Archives for August 2, 2012

Summit Partners Raises $520 Million Credit Fund

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Summit Partners has raised a $520 million credit fund to address the borrowing needs of middle-market companies. The fund will be run in Boston by Managing Directors Todd Hearle and Jamie Freeland who joined Summit in 2010.

Surpassing its initial target of $300 million, Summit Partners Credit Fund will target credit investments in profitable companies with proven business models and a record of stable growth. Sectors of interest include technology, healthcare & life sciences, financial technology & services, consumer and industrial.

Credit investing has been an active component of Summit Partners’ investment platform since 1994, when it raised its first subordinated debt fund. Summit has since raised three more subordinated debt funds and has funded more than 70 credit investments, including subordinated debt investments in conjunction with its equity investments and stand-alone credit investments. In total, Summit has raised $2.3 billion in combined credit assets.

“All of us at Summit appreciate the support we’ve received from new and existing limited partners in our Credit Fund.” Investors participating in the fund include public and private pension plans, insurance companies, funds of funds, family offices, endowments and foundations,” said Tom Roberts, Managing Director at Summit Partners. “Every year, we speak with thousands of companies around the globe about their growth strategies. The Credit Fund leverages this proprietary outreach model and allows us to provide customized, innovative capital solutions to a wider range of businesses.”

Summit Partners provides private equity and venture capital for growth companies. Founded in 1984, Summit has raised more than $15 billion in capital and has provided equity, recapitalization, and management buyout financing to more than 350 companies across a range of industries. Summit Partners has offices in Boston, MA; Palo Alto, CA; London, UK; and Mumbai, India (www.summitpartners.com).

Monroe Capital Provides Credit Facility to Forbes Media

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Monroe Capital has provided a unitranche credit facility to Forbes Media to refinance existing debt and provide growth capital for the company. “We are excited to have partnered with Forbes, one of the premier global brands and media companies. We look forward to working with the management team as they continue to execute their business plan,” said Thomas Aronson, Managing Director of Monroe Capital. Forbes Media is owned by the Forbes family and Elevation Partners.

Forbes Media is the publisher of Forbes magazine and forbes.com which provides news and information on business, investing, technology, entrepreneurship, leadership and affluent lifestyles. Forbes.com currently reaches 30 million monthly unique visitors, and Forbes magazine, Forbes Asia and Forbes Europe attract a global audience of more than 5 million readers. The company also publishes ForbesLife magazine, as well as 23 licensed international local-language editions around the world. The company is based in New York (www.forbes.com).

“Forbes Media has been successful in placing authoritative journalism at the center of the social media experience. Building on the positive momentum of our business, the company, the Forbes family and Elevation Partners are pleased to work with Monroe Capital to put a financing structure in place that allows us to carry forward our growth plans through 2012 and into the future,” said Mike Perlis, President and CEO of Forbes Media.

Monroe Capital is a specialty finance company providing senior and junior debt to middle-market companies. Monroe Capital specializes in originating, structuring and providing one-stop financings. Investment types include senior and junior secured debt as well as bridge loans, acquisition facilities, mezzanine or last-out secured loans and equity co-investments. The firm is based in Chicago, IL (www.monroecap.com).

Investors Retain Confidence in Private Equity

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According to the latest Preqin Investor Outlook, forty-four percent of investors expect to commit capital to private equity before the end of 2012. Despite uncertainty in the wider financial markets, private equity investors remain positive, with 90% expecting to maintain or increase their allocations to the asset class in the longer term. A link to a free copy of the Preqin report is available at the end of this article.

Competition continues to increase among fund managers, with 1,878 funds on the road competing for capital in the second half of 2012. Encouragingly, eighty-six percent of investors interviewed by Preqin expect to consider at least some new manager relationships over the next 12 months, and just 12% expect their total number of GP relationships to decrease in the future. Nevertheless, investors generally remain cautious when making new commitments, and just 23% expect to invest in first-time funds in the next 12 months.

“Aggregate capital raised by funds closing in the first half of 2012 has increased slightly in comparison to the same period last year, despite concerns about ongoing problems in the eurozone and wider financial markets. Although some investors remain reluctant to commit fresh capital to funds, and others are exploring new methods of accessing private equity investments, the majority of LPs intend to continue to allocate capital to private equity funds in the longer term,” said Antonia Lee – Manager, Private Equity Investor Data. “However, in such a competitive market, fund managers must assess their existing LP base to establish how much capital they are likely to receive from existing investors and how much capital they are likely to need to source from additional LPs.”

Other Key Findings:

  • 33% of LPs are currently below their targeted levels of exposure to private equity.
  • 90% of North America-based investors are currently at or below their target allocations to private equity, compared to 77% of European LPs and 73% of LPs based in Asia and Rest of World.
  • 49% of LPs intend to commit to small to mid-market buyout funds in the next 12 months, with venture capital and growth following at 25% and 22% respectively.
  • 72% of LPs will invest or consider investing in emerging markets, and 95% of these expect to increase their exposure to these regions over the next 12 months.
  • 40% of investors look to participate as co-investors in deals alongside their fund managers, and 28% invest directly on a proprietary basis.
  • 91% of investors already active in direct or co-investment expect to maintain or increase their activity in these areas in 2012 compared to 2011.
  • 65% of LPs expect returns in excess of 400 basis points over public markets.
  • 19% of investors expect to increase their exposure to private equity over the next 12 months, while just 11% expect their allocations to the asset class to go down.

For a free copy of the Preqin Investor Outlook click HERE.

Pamlico Capital Invests in TekLinks

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TekLinks, a provider of managed and hosted IT services, has announced that Pamlico Capital has acquired a majority interest in the company from Symmetric Capital and certain other shareholders. In conjunction with the transaction TekLinks announced that Jim Akerhielm, an executive with over 20 years of experience in the communications and technology services industry, will become CEO of the company.

TekLinks is a provider of managed and hosted IT services to businesses throughout Alabama, Mississippi, Tennessee, and the Gulf South. Company provided services range from desktop support to telecom services to complete cloud-based virtual computing. The company was founded in 2001 by Stuart Raburn and is headquartered in Birmingham, AL (www.teklinks.com).

Mr. Akerhielm was previously CEO of NuVox Communications (a broadband and IT services provider) from 2001 to 2010, when the company was acquired by Windstream for approximately $650 million, and served as the CEO of Triton Cellular (a rural wireless services provider) prior to that.

“TekLinks is a clear IT solutions leader in the Greater Gulf states region with unparalleled technical expertise. I believe TekLinks is ideally poised to benefit from the explosive growth in demand for managed and cloud services. We will look to leverage the company’s leading position and technical capabilities to drive continued regional expansion; at the same time, we will also move to execute targeted acquisitions that will help create one of the foremost managed services businesses in the IT industry,” said Mr. Akerhielm.

Stuart Raburn, TekLinks’ founder and President, will become a member of the Board of Directors, retain an ownership position in TekLinks, and focus on strategic initiatives going forward. “With their successful history investing in the technology services industry, Jim Akerhielm and Pamlico are the ideal partners to lead TekLinks through the next phase of its development, and I am thrilled to be working with them,” said Mr. Raburn.

Pamlico Capital, formerly known as Wachovia Capital Partners, was founded in 1988 and has invested in excess of $3.5 billion in over 200 middle market companies since its inception. Pamlico Capital seeks growth equity and buyout investments of up to $75 million alongside management teams in its target industries, which include business & technology services, communications, and healthcare. The firm currently manages over $2 billion in assets and is based in Charlotte, NC (www.pamlicocapital.com).

“We are excited about the opportunity to partner with Stuart Raburn and the team at TekLinks, and to work again with Jim Akerhielm, whom we have known for over 15 years and backed successfully as CEO of two Pamlico portfolio companies, NuVox Communications and Triton Cellular,” said Pamlico Partner Walker Simmons.

TekLinks and Symmetric Capital were advised by Signal Hill Capital Group (financial advisor) and Choate, Hall & Stewart LLP (legal advisor). Pamlico was advised by Alston & Bird LLP (legal advisor), Ernst & Young (accounting and tax advisor), and Willis Group (insurance and benefits advisor).

Serent Capital Acquires Safety Services

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Serent Capital has completed a majority investment in Safety Services, a provider of safety and compliance products and services. The company’s founder, Devon Dickinson, was looking to move to an advisory role and to find a capital partner who could help the company take advantage of multiple growth opportunities. Mr. Dickinson retains a significant equity interest in the company and is continuing to support Safety Services as an active board member.

“I am very excited about Serent’s investment in Safety Services,” said Mr. Dickinson. “Serent clearly has the operating experience to help the company navigate the challenges of rapid growth. I also recognize the need to build out our organization, and I am pleased to say that Serent has already helped us add significantly to our executive team.”

Safety Services is a provider of safety and compliance products and services to small and mid-sized businesses in the US and Canada. The company sells customizable safety materials, training kits, and compliance solutions tailored to meet the safety and compliance requirements in industries such as construction, oil & gas, and healthcare. Safety Services is headquartered in Tempe, AZ (www.safetyservicescompany.com).

Safety Services represents a platform investment for Serent in the compliance industry and Serent Capital is actively looking for add-on acquisitions. Possible acquisition targets include providers of human resources compliance services or compliance services targeting specific markets such as healthcare or heavy industries. Ideal targets will have at least $5 million in revenues, a large installed base of small and mid-sized customers, strong recurring revenues, and 40+% gross margins.

With Serent’s support, the new Board of Directors has hired a new CEO, Peter Schrady, and the company has recently added several additional executives to help scale the business. Serent is working closely with the new management team as it accelerates the company’s growth.

“Safety Services has a strong leadership position in industries such as construction and oil & gas,” said Mr. Schrady. “Contractors in heavy industries are facing a proliferation of safety and compliance regulations, and Safety Services is in an ideal position to expand its products and services to address these needs. Furthermore, we see tremendous opportunity to continue the company’s expansion to other markets.”

Serent Capital invests from $10 million to $100 million in service businesses with revenues from $10 million to $100 million and EBITDAs from $3 million and $10 million. Transaction types include buyouts, recapitalizations and growth capital. The firm is based in San Francisco, CA (www.serentcapital.com).

“The company’s extraordinary growth is a testament to the founder’s vision and execution to date. We see an opportunity to dramatically grow this business, and we are excited to support the company as it continues to innovate,” said David Kennedy, co-founder and General Partner of Serent Capital.

Marlin Equity Partners Acquires ATC Drivetrain

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It was announced today that Marlin Equity Partners has acquired ATC Drivetrain, a remanufacturer of transmissions, from GENCO ATC. “The ATC Drivetrain team and I are extremely proud and excited to be joining forces with a first-class organization like Marlin Equity Partners,” said Michael LePore, ATC Drivetrain’s president and CEO. “We are in the midst of an explosive growth period and look forward to future product expansion with our new partners.”

ATC Drivetrain is a remanufacturer of transmissions, engines, advanced battery packs, and related components for light-, medium- and heavy-duty vehicles. The company’s services include process and salvage engineering, warranty root cause analysis and testing, machining for repair and salvage of components, and recycling of non-reclaimable material. ATC Drivetrain serves automotive original equipment manufacturers and aftermarket distributors throughout the United States. The company is based in Oklahoma City, OK (www.atcdrivetrain.com).

Marlin Equity Partners invests in businesses across multiple industries that are in the process of undergoing varying degrees of operational, financial or market-driven change. The firm is based in is a Los Angeles, CA (www.marlinequity.com).

“We are excited to partner with the industry’s leading transmission remanufacturer and are committed to building on ATC Drivetrain’s longstanding relationships with its blue-chip customers. Our substantial investment reflects our confidence in the platform and our strong belief in the company’s continued growth,” said Steve Johnson, a principal at Marlin.

Angle Advisors acted as the exclusive investment banking advisor to GENCO ATC and ATC Drivetrain in managing this transaction. “We hired Angle Advisors for their deep experience in the automotive aftermarket and vehicular industries, in addition to their hands-on approach and customized processes. Their strategy proved highly successful and we are very happy to have consummated such a successful transaction for our customers and teammates,” said Todd Peters, vice chairman at GENCO ATC.

Angle Advisors, with offices in the United States, Germany, the United Kingdom, and China, specializes in a variety of industries including the vehicular and industrial sectors. The firm’s 32 professionals provide mergers and acquisitions, capital raising, and debt advisory services to multinational corporations, privately-held companies, private equity funds and public sector clients. The firm is based in Birmingham, MI (www.angleadvisors.com).

GENCO ATC is North America’s second largest and a global Top 25 third-party logistics company. GENCO ATC serves more than 150 customers worldwide, including many Fortune 500 manufacturers, retailers, and government agencies. With over $1.5 billion in annual sales, GENCO ATC maintains 130 operations throughout North America and has more than 10,000 employees. The company was founded in 1898 and is based in Pittsburgh, PA (www.genco.com).

Chicago Growth Partners Invests in Specialized Education Services

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Chicago Growth Partners has led the recapitalization of Specialized Education Services, (“SESI”) a provider of non-public, for-profit educational services for children with learning and behavioral difficulties in the K-12 market. Also investing Specialized Education Services were Prairie Capital, Twin Bridge Capital Partners and the company’s management team.

Proceeds from the transaction were used to refinance the company’s existing debt and pay a dividend to shareholders. The recapitalization was funded with excess cash from the company’s balance sheet and third party debt facilities that were structured to expand the capital available to support SESI’s growth plans. The company plans to extend its reach to new states and more students by opening new schools, acquiring existing non-public schools and partnering with more districts to manage special education and alternative education programs.

Specialized Education Services provides specialized education services in the K-12 market for children and youth facing learning, language, behavior and social challenges. The company serves over 3,000 students in several states, including Connecticut, Delaware, Maryland, Pennsylvania, Washington D.C., Illinois and California. The company is based in Yardley, PA (www.sesi-schools.com).

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).

Huron Capital Partners Acquires Charles G. Lawson Trucking

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Huron Capital Partners announced today that its portfolio company, Cardinal Agri-Logistics, has acquired Charles G. Lawson Trucking, in partnership with Lawson’s management team.

“We believe the addition of Lawson to Cardinal brings critical mass, expands our geographic footprint, further diversifies our customer base, and broadens our service capabilities. We are excited to join forces with Lawson to increase our level of service to existing customers and pursue new markets. Lawson’s reputation for food safety, service, and on-time delivery made this a very attractive addition to our existing platform,” said Jim Mahoney, a Partner at Huron.

Huron formed Cardinal Agri-Logistics in 2009 to invest in the highly-specialized, niche bulk liquid food-grade sector of the transportation and logistics industry. Cardinal’s first acquisition was Landes Trucking which serves grain processors throughout the Midwest. Lawson represents Cardinal’s second acquisition in this sector.

Charles G. Lawson Trucking is a regional provider of specialty food transportation services to the Southeast U.S. with terminal operations in Alabama, Georgia, and Louisiana. Lawson provides bulk liquid food-grade, refrigerated and dedicated van transportation services to food manufacturers. Lawson has been family-owned since its founding in 1976 and has grown to over 180 employees over the past 35 years. The company is headquartered in Montgomery, AL (no website found).

“We see many similarities with Landes and Lawson – each company starting many years ago with one truck. We have both built our businesses one lane at a time by providing excellent customer service and focusing on each and every detail. We are excited to continue this tradition in partnership with Landes and Huron,” said Billy Rotton, President of Lawson.

Cardinal Agri-Logistics transports a variety of bulk vegetable oils, tropical oils, and syrups to food manufacturing plants throughout the Midwest, and operates two kosher-certified tank wash facilities in Illinois. The company is based in Jacksonville, IL (www.landestruckinginc.com).

Huron Capital Partners invests up to $70 million per transaction in middle market companies that have revenues up to $300 million and EBITDAs of $5 million or more. Typical transaction values are from $20 million to $200 million. Sectors of interest include niche manufacturing, distribution and business services. Since its founding in 1999, Huron has acquired or invested in 59 companies with aggregate revenues in excess of $1 billion. Investments have been made in the US and Canada in a variety of areas, including print solutions & document management, education, healthcare products & services, specialty chemicals, specialty packaging, consumer products, home décor, passenger transportation services, building products, office furniture components and laboratory testing. Huron Capital currently manages over $600 million in committed equity through three private equity funds, and has offices in Detroit and Toronto (www.huroncapital.com).

Cyprium Partners Exits Imperial Bag & Paper

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Cyprium Investment Partners announced today the realization of its investment in Imperial Bag & Paper Co. Cyprium invested $12 million in subordinated debt in Imperial in January 2007.

Imperial is a wholesale distributor of paper and plastic packaging and janitorial supplies sold to the food service industry and retailers nationwide. The company is based in Bayonne, NJ (www.imperialbag.com).

During Cyprium’s investment period, Imperial grew over 159% to $275 million in sales operating from over 500,000 square feet of warehouse space in Bayonne, NJ and Long Island, NY. Cyprium was instrumental in assisting with the growth of Imperial, which came through both geographic and channel expansion as well as through three add-on acquisitions completed during its holding period.

Cyprium provides capital for acquisitions, growth, shareholder or partnership buyouts, refinancings and personal dividend distributions, without requiring majority control. The firm provides capital via subordinated debt, preferred stock and/or common stock. Cyprium will also selectively invest in control (majority ownership) positions. The firm invests from $10 million to $60 million per transaction in privately-held companies based in the US and Canada with more than $8 million of EBITDA. Cyprium has offices in Cleveland, OH and New York, NY (www.cyprium.com).