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August 15, 2026

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Archives for November 14, 2012

Performance of U.S. Private Equity and Venture Capital Funds Was Flat in the Second Quarter

November 14, 2012 by John McNulty

Returns for U.S.-based private equity and venture capital funds were essentially flat for the quarter ending June 30, 2012; the performance of both alternative asset classes was down sharply from the prior quarter. However, private equity and venture capital funds outperformed U.S. public equity markets during the second quarter. Venture capital fund returns slightly bested those for private equity for the period, according to a new commentary from Cambridge Associates.

The Cambridge Associates U.S. Private Equity Index returned negative 0.1% for the second quarter, a 5.5% drop from the prior quarter. For comparison, the S&P 500 returned negative 2.8% for the period, a fall of 15.4% from the first quarter. The Cambridge Associates U.S. Venture Capital Index® was off 4.1% from its first quarter performance, returning just 0.6% for the second period. The Russell 2000, the small company index, returned negative 3.5%, putting it 15.9% below its performance in the first quarter.  

(Click image to enlarge)

As the table above indicates, for the first six months of 2012 the private equity and venture capital benchmarks performed almost identically, earning 5.5% and 5.4%, respectively. Both trailed public equities for the period. Over the three longest time horizons in the table — the 15-, 20-, and 25-year marks — the reverse was true, with both benchmarks significantly outperforming comparable public market indices.

Funds Raised in 2008 had the Highest Return among the PE Index’s Largest Vintage Years.

Three of the five largest vintage years by weight in the private equity index generated positive returns for the second quarter, including the two largest, 2007 and 2006. Together, these two vintages represented 47% of the index’s value; they earned 0.6% and 0.9%, respectively. The best performing vintage year of the top five, 2008, earned 1.6%, while the worst, the 2004 funds, lost 3.4% for the period.

The 2004 funds’ relatively poor performance was driven primarily by decreased valuations in information technology (IT) companies. IT losses also impacted the 2008 funds, but these were offset by valuation gains in hardware, healthcare, and manufacturing companies.

In the PE Index, Capital Calls were Down while Distributions were Up

During the second quarter fund managers in the private equity index asked for the lowest level of contributions from their limited partners in the past three years: $11.3 billion, an almost 17% decrease from the prior period. At the same time, capital distributions jumped almost 73% from the first quarter, to $28.7 billion, the second largest quarterly distribution in the last five years.

“This was the fifth time in the last seven quarters that fund managers in the PE index returned more capital to their limited partners than they collected through contributions. And the scale of the difference was, historically, striking, in that it was the first quarter in the past 20 years that fund managers in the index distributed more than 2.5 times the amount that they called,” said Keirsten Lawton, Senior Consultant, Private Equity Research at Cambridge Associates. “The second quarter also marked the sixth quarter in a row in which the 2007 funds, the largest vintage in the index, called the most capital — they are now about 70% drawn. The largest distribution came from the 2006 funds, whose managers returned 5% of contributed capital to their investors.”

Software was the Best Performing Sector, IT was the Worst

Three of the eight sectors representing at least 5% of the PE index’s value earned positive returns for the quarter. Software led the way, earning 7.4%, followed by healthcare’s 2.6% and consumer’s 1.5%. IT was the worst performer, returning negative 4.1%. The three largest sectors in the index — consumer, energy, and healthcare — represented more than 50% of the index’s value and returned 0.2% on a dollar-weighted basis for the quarter.

Software was also the best performing of the four largest sectors in the VC index, where it generated a second-quarter return of 6.9%. Because software represented a larger percentage weight in the VC index than the PE index (17.5% vs. 7.4%), its strong performance had a bigger impact in helping to keep the VC index’s return in positive territory.

“The only significantly-sized sector that had a loss for the quarter in the VC index was IT, which dropped almost two percent. Since IT was also the largest sector in the index, representing just over one-third of its value, it was the largest drag on the index’s performance during the period, and offset positive returns in the software, healthcare and media sectors,” said Peter Mooradian, Managing Director and Venture Capital Research Consultant at Cambridge Associates.

A copy of Cambridge Associates’ commentary on the second-quarter performance of its U.S. private equity and venture capital benchmarks is available by clicking HERE.

© 2012 PEPD • Private Equity’s Leading News Magazine • 11-14-12

Filed Under: News, Studies

Amalgamated Capital Backs Carol’s Daughter, a Pegasus Capital Portfolio Company

November 14, 2012 by John McNulty

Amalgamated Capital has provided a $5 million senior secured revolving credit facility to Carol’s Daughter Holdings, a portfolio company of Pegasus Capital Advisors.

“With the funds to be used for product line rebranding, leasehold improvements and working capital, this was an important transaction for us,” said Richard Dantas, President and CEO of Carol’s Holdings. “The AmalCap team handled the due diligence tasks quickly and efficiently, and the closing went smoothly under their direction. We are very pleased that Pegasus both highly recommended AmalCap and made the introduction.”

Carol’s Daughter is a wholesaler and retailer of natural beauty, skin and hair care products whose core consumers are African-American women.  Founded in 1993, Carol’s Daughter currently has over 100 products which are sold by catalog, through its website, through wholesale channels and through nine company-operated retail stores located in New York, New Jersey, Georgia, Maryland, Virginia and California.  Carol’s Daughter is based in New York (www.carolsdaughter.com).

Amalgamated Capital offers both leveraged cash flow-based and asset-based financing to support investments made by private equity sponsors. Investments are made in an array of industry sectors to companies that have annual revenues ranging from $15 million to $150 million and EBITDA’s of $3 million to $20 million. Amalgamated Capital is based in New York, NY (www.amalcap.com).

“This is a great New York company growth story – a determined woman working 18 years ago from a kitchen in Brooklyn founded a company that today has $30 million in revenues and has attracted a quality equity partner,” said Robert Love, Executive Vice President and Head of AmalCap. “We salute founder Lisa Price for what she has accomplished and congratulate her for teaming up with Pegasus, a firm we know well and which in 2007 took a substantial equity stake in Carol’s Daughter. Interestingly, when Ms. Price started her company, it was with money she had saved in an Amalgamated account – we are glad to be able to welcome her back.”

Pegasus invests in middle market companies across a range of industries including alternative energy, all-natural human and pet foods, alternative building materials, LED lighting, homeland security and sustainable business solutions in a number of industries.  Pegasus has cumulatively managed approximately $2 billion in assets through several private equity funds and has made more than 80 investments.  The firm was founded in 1995 and has offices in New York, NY and Cos Cob, CT (www.pcalp.com).

© 2012 PEPD • Private Equity’s Leading News Magazine • 11-14-12

Filed Under: Financing, News

Alvarez & Marsal Expands Private Equity Services Group

November 14, 2012 by John McNulty

Professional services firm Alvarez & Marsal has added Russell Kellner to its Private Equity Services Group as a managing director based in Boston.

“The private equity deal environment is increasingly competitive,” said Nick Alvarez, national practice leader of A&M’s Private Equity Services Operations Group. “We believe that A&M’s depth of industry and operational experience as well as our long history of rolling up our sleeves and actually running companies will help our clients achieve a unique edge in transactions. Russell brings proven commercial due diligence expertise and will help to harness A&M’s experience.”

The private equity services group of Alvarez & Marsal provides due diligence/acquisition support, performance improvement and business advisory services, portfolio management, turnaround management and exit support. The group has more than 150 professionals and has offices in New York, NY and Chicago, IL (www.alvarezandmarsal.com).

Mr. Kellner brings 15 years of experience in performance improvement and due diligence across industries such as financial services, business services, healthcare, retail, consumer products, technology, media, and industrial goods and services.  He has also worked on a variety of business unit and corporate strategy projects for clients, including portfolio strategy, technology strategy, product-line profitability, customer segmentation, marketing strategy, M&A and post-merger integration. Prior to joining A&M, Mr. Kellner was a principal at Bain & Company and a leader in the firm’s Private Equity Group where he oversaw 80+ commercial due diligence projects on prospective investments with analyses including market sizing and growth, competitive positioning, and performance improvement opportunities. In his new role, he will focus on pre-acquisition diligence support and operational improvement.

Prior to Bain, Mr. Kellner worked at First Manhattan Consulting Group, a strategy consulting firm specializing in financial services in New York. He was a cofounder of Novantas, a consultancy focusing on providing customer-centric business strategies to financial services companies. He also worked as an investment banker in Goldman Sachs’ Financial Institutions Group. Mr. Kellner received his MBA from MIT and he earned a bachelor’s degree in chemical engineering from Cornell.

© 2012 PEPD • Private Equity’s Leading News Magazine • 11-14-12

 

Filed Under: News, People

Nancy Rocha Joins AUA Private Equity Partners

November 14, 2012 by John McNulty

AUA Private Equity Partners has hired Nancy Rocha, the former Senior Director for Economic Capital and Advocacy at New America Alliance, as a Vice President focusing on business development, investor relations and investment management.

Ms. Rocha brings longstanding experience in the financial services, consulting, investment banking and emerging manager sectors.  Ms. Rocha started her career as an Investment Banker at UBS Financial Services in New York.  Thereafter, she was a Vice President at Cabrera Capital Markets in Chicago and Wells Fargo Brokerage in Texas where she managed regional markets and serviced public entities and municipalities in structuring and issuing debt instruments in the capital markets and direct private placements with institutional buyers.

Most recently Ms. Rocha served as Senior Director at the New America Alliance, where she managed capital advocacy efforts at the state and federal levels, as well as key programs such as the pensions fund initiative.  Ms. Rocha has also held positions in a White House Presidential Advisory Committee, U.S. Overseas Private Investment Corporation, and as a consultant with PwC.  Ms. Rocha will be in based in Texas and New York.

“I am pleased that Nancy is joining the AUA Private Equity team. I have worked with her on many initiatives at the New America Alliance and feel fortunate to have someone who brings a wealth of experience in the Emerging Manager arena,” said Andy Unanue, Managing Partner of AUA Equity.  “Her background in financial services, capital markets and consulting lends well to private equity investing. She is an outstanding addition to our team and will be immediately involved in a number of investment opportunities that are in our pipeline.”

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 firm plans to invest $10 million 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).

“I am pleased to be joining a blue chip organization such as AUA Private Equity Partners and to partner with Andy Unanue, Steven Flyer and David Benyaminy. Their investment pedigree and longstanding relationships in the private equity industry together with the operational experience that Andy offers provides a significant advantage in identifying new investment opportunities,” said Ms. Rocha.  “I hope to leverage many of the relationships that I have developed both at the NAA and throughout my career to help contribute to building AUA Private Equity into one of the most recognized private equity names catering to the U.S. Hispanic marketplace.”

© 2012 PEPD • Private Equity’s Leading News Magazine • 11-14-12

Filed Under: News, People

Nova Capital Management Acquires Portfolio of Five US Industrial Businesses

November 14, 2012 by John McNulty

Nova Capital Management has completed the previously announced acquisition of five industrial businesses that comprised all of the operating subsidiaries of Latshaw Enterprises, a US based industrial group.

“We are delighted to have completed this portfolio acquisition.  It fits perfectly with our strategy of buying groups of companies in a single transaction, which are well managed and have strong market positions but where we feel we can accelerate their growth through the deep operational and international experience which we can bring to bear.  This is our third deal in the US and we believe that this will open up other opportunities for us,” said Tom Leader of Nova.

Equity financing for the acquisition was provided by a syndicate comprising Nova Capital Management and Caledonia Investments.  GSO Capital Partners (part of the Blackstone Group) and PNC Bank provided the debt financing.

The five acquired businesses have aggregate sales of approximately $90 million and employ more than 450 people in 5 operating facilities across the USA.  The businesses acquired are: Wescon Products Company, an OEM manufacturer of mechanical controls, cable assemblies and screw machined components primarily for the lawn & garden sector, based in Wichita, KS (www.wesconproducts.com);  Wescon Plastics, a manufacturer of custom plastic injection molded parts using highly-engineered resins primarily for the battery and heavy duty truck industries, based in Wichita, KS (www.wesconproducts.com);  MC Electronics, an assembler of custom electronic cables, harnesses, electro-mechanical assemblies and full system integration, based in Hollister, CA (www.mcelectronics.com);  Coast Wire & Plastic Tech, a manufacturer of custom electronic wire and cable products, for the medical, instrumentation and commercial electronic industries, based in Carson, CA (www.coastwire.com); and Anderson & Forrester, a manufacturer of orifices, fittings and gauging tools for the natural gas and propane industries, based in Wheat Ridge, CO (www.andersonforrester.com).

Following the acquisition, three of Nova’s partners, Jan Kreminski (Operating Partner), Tom Leader (Investment Partner) and Mike Nevin (Investment Partner) will join the boards of each business to support the executive management teams of the acquired businesses.

Debt advisory services were provided to Nova by Alvarez & Marsal and Lincoln International. Nova was advised on the acquisition by Goodwin Procter.

Nova Capital Management was established in 2002 and has acquired or taken over the management of portfolios representing a total transactional value of over €1 billion.  Nova currently manages investments in over 25 businesses primarily operating in Western Europe and North America across a range of sectors. The firm is based in London, UK (www.nova-cap.com).

© 2012 PEPD • Private Equity’s Leading News Magazine • 11-14-12

Filed Under: New Platform, Transactions Tagged With: Industrial

McCarthy Capital Acquires Environmental Planning Group

November 14, 2012 by John McNulty

McCarthy Capital has acquired Environmental Planning Group (EPG), an environmental planning and design firm. The investment in EPG was made through McCarthy Capital Fund V.

Environmental Planning Group is an environmental consulting firm offering services in environmental planning, landscape architecture, land-use planning, biological and cultural resources, earth sciences, paleontology, public involvement, geographic information systems and environmental compliance.  EPG is based in Phoenix, AZ (www.epgaz.com).

Greene Holcomb & Fisher (www.ghf.net) represented Environmental Planning Group in this transaction.  “This transaction, structured as an equity recapitalization, was a win-win for all parties involved as all current EPG shareholders reinvested a substantial portion of their proceeds alongside McCarthy, and several other senior managers were given the opportunity to buy equity in the transaction,” said Paul Jevnick, Managing Director at GH&F.  “EPG is the preeminent brand in its market and we look forward to working with our management partners to grow EPG’s presence,” said Patrick Duffy, Managing Partner of McCarthy.

McCarthy Capital invests from $10 million to $30 million in middle market companies with operating profits between $3 million and $25 million.  McCarthy partners with existing management teams across a range of industries and is equally comfortable as a minority investor or majority shareholder.  Since 1986, McCarthy has invested in over fifty companies, including Cabela’s, Peak 10, Guild Mortgage Company, and Vornado Air. The firm has approximately $700 million in capital under management and is based in Omaha with an additional office in Boston (www.mccarthygroup.com).

© 2012 PEPD • Private Equity’s Leading News Magazine • 11-14-12

Filed Under: New Platform, Transactions Tagged With: consulting

Berkshire Partners Acquires Farm Boy

November 14, 2012 by John McNulty

Berkshire Partners has signed an agreement to make a growth equity investment in Farm Boy, an Eastern Ontario based retail grocer.

“We are excited to partner with the founding Bellemare family, CEO Jeff York and the rest of the management team of Farm Boy, and we believe the company is very well positioned for future growth,” said Chris Hadley, Managing Director of Berkshire Partners. “Farm Boy’s stores deliver a unique fresh and friendly shopping experience compared to other food retailers. The company has exacting standards for freshness and quality, which translates into customer value and loyalty.”

Farm Boy is an eastern Ontario, food retailer recognized for its produce, meat, bakery, cheese and fresh kitchen prepared items.  The company currently has 13 stores in the Greater Ottawa, Cornwall and Kingston regions of Canada.  Farm Boy was founded in 1981 and is headquartered in Ottawa, Canada (www.farmboy.ca).

“Berkshire’s long history of joining forces with family-owned businesses to create growth, combined with its experience investing in grocery retail give us great confidence that we have found the right partner to expand our business,”  said Vice President and co-founder Jean-Louis Bellemare.

Berkshire Partners invests from $50 million to $500 million of equity capital in mid-sized companies operating in the consumer products, retail, business services, industrial manufacturing, transportation and communications sectors.  The firm was founded in 1986 and is based in Boston, MA (www.berkshirepartners.com).

© 2012 PEPD • Private Equity’s Leading News Magazine • 11-14-12

Filed Under: New Platform, Transactions Tagged With: FS, grocery

Ferrer Freeman Acquires Arcadia Solutions

November 14, 2012 by John McNulty

Arcadia Solutions, a provider of data-driven health IT services, has been acquired by Ferrer Freeman & Company and members of the Arcadia senior management team.

Arcadia Solutions is a provider of data-driven Health IT services that engages with both payors and providers to design, implement, and manage healthcare information technology infrastructure and applications in ambulatory settings.  Customers include large healthcare providers, payors, accountable care organizations and health information exchanges.  The company was founded in 2002 and is based in Burlington, MA (www.arcadiasolutions.com).

“Providers and payors must include physicians in system-wide IT platforms in order to succeed in today’s rapidly evolving healthcare industry.  Arcadia’s solutions enable its customers to do just that,” said Carlos Ferrer, co-founder of Ferrer Freeman. “We are excited to work with Arcadia’s management team to build upon their accomplishments and help them to realize the company’s significant potential.”

Carlos Ferrer, David Freeman and Ted Lundberg of Ferrer Freeman will join Arcadia’s Board of Managers. In addition, Jim Crook, a healthcare IT industry veteran who was CEO of IDX Systems when it was sold to GE Healthcare for $1.2 billion, will also join the Board.

“When evaluating strategic partners, it was important for us to find an investor with deep experience and a broad network in the healthcare industry as Arcadia enters the next phase of growth and establishes its position as a national player,” said Seth Henry, Founder and President of Arcadia. “Ferrer Freeman shares our vision for the future of Arcadia.  Our customers have validated the increasing need for a national firm that can optimize results by delivering clinical IT to the ambulatory market. With Ferrer Freeman’s relationships and expertise, we will continue to expand and enhance our presence.”

Ferrer Freeman & Company makes growth capital investments in the healthcare industry.  Since its founding in 1995, the firm has invested over $900 million in 36 portfolio companies. Ferrer Freeman is based in Greenwich, CT (www.ffandco.com).

© 2012 PEPD • Private Equity’s Leading News Magazine • 11-14-12

Filed Under: New Platform, Transactions Tagged With: FS, Healthcare

Aisling Capital Acquires Cypress Pharmaceuticals and Hawthorn Pharmaceuticals

November 14, 2012 by John McNulty

Pernix Therapeutics, a specialty pharmaceutical company and a portfolio company of Aisling Capital, has entered into an agreement to acquire privately-owned generic pharmaceutical companies Cypress Pharmaceuticals and Hawthorn Pharmaceuticals for $101 million.

Pernix has received a commitment from MidCap Financial for a $60 million credit facility to support the transaction.  MidCap Financial will serve as Sole Bookrunner, Administrative Agent and Joint Lead Arranger on this facility.

Hawthorn Pharmaceuticals offers an array of branded pharmaceutical products, including allergy, respiratory, iron deficiency, nephrology and pain management. Cypress Pharmaceuticals offers a range of generic pharmaceutical products in the areas of cough and cold, nutritional supplements, analgesics, urinary tract, women’s health, pre-natal vitamins and dental health.  In 2012, revenues for Cypress and Hawthorn are expected to be approximately $50 million, consisting of approximately 54% generic products and 46% branded products.  Cypress and Hawthorn, founded in 1993, are headquartered in Madison, MS and have 170 employees, including 115 sales representatives (www.cypressrx.com) (www.hawthornrx.com).

“This will be the most significant acquisition in the company’s history. The generic and branded businesses of Cypress and Hawthorn are an excellent fit for Pernix, which is expected to increase the company’s revenues for the full year 2013 to approximately $135 million to $145 million,” said Cooper Collins, President and CEO of Pernix.  “The Cypress and Hawthorn pipeline, which includes products filed with the FDA or in development, will move us forward on our strategic plan to drive the company’s future success. We are enthusiastic about working with the Cypress and Hawthorn’s management team as we integrate our companies. We are confident that Pernix, Cypress and Hawthorn are an excellent combination that will provide strong growth in the future.”

Pernix Therapeutics is a specialty pharmaceutical company primarily focused on the sales, marketing, manufacturing and development of branded, generic and OTC pharmaceutical products. The company manages a portfolio of branded and generic products. Pernix markets its generic products through its wholly-owned subsidiary, Macoven Pharmaceuticals. The company’s wholly-owned subsidiary, Great Southern Laboratories, manufactures and packages products for the pharmaceutical industry in a wide range of dosage-forms.  Founded in 1996, the company is based in The Woodlands, TX (www.pernixtx.com).

Aisling Capital makes investments in healthcare companies that require $20 million to $50 million or more of capital. The size of the investment is contingent upon the company’s stage of development, funding needs and risk profile.  Aisling Capital will often participate in further rounds of financing following its initial investment.  The firm is based in New York, NY (www.aislingcapital.com).

© 2012 PEPD • Private Equity’s Leading News Magazine • 11-14-12

Filed Under: Add-on, Transactions Tagged With: FS, Pharmaceuticals

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