Archives for February 1, 2013

Fulcrum Equity Partners Closes Fund 2 at $93 Million

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Fulcrum Equity Partners has held a closing of its second fund, Fulcrum Growth Fund II, LLC, with capital commitments in excess of $93 million, surpassing its target of $75 million.

One of Fulcrum’s strategies is to recruit successful entrepreneurs to its investor group, and Fund 2 now has more than 90 current and former CEOs from a wide range of industries.  “The deep business experience of our investors is a very rich resource for the Fulcrum Funds and our portfolio companies,” said Jeff Muir, a partner at Fulcrum. “Many of our limited partners have provided value-added support and guidance, including referring quality deals, assisting with due diligence, providing relevant industry experience and making strategic introductions.”

Fulcrum is actively seeking opportunities to invest in rapidly growing companies, and Fund 2 has already invested in eight new portfolio companies. Fulcrum’s prior fund, Fulcrum Fund I, LLC, is a $40 million fund that commenced in 2006 and invested in 11 portfolio companies, while completing 29 financings. Fund I has had four successful exits and already returned 157 percent of contributed capital.

Fulcrum Equity Partners invests from $1 million to $5 million in companies that have revenues of $2 million to $75 million and are based in the Southeast.  Sectors of interest include healthcare, information technology and technology-enabled operating companies.  With the closing of Fund 2 the firm now has $140 million in capital under management. Fulcrum Equity Partners was founded by Jeffrey Muir, Partner; Thomas Greer, Partner; Frank Dalton, Partner; and Alston Gardner, Venture Partner. The firm is based in Atlanta (www.fulcrumep.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-1-13

Versa Forms Vestis Retail Group

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Versa Capital Management has launched a new retail platform called the Vestis Retail Group which is comprised of two current Versa portfolio companies, Bob’s Stores and Eastern Mountain Sports.

Bob’s Stores sells value-oriented footwear, apparel, work wear and accessories.  Bob’s Stores was founded in 1954 and is based in Meriden, CT (www.bobstores.com).

Eastern Mountain Sports (EMS) is an operator of 68 retail stores in the Northeast US that sell brand name and private label outdoor apparel and equipment.  The company also sells its products online through its website (www.ems.com). EMS was founded in 1967 and is based in Peterborough, NH.

As part of the Vestis Retail Group, Bob’s and EMS will share certain operational functions and enterprise resource planning systems, but will remain separate and distinct retail brands in stores, merchandise and online. By combining Bob’s and Eastern Mountain Sports the Vestis platform now has over 3,200 employees and nearly $500 million in revenue both online and through over 100 stores in 12 eastern states.

“We believe the retail industry for outdoor apparel and gear holds great promise, and our firm has been active in the space for many years,” said Greg Segall, CEO of Vestis’ controlling shareholder Versa Capital. “We are committed to ensuring that each of our companies in the space – including Bob’s and EMS – have the resources and infrastructure to achieve sustainable success in this dynamic sector over the long term.”

The capitalization and working capital requirements of Vestis will be supported by a new $95 million revolving credit facility provided by Wells Fargo Bank.

Mark Walsh, CEO of Bob’s and a Versa Principal, has been named CEO of Vestis.  Will Manzer has stepped down as CEO of EMS and he will serve as a consultant to Mr. Walsh during a transitional period. Working closely with Mr. Walsh to oversee EMS’s day-to-day operations in Peterborough, NH will be Garry Herdler, interim CFO of Vestis.

EMS is closing its distribution facility and several other back-office support functions in Peterborough, NH.  EMS currently plans to maintain its merchandising, product design, call center and web operations in Peterborough, NH, and its climbing, paddle and outdoor schools in New England.

The moves are designed to improve EMS’s operating efficiency, inventory management and capacity to invest in the continued development and success of its brand. The company’s distribution function will be consolidated within Bob’s existing distribution facility in Meriden, CT. These changes will commence immediately and will be finalized over the next five months.

“The steps we have taken at EMS are difficult ones, but we believe they are in the best long-term interests of the business,” said Mr. Walsh. “We thank all EMS employees for their hard work and dedication, and we are committed to supporting the affected employees in seeking new opportunities both within and outside of the company. Will’s product and industry knowledge are superior, and he will be of great help to me as I work with the EMS team to ensure the strength of the EMS brand with outdoor enthusiasts. The Vestis platform will enable us to improve the operations of Bob’s and EMS while growing each business independently with separate customer and brand strategies.”

Versa Capital Management invests in special situations involving middle market companies with revenues in the $100 million to $1 billion range or assets of $25 million to $500 million. The firm has $1.2 billion of capital under management and is based in Philadelphia (www.versa.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-1-13

Grey Mountain Partners Adds Two New Investment Professionals

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Grey Mountain Partners has added two new professionals to its investment team with the hiring of Brad Starkweather and Rick McKenzie.

Mr. Starkweather joins Grey Mountain from US Renewables Group, a private equity firm specializing in alternative energy investments, where he was a Principal responsible for managing all aspects of due diligence and transaction execution.  Previously he was an Associate at Centre Partners Management, a private equity firm focused on middle-market leveraged buyouts, and an Associate at Lehman Brothers Merchant Banking Partners, Lehman Brothers’ captive leveraged buyout fund.  He started his career as an Analyst in Lehman Brothers’ Technology Mergers & Acquisitions group.  Mr. Starkweather holds an MBA from Columbia Business School and BS degrees in Economics and Engineering Science from Vanderbilt University.

Mr. McKenzie joins Grey Mountain from Jefferies & Company, where he advised companies on M&A transactions and executed debt and equity financings as an Analyst in the Consumer & Retail Group. Mr. McKenzie graduated from Wake Forest University with a BS in Finance from the Calloway School of Business and Accountancy.

Grey Mountain Partners invests in middle market companies with enterprise values between $30 million and $150 million. The firm invests up to $75 million in control acquisitions of basic industry businesses and is currently investing from its second fund, Grey Mountain Partners Fund II, LP.  The firm was founded in 2003 and is based in Boulder, CO (www.greymountain.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-1-13

The Carlyle Group Acquires Paradigm Precision

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Dynamic Precision Group, a portfolio company of The Carlyle Group, has acquired Paradigm Precision Holdings, a provider of engineered components for turbine engines.

Paradigm Precision is a manufacturer of a diverse range of turbine engine and other machined products ranging from close tolerance parts to multi-level, highly complex assemblies. The company serves the commercial aerospace, defense and energy end markets.  Paradigm has more than 600 employees and operates from six primary locations in Peabody (headquarters) and Malden, MA; East Berlin, CT; Tempe, AZ; Guaymas, Mexico; and Tunis, Tunisia (www.paradigmprecision.com).

“We are impressed with Paradigm’s broad capabilities and product portfolio on both current and next-generation engine platforms, and are excited about the combination of these two precision component manufacturers,” said Adam Palmer, Managing Director and Head of Carlyle’s Global Aerospace, Defense and Government Services team.

Acquisition financing was arranged by RBS Citizens and SunTrust Robinson Humphrey.  Dynamic Precision Group and Carlyle were advised by Latham & Watkins and PricewaterhouseCoopers.  Paradigm Precision was advised by Lazard Freres.

Dynamic Precision Group (DPG) was created by The Carlyle Group and AeroEquity Partners in December 2011 to build a platform of manufacturers of critical components for the hot section of commercial and military aircraft engines and industrial gas turbines.  In addition to the acquisition of Paradigm Precision Holdings, DPG has acquired TurboCombustor Technology, a manufacturer of critical aircraft engine components, predominantly combustors and flameholders/heatshields.  TurboCombustor Technology operates facilities in Stuart, FL; Cincinnati, OH; and Budapest, Hungary (www.tct-inc.com).

“We are excited about the addition of Paradigm, its global footprint, and the technical know-how it brings to Dynamic Precision Group.  Paradigm supports our strategy of delivering complex engine components to our customer base,” said Greg Bennett, President and CEO of Dynamic Precision Group.

The Carlyle Group invests in buyouts, growth capital, real estate and leveraged finance in Africa, Asia, Australia, Europe, North America and South America focusing on aerospace & defense, automotive & transportation, consumer & retail, energy & power, financial services, healthcare, industrial, infrastructure, technology & business services and telecommunications & media. The Carlyle Group employs 1,300 people in 32 offices across six continents and is based in Washington, DC (www.carlyle.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-1-13

Marlin Equity Partners Acquires Sycamore Networks

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Marlin Equity Partners’ has completed the acquisition of Sycamore Networks, Inc.’s bandwidth management product and service business, and has re-launched the company as a new platform company under the name Sycamore Networks Solutions.

Sycamore Networks Solutions is a provider of optical networking and multiservice access services that enable fixed line and mobile operators to improve utilization of network capacity, increase operational efficiencies and cost-effectively transition from circuit to packet services while ensuring the highest degree of service availability. Sycamore’s customer base includes Tier 1 service providers, government agencies and utility companies. The company is based in Chelmsford, MA (www.sycamorenet.com).

Sycamore Networks Solutions, which will continue to use the brand name “Sycamore Networks,” will be led by John Scully as president and chief executive officer. Most recently, Mr. Scully served as Sycamore’s vice president of worldwide sales and support.

“Sycamore’s carrier-class networking solutions form the critical foundation for many of the world’s leading communications networks, and we believe the company is well positioned to deliver enhanced value to its global customers as it moves forward,” said Pat DiPietro, operating partner at Marlin. “We are pleased to appoint John to the role of president and CEO, and we are committed to providing the strategic guidance and financial resources necessary to ensure the company’s success as it enters a new phase of growth and innovation.”

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 Los Angeles (www.marlinequity.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-1-13

ORIX Invests in Sierra Engineering and Sierra Petroleum

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ORIX Mezzanine & Private Equity Investments has made a mezzanine and equity investment to support the acquisition of Sierra Engineering and Sierra Petroleum Services by Corinthian Capital Group.

Sierra provides engineering and consulting services to the oil and gas industry and specializes in wellbore-construction project management.  The company is headquartered in Midland, TX (www.sierra-engineering.net).

“We are pleased to be partnering once again with Corinthian Capital professionals and look forward to working with Sierra and its management team,” said Jeff Sangalis, managing director of ORIX Mezzanine and Private Equity Investments.

ORIX Mezzanine & Private Equity (OMPE) provides mezzanine debt and/or equity capital to lower middle market companies throughout the United States.  As a business unit of Dallas-based ORIX USA, OMPE makes investments from $5 million to $25 million in a wide variety of businesses and geographic areas for buyouts, mergers and acquisitions, recapitalizations and refinancings, and growth and expansions situations.  Investments are with companies owned by equity sponsor groups, fundless sponsors, family owned companies, and directly with management teams.  ORIX Mezzanine & Private Equity is based in Dallas (www.orixmpe.com) (www.orixpe.com).

“Sierra has emerged as a leading provider of oil and gas engineering and consulting services and has a very strong brand.  I am confident that, with Sierra’s impressive management team, we can help position the company to expand and grow domestically as well as abroad,” said C. Kenneth Clay, senior managing director of Corinthian Capital.

Corinthian Capital invests in niche manufacturing, distribution, and service businesses with EBITDAs between $10 million and $30 million located primarily in North America.  Corinthian Capital is based in New York with offices located in Chicago and Boston (www.corinthiancap.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-1-13