech-mfg.com).

“We are excited to partner with May River, the Pohlad family and Yukon. Our new partners provide significant capital backing, strategic support and experience in the manufacturing sector, as well as within our core end-markets, that will help our company continue to grow and deliver world class quality, service and value to our customers,” said Tim Weaver, CEO of Hi-Tech.

May River raises equity capital on a deal-by-deal basis from family offices, mezzanine funds, co-invest funds, industry executives, high net worth individuals, and other private equity firms. May River was founded in January 2012 and is based in Chicago, IL (www.mayrivercapital.com).

“Hi-Tech’s talented management team, strong customer relationships, demonstrated track record of growth, and commitment to operational excellence were central to our interest in the company. Tim and his team relish competition and excel in it,” said Dan Barlow, Partner of May River.

Fifth Third Bank provided senior debt financing, while Yukon Capital Partners provided subordinated debt financing beyond its equity co-investment.

Chicago Growth Partners Acquires Caprion Proteomics

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It was announced today that Chicago Growth Partners has acquired Caprion Proteomics, a provider of proteomic biomarkers, from Great Point Partners.

Caprion is a provider of proteomics services to pharmaceutical and biotechnology companies as well as government research institutions. Caprion’s key services include: (i) biomarker discovery, (ii) biomarker validation, (iii) drug target discovery, (iv) advanced immune monitoring services, and (v) clinical diagnostic product development. The company is based in Montreal (www.caprion.com).

Harris Williams & Co. acted as an advisor to Caprion. The transaction closed on July 19, 2012 and was led by James Clark, Turner Bredrup, Geoff Smith, Whit Knier and Paul Hepper from the firm’s Healthcare & Life Sciences (HCLS) Group.

“Caprion has established itself as the market leader in providing outsourced proteomic biomarker discovery and immune monitoring services for its growing list of blue-chip pharmaceutical and biotechnology clients. Caprion is well positioned as the pharmaceutical industry continues to outsource critical elements of the drug development process to maximize returns on its research and development spend,” said James Clark, a managing director in Harris Williams & Co.’s HCLS Group.

Chicago Growth Partners invests from $15 million to $75 million of equity in companies with revenues from $15 million to $150 million. The firm targets three primary sectors: education; business and consumer services; healthcare products and services; and industrial growth. CGP is currently investing its second fund, Chicago Growth Partners II with $500 million of capital commitments. The firm is based in Chicago, IL (www.cgp.com).

Great Point Partners is a health care investment firm with approximately $450 million of equity capital under management. Great Point has provided growth equity, recapitalization and management buyout financing to more than 100 health care companies. Currently the firm manages capital in both public equity and private equity funds. Both the private and public funds invest across all sectors of the health care industry including biotechnology and life sciences, consumer health, generic drugs, health care services, information technology, insurance, medical devices, specialty pharmaceuticals and workers compensation. The firm is located in Greenwich, CT (www.gppfunds.com).

Sentinel Capital Partners Exits LTI Boyd

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Sentinel Capital Partners announced today the sale of LTI Boyd, a manufacturer and supplier of high performance, custom engineered components for large, multinational OEMs. During Sentinel’s ownership, LTI Boyd’s revenue increased nearly five-fold through organic growth and the completion of three acquisitions. “We are extremely pleased with LTI Boyd’s performance,” said John McCormack, Senior Partner at Sentinel. “We have been fortunate to partner with LTI Boyd’s talented management team and wish them continued success as they enter their next stage of growth.”

LTI Boyd manufactures products for gasket, sealing, insulation, and impact protection applications in the heavy truck, recreational vehicle, enterprise electronics, off-highway, aerospace, and consumer electronics markets. LTI Boyd operates seven manufacturing facilities across the United States and in China. The company is based in Modesto, CA (www.ltiboyd.com).

“Sentinel was an ideal partner for our team,” said Mitch Aiello, LTI Boyd’s CEO. “Sentinel’s support and help was a crucial component of LTI Boyd establishing its leading market position.”

Sentinel Capital Partners invests in smaller middle market companies in the United States and Canada in partnership with management. The firm invests in management buyouts, recapitalizations, corporate divestitures, and going-private transactions of established businesses with EBITDAs of between $7 million and $35 million. Sectors of interest include aerospace & defense, business services, consumer, distribution, food & restaurants, franchising, healthcare products and services, and industrials. The firm is located in New York, NY n(www.sentinelpartners.com).

Robert W. Baird & Co. advised LTI Boyd in the transaction. William Blair & Company served as co-advisor. Kirkland & Ellis served as legal advisor to LTI Boyd.

Kilmer Capital Partners Invests in Artaflex

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Artaflex, an electronic contract manufacturer, has entered into an agreement to acquire MTI International for US$12.7 million. As part of this transaction Kilmer Capital Partners has agreed to invest C$15.3 million in Artaflex through a C$10.3 million secured convertible debenture and a C$5.0 secured promissory note. The net proceeds of the debenture and the promissory note will be used to fund the acquisition of MTI International.

MTI operates in the electronics manufacturing services industry and specializes as a full service provider of high value, complex, low to medium volume assemblies including printed circuit boards, final box build and system integration and to a lesser extent thick film hybrid circuits manufacturing. The company serves the defense & aerospace; industrial; medical; and automotive markets. MTI was founded in 1975 and is based in Milwaukee, WI (www.mtielectronics.com).

“We are extremely pleased to begin our expansion into the US with the acquisition of MTI. Their focus on manufacturing high mix, high reliability products in segments such as defense, aerospace and medical, as well as being centrally located in Milwaukee were key factors in our decision making process” says Paul Walker, CEO of Artaflex. “Our management team at Artaflex has had significant experience acquiring and growing operations in the US over the past 20 years, and with MTI as a base, we will be able to leverage that combined knowledge again”.

Artaflex is an electronics contract manufacturer serving high–mix and high-complexity original equipment manufacturers. The company provides engineering services, supply chain management, PCB Assembly, and final integration services. Artaflex is based in Toronto (www.artaflex.com).

Kilmer Capital Partners makes control and minority investments of $5 million to $50 million in companies that have revenues from $20 million to $200 million. The firm is industry agnostic but has a specific interest in the electronics, communications, technology, food, apparel, healthcare, consumer products, media and entertainment sectors. Kilmer Capital is based in Toronto (www.kilmercapital.com).

“This is a particularly exciting new opportunity for us. Not only do we see this as a great starting point for Artaflex in executing its US expansion, but on an overall level this gives us the chance to partner with Paul Walker and Phil Woodard for a second time,” said Anthony Sigel, President and Managing Partner of Kilmer Capital Partners. “During the 1990’s we worked side by side with Paul and Phil building SMTC into an internationally recognized EMS Player. We’re really looking forward to this opportunity to support them once again in their efforts to build a successful Canadian electronics company”.

ACON Investments Acquires Suzo-Happ Group

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ACON Investments has acquired Suzo-Happ Group, a supplier of components and accessories to the gaming, amusement and industrial markets, from Pfingsten Partners. Pfingsten will maintain a minority interest in Suzo-Happ and the company will continue to be led by President and CEO James Brendel and other members of the existing management team and staff.

The Suzo-Happ Group is a supplier of components and accessories to the gaming, amusement and industrial markets. The Suzo-Happ Group was formed in 2004 with the merger of Suzo International, headquartered in The Netherlands, and Happ Controls, headquartered in Mount Prospect, IL. Add-on acquisitions included Advanced Electronic Systems in 2005, Starpoint Electrics in 2006, and Dynamics Chinatec in 2007. Today, Suzo-Happ has manufacturing, engineering, distribution and service capabilities in 8 countries globally. The company has more than 500 employees and 20,000 customers worldwide and is headquartered in Mount Prospect, IL (www.suzohapp.com).

ACON Investments manages private equity funds and special purpose partnerships in the US and Latin America. ACON pursues a theme-based investment strategy by focusing on industries and businesses at key inflection points in their development and pursues these opportunities in close partnership with established management teams. The firm has offices in Washington, Los Angeles, Mexico City and Sao Paulo (www.aconinvestments.com).

“We are excited to partner with the management of Suzo-Happ Group to build value in a business that is poised for continued growth,” said Ken Brotman, Founding Partner of ACON. “The company has demonstrated solid performance through its long-tenured relationships with its customers and has built a solid foundation, which will ensure Suzo-Happ Group continued success. Customers see value in breadth of product, distribution excellence along with global engineering and manufacturing and we see continued opportunity to expand this concept across multiple end markets and geographies.”

Pfingsten Partners invests in middle market manufacturing, distribution and business services companies. Since completing its first investment in 1991, Pfingsten Partners has acquired 83 manufacturing, distribution, and business service companies and has over $1 billion of capital under management. The firm is based in Chicago, IL and has offices in Changan, China and New Delhi, India (www.pfingstenpartners.com).

Financing for the acquisition is being provided by PNC Bank and Cerberus Business Finance. Hogan Lovells acted as legal advisor to ACON Investments and Paul Hastings acted as legal advisor to Pfingsten Partners.

Active Deal Pipeline Points to Positive M&A Momentum in Second Half

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While uncertainty over the global economic environment and volatile equity markets significantly slowed US deal volume earlier in the year, an uptick in activity during the end of the second quarter, in conjunction with an active pipeline, indicates the M&A market is regaining momentum, according to a new report from PwC.

With corporations focused on executing targeted growth strategies, reshaping their businesses to prosper in the current economic environment, and preparing to execute and close on transactions in the pipeline, PwC expects U.S. merger and acquisition (M&A) activity to accelerate into the second half of 2012.

“Deal activity has continued at a measured pace over the last several quarters. The uptick in deal value and recent climb in the rate of deals in the second quarter adds to growing levels of businesses looking to execute on transactions,” said Martyn Curragh, PwC’s US Deals Leader. “During the first half of 2012, we’ve been extremely active in working with clients to prepare for a range of transactions. As deals continue to emerge from the backlog, we expect to see an increased level of activity in the second half of the year.”

Corporates continue to grow cash reserves – with S&P 500 companies’ combined cash totals reaching nearly $1.1 trillion as of March 2012 – in addition to more readily available debt financing. According to PwC, both factors provide additional flexibility for buyers and bode well for an uptick in activity.

There were a total of 3,870 transactions and $350 billion in disclosed deal value during the first half of 2012, compared to 4,606 deals and $592 billion in the same period of 2011. In the second quarter of 2012, there was a considerable uptick in disclosed deal value with $218 billion and a total of 1,891 deals, demonstrating a ‘high’ for aggregate disclosed deal value in recent quarters. By comparison, there was $132 billion in disclosed value and a total of 1,979 deals in the first quarter of 2012. In June alone, total deal value reached $76 billion, the best month for M&A value since October 2011 when deal value totaled $88 billion.

Middle market deals accounted for $123 billion, or 35 percent, of total deal value – a notable uptick for the first half of 2012. In terms of volume, middle market transactions contributed nearly 98 percent of total deal activity in the first half with 3,788 deals. The competition for middle market transactions is driving up the valuation of these deals, placing even greater importance on robust diligence of revenue growth and operational improvement opportunities and development of the post-deal integration strategy earlier in deal preparation, according to PwC.

“Deals slowed earlier in the year as a result of challenging debt markets and companies being more cautious in their M&A strategies. In taking a more thorough approach to processes and diligence, dealmakers focused on ensuring a successful outcome in what was a very uncertain macroeconomic environment,” said Mr. Curragh. “Patient private equity and corporate dealmakers are evaluating every potential scenario with thoroughness of diligence taking priority over speed of execution. That cautious and flexible approach is paying off. With macroeconomic economic conditions having somewhat stabilized and a building pipeline of transactions in recent months, we expect deal activity to increase in the second half of 2012 as these preparations move toward execution and close.”

Divestiture activity is on the rise, accounting for nearly 28 percent of overall deal volume in the first half of 2012 versus 22 percent in the same period of 2011. As more companies look to reshape their businesses by divesting of “orphan” or non-strategic assets to focus on core revenue generators, sell-side diligence has played a more prominent role in preserving the seller’s deal value, expediting deal close and enhancing the potential for buyers to optimize financing.

Private equity players are also stepping up, eagerly pursuing middle market deals across a range of industries and exiting investments at a faster rate than in previous quarters. Private equity buyers accounted for 17 percent of activity and $46 billion in the first half of 2012. While the majority of IPO activity and value has been largely driven by financial sponsors, private equity continues to enhance their prospects for exit by preparing for a variety of scenarios, according to PwC.

“The deal market continues to be extremely competitive, with experienced buyers scrutinizing every aspect of a potential asset. They are asking for greater levels of financial and operational information to increase their visibility into a potential acquisition and well-prepared sellers who are able to meet those demands, are enhancing their prospects of getting a deal done expediently,” said Tim Hartnett, U.S. Private Equity Leader. “Private equity funds have also significantly increased the number of exits over the first six months of the year, and are preserving optionality in readying their portfolio companies for multiple monetization possibilities – go public, be sold or secure additional debt financing.”

AUA Private Equity Appoints New Operating Executive

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AUA Private Equity Partners has appointed Esperanza Carrion, a former marketing executive with Goya Foods, as a new Operating Executive focusing on consumer, food and beverage companies and Hispanic-oriented business opportunities.

Ms. Carrion brings diverse experience in global and multicultural marketing. Ms. Carrion established her marketing career with Colgate Palmolive Philippines and has held the position of Marketing Director for The Coca-Cola Company, Kraft Foods International, Sara Lee Corporation and Goya Foods. She is currently the Marketing Director at Professional Disposable International where she oversees the marketing function of its B2B operations. Ms. Carrion is a specialist in marketing and branding and has exceptional understanding and expertise in marketing products to the Hispanic community in the United States.

“I am ecstatic to have Esperanza join our Operating Executive Board and feel fortunate to be able to have the opportunity to work with her once again. I have known and worked with Esperanza for close to 15 years, having recruited her to the marketing department at Goya Foods. She is one of the top marketing executives in the industry who understands the Hispanic community and how to market to its unique and diverse populations,” said Andy Unanue, Managing Partner of AUA Equity.

AUA Private Equity Partners makes equity investments in companies in the consumer, media and business services sectors with a particular focus on Hispanic-oriented companies and family-owned businesses located in the United States. The new firm plans to invest $10 to $30 million of equity in companies that generate $3 million to $15 million in EBITDA. AUA Equity makes control and significant minority investments in a variety of transactions and structures including: traditional leveraged buyouts; growth equity; recapitalizations; and roll-up strategies. The firm is based in New York, NY (www.auaequity.com).

“Andy Unanue and his family are pioneers in the food industry and at meeting the needs of the US Hispanic marketplace. In addition, the combination of Andy’s investment acumen and his operating expertise makes him one of the foremost executives who have successfully mastered the marketing and selling of consumer products to Hispanics. I am extremely excited to be re-united with Andy and have the opportunity to continue to expand my horizons by joining his private equity team as an Operating Executive.”

Deloitte’s Consumer Spending Index Posts its Fourth Monthly Increase

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Responding to improvements in the housing market, the Deloitte Consumer Spending Index posted its fourth consecutive increase in June. The Index tracks consumer cash flow as an indicator of future consumer spending. “The housing market is showing signs of recovering, while energy prices continue to decrease, giving a boost to consumer buying power,” said Carl Steidtmann, Deloitte’s chief economist and author of the monthly Index. “Although consumers are financially stronger, the job market continues to affect their willingness to spend. Additionally, the oppressively hot weather impacting a large part of the country may stifle consumers’ desire to shop.”

Deloitte’s analysis of factors influencing consumer spending indicate:

  • Gasoline prices are down 20 cents in the past month but are down just 14 cents from a year ago. Unseasonably hot weather across much of the country could be offsetting some of the benefit of this price reduction.
  • The labor market remains very fragile, despite this month’s small decline in jobless claims. Consumer confidence has fallen sharply over the past two months due largely to the renewed weakness in job growth.
  • Home prices are stabilizing and even turning up in some markets. Record low interest rates are giving a small boost to demand and helping to increase refinancing activity. Most refinances are being done for a lower payment as there is little equity to be cashed out.
  • Tax rates are likely heading higher next year. The fiscal cliff of $1 trillion that the Federal government faces at the end of the year is made $100 billion larger due to costs associated with health care reform.

The Index, which comprises four components — tax burden, initial unemployment claims, real wages and real home prices — rose to 3.22 from a reading of 3.09 the previous month.

Highlights of the index include:

  • Tax burden: The tax burden ticked up this month to 11.03 percent as the tax refund season passed.
  • Initial unemployment claims: The increase in jobless claims took a small pause this month, falling to 376,000 claims, adding slightly to the index. Claims in recent weeks have resumed their slow move higher.
  • Real wages: Declining energy prices continue to contribute a small bump in real wages, putting average hourly earnings at $8.75.
  • Real home prices: Prices have stabilized and are turning up, and have increased 3.83 percent from last year.

Audax Group Acquires Conmed Healthcare Management

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Correct Care Solutions, a portfolio company of the Audax Group, has announced that it will acquire Conmed Healthcare Management, a provider of correctional facility healthcare services, for $3.95 per share in cash. The purchase price represents an equity value of approximately $59 million. The transaction is expected to close in the third quarter of 2012.

Correct Care Solutions is a provider of medical, mental health, care management and medical technology services to municipal, county, state and federal jail and correctional facilities serving both adult and juvenile populations. Currently, the company is responsible for providing daily healthcare for over 65,000 inmates in correctional facilities in 21 states. Correct Care Solutions was founded in 2003 and is based in Nashville, TN (www.correctcaresolutions.com).

“Conmed has been actively seeking a partner that not only maintains the integrity of what has been built over the last 28 years, but also represents an attractive opportunity to deliver a return on investment to its shareholders. By joining with Correct Care Solutions, we believe we will achieve that goal,” said Dr. Richard Turner, Chairman and Chief Executive Officer of Conmed.

Conmed has provided correctional healthcare services since 1984, beginning in the State of Maryland, and currently serves county and municipal correctional facilities in ten states: Arizona, Kansas, Kentucky, Maryland, New Jersey, Oregon, Tennessee, Texas, Virginia and Washington. The company is based in Hanover, MD (www.conmedinc.com).

The Audax Group makes control investments of $10 million to $100 million in middle market companies with transaction values of $25 million to $500 million. Sectors of interest include industrial manufacturing; energy; outsourced industrial services; consumer products; healthcare devices and services; non-asset based logistics; technology; aerospace and defense; business services; and direct marketing. The firm was founded in 1999 and has offices in Boston, MA and New York, NY (www.audaxgroup.com).

Bluestone Acquires CIS Secure Computing

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Bluestone Investment Partners announced today that it has made an investment in CIS Secure Computing, a provider of secure communications and services to defense and civilian agency customers. “Bluestone’s principals have extensive experience owning, operating and advising companies in the defense technology and government services sectors. This experience truly makes Bluestone a value-added partner,” said Alan Mischler, president of CIS. “We look forward to leveraging the experience of the Bluestone team as we take CIS to the next level.”

CIS Secure Computing is a provider of secure communications and services to defense and civilian agency customers. The company provides its products to a range of US government customers that includes the Department of Defense, Department of State and the intelligence and special operations communities. CIS maintains industry partnerships with large OEMs (Cisco, HP, Polycom, Riverbed, Juniper, Dell and Avaya) and federal systems integrators (General Dynamics, Harris, Lockheed Martin, ManTech, Northrop Grumman, Raytheon, CACI, SAIC and Verizon). The company was founded in 1992 and is headquartered in Sterling, VA (www.cissecure.com).

“We are pleased to partner with CIS. The company has an outstanding reputation for delivering quality products and solutions. We are eager to bring additional resources to the business so that it can expand its reach and product offerings and accelerate growth,” said Bill Strang, Managing Partner of Bluestone.

Bluestone makes control and non-control investments in companies with revenues from $10 million to $40 million and EBITDAs from $1 million to $5 million. Sectors of interest include defense and government services. The firm is headquartered in McLean, VA (www.bluestonecapitalpartners.com).

Avista Capital Partners Acquires Knology

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Credit Suisse, Morgan Stanley, RBC Capital Markets, SunTrust Robinson Humphrey and Bank of Tokyo-Mitsubishi have provided fully committed debt financing in connection with the transaction.

Knology is a provider of video, voice, data and advanced communications services to residential and business customers in 10 markets in the southeastern United States and three markets in the Midwestern United States. As of December 31, 2011, Knology had 795,349 total connections. The company is based in West Point, GA (www.knology.com).

WOW! (“WideOpenWest”) is the 13th largest cable company in the United States with over 1.4 million homes passed and over 350,000 subscribers. The company provides cable television, high-speed data and digital telephony services to customers in the greater metropolitan areas of Detroit, Chicago, Columbus and Cleveland. The company is based in Denver, CO (www.wideopenwest.com).

“We’re pleased to have completed this transaction so expeditiously and are excited to operate together as a combined entity. We have the people, network, and operating infrastructure to ensure sustained success. We are honored to welcome Knology employees to the WOW! family and are committed to providing all of our customers with services that meet their needs, at a great value, backed by award-winning customer experiences,” said Colleen Abdoulah, WOW! Chief Executive Officer and Chairwoman of the Board.

Avista Capital Partners makes control or influential minority investments in growth-oriented healthcare, energy, and media companies as well as select industrial and consumer businesses. The firm was founded in 2005 and is based in New York, NY with offices in Houston, TX and London, UK (www.avistacap.com).

Cowen Adds James Stone to Lead Financial Sponsors Coverage

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Cowen and Company has hired James Stone as a new Managing Director and Head of the firm’s Financial Sponsors Coverage. Mr. Stone is based in New York and reports to Chris McCabe and Kevin Raidy, Co-Heads of Investment Banking at Cowen and Company.

“I am delighted to welcome James to the firm,” said Jeffrey Solomon, Chief Executive Officer of Cowen and Company. “With over 15 years of experience advising clients across the private equity industry, he is well positioned to enhance our financial sponsor coverage in a variety of sectors. He is an important addition for the firm and will be a valuable asset to our clients.”

Mr. Stone joins Cowen from Gleacher & Company Securities, where he led the firm’s financial sponsor coverage practice. Prior to Gleacher, he was with the U.S. division of Macquarie Capital where he served as a Managing Director of Corporate Finance focusing on Financial Sponsor Coverage. Prior to that, he was a Managing Director of Corporate Finance focusing on Financial Sponsor Coverage at Imperial Capital. He was also a Managing Director in the Leveraged Finance and Financial Sponsor Coverage Groups at Credit Suisse. Mr. Stone received a BA in History and an MBA in Finance from Columbia University.

Cowen and Company offers industry focused investment banking for growth-oriented companies, domain knowledge-driven research and a sales and trading platform for institutional investors. Founded in 1918, the firm is headquartered in New York and has offices located in major financial centers around the world (www.cowen.com).

Babson Capital Creates New Energy Finance Group

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Babson Capital Management has created a new Energy Finance Group and hired four seasoned industry veterans with more than 90 years of experience financing power generation and related energy infrastructure projects.

The new group will focus on mezzanine debt and equity investments in energy and infrastructure projects owned and operated by middle-market and smaller privately owned companies. The group will be based in New York and led by Managing Director Brian Daly, a former managing director and senior portfolio manager of the TCW Cogeneration and Infrastructure Fund.

“The Energy Finance Group complements Babson Capital’s existing expertise in middle-market mezzanine and private equity investing and extends our capabilities into a proven asset class with very attractive supply-demand characteristics and a track record of providing attractive, stable returns over a long-term investment horizon,” said Michael Hermsen, Managing Director and head of Babson Capital’s Global Private Finance Group. “Brian’s team possesses a unique combination of technical and financial expertise that has kept borrowers coming back over the years, and we are eager to put their talents to work on behalf of middle-market borrowers, sponsors and our investors.”

Joining Mr. Daly in the Energy Finance Group are former TCW colleagues William VanHerwarde and Brett Macune. The team, which will report to Mr. Hermsen, expects to announce the addition of a fourth investment professional soon.

“We are very excited to join the Babson Capital platform, which is well positioned to provide a stable source of capital in a relationship-oriented approach to the energy and infrastructure market,” Mr. Daly said. “We are looking forward to building a direct origination franchise within Babson Capital’s Global Private Finance Group, which has more than two decades of experience in the mezzanine and private equity markets.”

Babson Capital had $143 billion in assets under management as of March 31, 2012 and is a member of the MassMutual Financial Group. The firm is based in Boston and Springfield, MA and Charlotte, NC and has six additional offices in the US and one in Sydney, Australia, with subsidiaries in London and Tokyo (www.BabsonCapital.com).

CalSTRS Records 1.8% Return in Latest Fiscal Year

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Nearly flat investment returns of 1.8 percent at CalSTRS reflect the highly volatile and challenging global markets of the 2011-12 fiscal year. The return rate is well below the actuarial assumed rate of 7.5 percent and 150 basis points below the policy benchmark, the fund’s performance measuring stick. The CalSTRS Investment Portfolio’s market value for the fiscal year ending June 30 was $150.6 billion.

However, CalSTRS three-year return remains a solid 12.0 percent, given the previous two fiscal years of robust performance. In the 2010-11 fiscal year, CalSTRS posted a 23.1 percent investment return, preceded by a fiscal year 2009-10 return of 12.2 percent. CalSTRS has generated a 7.5 percent return over 20 years. “A year like this one underscores the wisdom of viewing CalSTRS’ performance in the long term and refraining from using one given year’s performance as the gauge for how well the fund is doing,” said CalSTRS Chief Executive Officer Jack Ehnes.

Here are the fiscal Year 2011-12 returns by asset class (numerals in parentheses denote negative values): Global Equity (3.1%); Private Equity 5.9%; Real Estate 9.2%; Inflation Sensitive 4.9%; Fixed Income 7.3%; Total Fund Performance 1.8%. On a longer-term portfolio-wide basis, CalSTRS returns were: 12.0 percent over three years; 0.3 percent over five years; 6.5 percent over 10 years; and 7.5 percent over 20 years. As of June 30, 2012, the CalSTRS investment portfolio holdings were 49.8 percent in U.S. and non-U.S. stocks, or global equity; 18.3 percent in fixed income; 15.0 percent in private equity; 14.5 percent in real estate; 0.6 percent in inflation sensitive and overlay assets; and 1.8 percent in cash.

The California State Teachers’ Retirement System, with a portfolio valued at $150.6 billion as of June 30, 2012, is the largest teacher pension fund and second largest public pension fund in the United States. “This fiscal year has presented a very difficult market for long-term investors like CalSTRS, with wild fluctuations amid ongoing instability in Europe, slowing growth in China and India, a U.S. credit rating downgrade and a sluggish economy,” said CalSTRS Chief Investment Officer Christopher Ailman. “The coming year presents us with many of the past year’s challenges. Short-term speculators risk day trades to time the market but large institutional investors are challenged to generate sustainable returns in such an environment.”

Cotton Creek Capital Adds New Associate

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Cotton Creek Capital announced today that Anil Ali has joined the firm as an Associate. Prior to joining Cotton Creek Capital, Mr. Anil was an Analyst with Harris Williams & Co. in Boston where he worked on a range of industries and focused on M&A transactions and minority private placements.

Mr. Ali earned his BS in Business Administration with concentrations in Finance and International Business from the Olin Business School at Washington University in St. Louis. He started his career as an Equity Research Analyst at Robert W. Baird & Co.

Cotton Creek Capital invests in lower middle market companies in manufacturing, value-added distribution, industrial services, business services, healthcare services and consumer staples. The firm invests in companies with enterprise values between $15 million and $200 million, partnering with management teams on a variety of transactions, including buyouts, recapitalizations, buy-and-builds, and corporate divestitures. Cotton Creek Capital is affiliated with Brownlie & Braden, a provider of financial advisory services to high net worth families. The firm is based in Dallas, TX (www.cottoncreekcapital.com).

High Street and Greyrock Exit Data Source

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High Street Capital and Greyrock Capital Group have announced the sale of DSI/Data Source, a business process outsourcing service organization, to Inverness Graham Investments.

Data Source is a business process outsourcing service organization that provides document design and distribution and other “back-office” services to multi-location businesses such as commercial franchises, auto dealerships, retail insurance, branded products, industrial products and restaurant concepts. The company is based in Kansas City, MO (www.data-source.com).

High Street Capital and Greyrock Capital Group partnered with the founders of DSI/Data Source in March of 2007 to grow Data Source both organically and through acquisitions. During their ownership, Data Source built a management team for growth, expanded to three industry verticals, completed three acquisitions and two strategic partnerships, added over 37 new clients, and grew revenues over 55%.

High Street Capital acquires, recapitalizes and provides growth capital to outsourced business services, niche manufacturing and value-added distribution and logistics companies in the central US with revenues of $10 million to $100 million. The firm is based in Chicago, IL (www.HighStreetCapital.com).

Greyrock Capital Group provides mezzanine debt and equity to finance buyouts, recapitalizations and internal growth needs of middle-market companies. Greyrock is currently investing out of its second fund and serves management teams and equity sponsors nationwide through offices in San Francisco, Chicago and Wilton, CT (www.greyrockcapitalgroup.com).

Inverness Graham invests in lower middle market value-added manufacturing and service companies with EBITDA’s between $3 million and $10 million and enterprise values of less than $75 million. Inverness Graham manages $250 million in capital commitments and was formed by senior executives of the Graham Group, an industrial and investment concern with global interests in plastics, packaging, recycling, building products and outsourced manufacturing. The firm is based in Philadelphia, PA (www.invernessgraham.com).

Century Park Capital Partners Exits Eckler’s

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Century Park Capital Partners has completed the sale of its portfolio company Eckler’s, multichannel retailer of aftermarket parts for predominantly classic cars, to Baird Capital Partners. Eckler’s was acquired in June of 2006 by Century Park Capital Partners.

“We are very proud of what the Eckler’s team has been able to accomplish, which was to build one of the leading multichannel marketers of parts and accessories for automobile enthusiasts,” said Chip Roellig, Managing Partner with Century Park. “By partnering with management to aggressively grow the company, we were able to deliver a favorable outcome for Century Park and our limited partners.”

Eckler’s is a multichannel retailer of aftermarket parts for predominantly classic cars. The company’s offerings include Corvette (www.ecklers.com), 1949-1954 Early Chevy (www.ecklersearlychevy.com), 1955-1957 Classic Chevy (www.classicchevy.com), 1958-1972 Chevy (www.lategreatchevy.com), Classic Chevy Truck (www.ecklerstrucks.com), Camaro (www.rickscamaros.com), Firebird (www.ecklersfirebird.com), Chevelle (www.ecklerschevelle.com), El Camino (www.elcaminostore.com), 1957-1979 Ford (www.dearbornclassics.com), Porsche (www.automotion.com) and Mercedes (www.ecklersmbzparts.com).

Since Century Park Capital’s original acquisition in 2006, Eckler’s consummated five acquisitions, expanding the company’s range of products to reach a much broader enthusiast vehicle base. Initially specializing in primarily Corvette-based products, the company now serves a variety of makes including Ford, Chevrolet, Porsche and Mercedes.

“We have had a great relationship with Century Park, and my team and I have valued their guidance and support in building our platform. The Century Park team felt like a true partner and it was a pleasure to work with them,” said Matt Jordan, President and CEO of Eckler’s. “We are pleased that this exit will deliver solid returns for their investors and we are excited for the next chapter of our growth.”

“The growth of Eckler’s both organically and through its successful integration of five acquisitions underscores the impact of our approach to building leading companies in the middle market. Matt Jordan and the entire management team at Eckler’s did an absolutely incredible job running this business, especially given the challenging macroeconomic environment,” said Guy Zaczepinski, Principal with Century Park.

Century Park Capital Partners invests from $10 million to $50 million in profitable, growing middle-market companies with operating cash flows of at least $4 million and revenues ranging from $25 million to $150 million. Sectors of interest include manufacturing, branded distribution and service businesses. The firm is based in Los Angeles, CA (www.centuryparkcapital.com).

Baird Capital Partners invests in lower middle-market companies in the manufactured products, healthcare and business services sectors. The firm invests from $15 million to $35 million in companies with enterprise values of $25 to $125 million and EBITDAs greater than $5 million. Baird Capital Partners was founded in 1989 and is based in Chicago, IL (www.bairdcapitalpartners.com).

Sidley Austin served as legal counsel to Century Park and Lazard served as the exclusive financial advisor to Eckler’s.

Levine Leichtman Acquires DRI Corporation

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Levine Leichtman Capital Partners (LLCP) has announced that its portfolio company Luminator Technology Group has completed the acquisition of certain assets and equity holdings of DRI Corporation, a designer and manufacturer of electronic destination signs.

DRI Corporation manufactures, sells and services Mobitec® and TwinVision® electronic information display systems. The company is based in Research Triangle Park, NC (www.digrec.com).

Luminator is a supplier of information systems, LED displays and lighting products for a range of applications in metropolitan and commercial transportation systems including systems for the rail, bus and aerospace industries. The company serves municipal transportation systems throughout the world with 70 of the largest 100 municipalities in North America and Europe as customers. Luminator is also a supplier of LED lighting products to commercial and military aircraft manufacturers. The company was founded in 1934 and is based in Plano, TX (www.luminatortechnologygroup.com).

“The DRI acquisition is an important strategic addition to the Luminator platform, which will strengthen the company’s product offering and significantly expand its international presence. The transaction will be highly accretive and generate significant synergies that will ultimately provide value to the company’s stakeholders,” said Lauren Leichtman, Co-Founder and CEO of LLCP.

Levine Leichtman Capital Partners manages approximately $5 billion of capital through private equity partnerships, distressed debt and leveraged loan funds. The firm is currently making new investments through Levine Leichtman Capital Partners IV, L.P., Levine Leichtman Capital Partners Deep Value Fund, L.P., and Levine Leichtman Capital Partners SBIC Fund, L.P. The firm is based in Los Angeles, CA with offices in Chicago, IL; Dallas, TX; and New York, NY (www.llcp.com).