February 11, 2013
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Archives for February 11, 2013

Private Equity Buyout Fundraising Increases by 50%

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PEI, a provider of information for the global private equity, private debt, real estate and infrastructure asset classes has published its latest report on global private equity fundraising in 2012.

Fundraising in 2012

According to PEI, despite residual economic uncertainty, the private equity fundraising market showed a continued recovery last year, with total capital raised in 2012 reaching $264.9 billion: an increase of 10 percent on 2011’s total.

Buyout funds were the most popular with investors, collecting a total of $130.9 billion: 49 percent more than they raised in 2011. Funds focused on venture capital and growth equity collected the second highest amount: $61.8 billion. This, however, represented a 23 percent fall from the $79.8 billion they raised in 2011.

Secondaries funds showed a marked year-on-year increase in funds raised, a likely reaction to regulatory changes that continue to force institutional investors to rebalance their private equity portfolios. Such funds collected $20.8 billion in 2012, more than double the $9.6 billion raised the previous year.

Despite 2012 being the third consecutive year of increased fundraising, aggregate capital raised by private equity firms is still at a level roughly half that of its 2008 peak. In that year the industry collectively raised $511.8 billion.

Funds with a global investment strategy were the most popular among institutional investors, collecting $118.1 billion during 2012. Such funds accounted for 45 percent of the total raised. Those focused on North America raised $79.2 billion, roughly in line with totals raised in the previous three years.

Funds looking to deploy capital in Western Europe and those targeting Asia-Pacific saw a drop-off in funds raised in comparison to 2011. Western Europe-focused funds showed the starkest decline; funds raised more than halved from £30.1 billion total in 2011 to $13.9 billion in 2012. Funds with an Asia-Pacific focus raised $32.1 billion.

Funds with a global investment strategy were the most popular among institutional investors, collecting $118.1 billion during 2012. Such funds accounted for 45 percent of the total raised. Those focused on North America raised $79.2 billion, roughly in line with totals raised in the previous three years.

Funds looking to deploy capital in Western Europe and those targeting Asia-Pacific saw a drop-off in funds raised in comparison to 2011. Western Europe-focused funds showed the starkest decline; funds raised more than halved from £30.1 billion total in 2011 to $13.9 billion in 2012. Funds with an Asia-Pacific focus raised $32.1 billion.

Funds in market

For those funds currently in the process of being raised, Asia-Pacific is the most popular investment destination. There are 471 funds currently being marketed to invest in Asia-Pacific with an aggregate total target size of $248.9 billion. Global funds have the second highest fundraising target with an aggregate of $203.7 billion. The figure for North America is $190 billion.

Of the funds currently in market, those looking to deploy venture capital and growth equity are the most numerous. There are currently 909 such funds in the market, with an average target size of just under $310 million. Buyout funds in the market number 332 in total, with an average target size of just under $1.1 billion.

PEI provides news, data and conferences for the global alternative asset classes of private equity, real estate and infrastructure. The company has offices in London, New York and Hong Kong (www.PEIMedia.com).

Methodology:
“Funds raised” includes funds that have held a final close and excludes funds that have only held interim closes. “Funds in market/coming to market” includes all those funds actively being marketed to institutional investors as well as those in the pre-marketing stage.  All numbers exclude funds raised solely for investments into real estate and infrastructure projects.

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-12-13

Norwest Venture Partners Invests in Bailey44

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Norwest Venture Partners (NVP) has acquired a 50% stake in Bailey44, a contemporary women’s apparel brand.

Bailey44’s products are sold through specialty stores across the U.S and Europe, as well as department stores and online stores globally.  The company was founded in 2006 and is based in Los Angeles (www.bailey44.com).

With this investment, Norwest Venture Partners’ Sonya Brown and Rob Arditi have joined Bailey44’s board of directors.

“In Norwest Venture Partners we have found a partner that will work with us in realizing our expansion plans into new and exciting areas. Sonya Brown and Rob Arditi worked closely with Bailey44’s senior management team to ensure that the company’s culture, vision and path remained essentially unchanged. We are thrilled to leverage Norwest’s consumer experience and strategic expertise in e-commerce, international expansion and marketing to help take our brand to the next level,” said Ruthy Grode, co-founder and CEO of Bailey44.

Demonstrating substantial year after year double digit growth, Bailey44 has been become a major player in the contemporary women’s apparel market. Nordstrom’s, Saks Fifth Ave, Neiman Marcus and Bloomingdales carry the Bailey44 brand, in addition to Intermix, E Street Denim and several hundred active retailers throughout North America, Europe and Asia. Bailey44 sales have also been boosted by online retailers such as Revolve Clothing and Piperlime. The company’s plans for growth include strengthening brand awareness, international growth, category expansion and increasing its online presence. Management will continue to operate the business from Bailey44’s Los Angeles headquarters.

“Bailey44 is a leading women’s contemporary premium apparel brand that is already highly profitable and well positioned for continued growth. The management team, which worked together for nearly 10 years, has an extraordinary track record in manufacturing and launching well designed clothing lines. We’re thrilled that Bailey44 has chosen NVP as its partner, and we look forward to working closely with the team to continue building a major force in the women’s contemporary apparel category,” said Sonya Brown, general partner at Norwest Venture Partners.

Norwest Venture Partners (NVP) is a multi-stage investment firm that has partnered with entrepreneurs to build businesses for more than 50 years. The firm manages over $3.7 billion in capital and has funded more than 500 companies since inception.  NVP makes early to late-stage venture capital and growth equity investments across a range of sectors including: technology, information services, business services, financial services, consumer products/services and healthcare.  The firm headquartered in Palo Alto, CA and has subsidiaries in Mumbai and Bengaluru, India and Herzelia, Israel.  (www.nvp.com).

“As a bootstrapped and well-established company, Bailey44 did not need an investment partner. Therefore, we feel very fortunate that the company has selected Norwest as its partner for the next stage of Bailey44’s growth,” said Rob Arditi, vice president at NVP.

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-11-13

Valesco Industries Invests in Adams Flavors

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Valesco Industries has made an investment in Adams Flavors, Foods & Ingredients.  Valesco Industries partnered with the Adams management team to complete the buyout of exiting shareholders and position the company for continued growth and expansion.

 Adams Flavors, Foods & Ingredients is a manufacturer and distributor of blends, extracts and spices sold to retail supermarkets and food manufacturers in the South-Central and South-Eastern U.S. Brands include Adams Best, Adams Extract, Adams ClearVan, Adams Seasoning & Spice, Adams Reserve, Flavor King, Adams Pantry Basics, Sear-n-Crust, Zesty-Full, Parslic, Carniceria and Culinary Tonight. The company was founded in 1888 and is based in Gonzales, TX (www.adamsextract.com).

Valesco Industries makes control and non-control investments in small and lower middle-market businesses that have revenues from $10 million to $100 million and cash flow of at least $2 million. Sectors of interest include manufacturing, distribution and business-to-business services. The firm is based in Dallas (www.valescoind.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-11-13

Prairie Capital Exits Navman Wireless

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Navman Wireless, a provider of GPS-enabled fleet tracking services and a portfolio company of Prairie Capital, has been sold to Danaher Corporation.

In July 2007, Prairie Capital invested $13.9 million in preferred and common equity to support the management team’s acquisition of Navman Wireless from its publicly traded parent, Brunswick Corporation.

Navman Wireless provides GPS-enabled fleet tracking services to a variety of service companies, school bus fleets, municipal governments and construction companies.  Navman operates principally in the US, the UK, New Zealand, Australia, and Singapore. The company has approximately 300 employees and is based in Glenview, IL (www.navmanwireless.com).

Prairie Capital invests in lower middle market companies and corporate carve-outs. Typical investments will have annual revenues of $20 million to $100 million and cash flows of $4 million to $12 million.  Sectors of interest include niche manufacturing, business and financial services, and education.  Prairie Capital was founded in 1997 and is currently investing out of its $300 million fifth fund.  The firm is based in Chicago (www.prairie-capital.com).

Robert W. Baird & Co. served as the exclusive financial advisor to Navman Wireless. Baird is a middle-market focused investment bank serving the M&A, equity financing and debt advisory needs of its clients throughout the United States, Europe and Asia.  Since 2008, Baird has advised on nearly 250 M&A transactions representing approximately $50 billion in transaction value and has served as lead or co-manager on 335 equity offerings raising approximately $98 billion. The firm is based in Milwaukee (www.rwbaird.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-11-13

KPS Capital Partners Recaps Waupaca Foundry

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KPS Capital Partners has completed a recap of its portfolio company Waupaca Foundry.  The proceeds of the recapitalization, funded by a $200 million upsizing of the company’s term loan, were used to fund a $200 million cash distribution to stockholders.

KPS acquired ThyssenKrupp Waupaca, Inc., which was renamed Waupaca Foundry, Inc., from ThyssenKrupp Budd Company in June 2012.  Waupaca Foundry is the largest iron foundry company in the world and produces gray and ductile iron castings using state-of-the-art technology. Waupaca is a  North America’s leading supplier of iron castings to the automotive, truck, agriculture, construction, hydraulics and commercial vehicle markets.  The company operates six manufacturing facilities located in Wisconsin (4), Indiana, and Tennessee. The company employs approximately 3,700 people and is headquartered in Waupaca, WI (www.waupacafoundry.com).

“Waupaca is now a thriving independent company under KPS’ ownership, and we are pleased to return capital to our stockholders. This recapitalization validates the successful transformation of Waupaca that was achieved in a very short period of time,” said Gary Gigante, Chief Executive Officer of Waupaca.  “Our conservative capital structure and the financial support of our stockholders provide us with the resources to support our customers and grow aggressively, both organically and through acquisitions.”

Financing for the transaction was provided by a syndicate of banks and institutional investors with GE Capital Markets acting as Lead Arranger.  RBC Capital Markets acted as special advisor to KPS.

KPS Capital Partners is the manager of the KPS Special Situations Funds, a group of private equity funds with over $2.5 billion of committed capital focused on investing in restructurings, turnarounds and other special situations. KPS has created new companies to purchase operating assets out of bankruptcy; established stand-alone entities to operate divested assets; and recapitalized highly leveraged public and private companies. The KPS investment strategy targets companies with strong franchises that are experiencing operating and financial problems. KPS portfolio companies, as of September 30, 2012, have aggregate annual revenues of approximately $6.8 billion, operate 85 manufacturing plants in 25 countries, and employ over 29,000 associates, directly and through joint ventures worldwide.  KPS Capital Partners is headquartered in New York (www.kpsfund.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-11-13

American Capital Invests in ASAP Industries

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American Capital has invested $89 million in ASAP Industries, a manufacturer and refurbisher of high-pressure flow control products.  American Capital’s investment took the form of senior debt, subordinated debt and equity.

ASAP is a manufacturer and refurbisher of high-pressure flow control products for the global oil and gas industry.  Customers range from small local operations to major oilfield services companies and original equipment manufacturers.  The company’s products are used in numerous applications including onshore and offshore projects, crude oil and natural gas wells and drilling, completion and production applications. The company is based in Houma, LA (www.asapind.net).

“With its broad product lineup, leading position in the Gulf Coast region, strong reputation, well-established customer relationships and significant organic growth opportunities, ASAP is an excellent fit for the American Capital Energy and Infrastructure Group,” said Darin Winn, Senior Vice President and Senior Managing Director, American Capital.  “ASAP is one of the largest manufacturers of high-pressure flow control components in the Gulf Coast region and a respected partner for original equipment manufacturers, oilfield service companies, and equipment rental companies throughout the United States.  The company is also one of the largest API certified independent manufacturers of oil and gas equipment.”

American Capital is a publicly traded private equity firm and global asset manager that originates, underwrites and manages investments of $10 million to $750 million in middle market private equity, leveraged finance, real estate and structured products. Founded in 1986, American Capital has $118 billion in total assets under management and has eight offices in the US, Europe and Asia. The firm is headquartered in Bethesda, MD (www.AmericanCapital.com).

“Since its start in 2001, ASAP has demonstrated strong financial performance, achieving consistent year-over-year revenue and EBITDA growth and has shown a unique resiliency to industry downturns,” said Miles Arnone, an American Capital Managing Director.  “Demand for the company’s flow control products is driven by increased drilling and completion activity as well as increasing well complexity.  We expect these industry drivers to remain favorable, providing ASAP with a clear and exciting growth path.”

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-11-13

Summer Street Closes on $280 Million for Third Fund

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Summer Street Capital Partners has held the final closing of its third fund with aggregate capital commitments of approximately $280 million.  The fundraise exceeded Summer Street’s $250 million target and represents a nearly 50 percent increase from the committed capital of Summer Street’s second investment fund.

“We are pleased to announce the final close of Summer Street Capital III, L.P. We appreciate the confidence and support received from our new and returning limited partners,” said Michael McQueeney, a Managing Partner and Co-Founder of Summer Street.  “We look forward to building lasting relationships with our limited partners, while driving growth within our portfolio to provide attractive returns.”

Summer Street Capital Partners has approximately $550 million of committed capital focused on investing in small-market companies. Equity investments typically range from $15 million to $50 million in companies with annual revenues of less than $200 million. The firm invests in a range of industries but has particular interest in education, environmental services, healthcare and niche manufacturing.  Summer Street’s investment team is complimented by the firm’s operating partners who are involved in building value in the firm’s portfolio companies. Summer Street was founded in 1999 and is based in Buffalo (www.summerstreetcapital.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-11-13

DW Healthcare Partners Closes $265 Million Third Fund

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DW Healthcare Partners has completed fundraising for its third fund with $265 million of committed capital, exceeding its original target of $250 million.  Fund III investors include pension plans, foundations, fund of funds, high net-worth individuals and family trusts.

“Through our partnerships with talented founders and management teams in our portfolio companies, we have been able to sustain a consistent track record of delivering above-average returns to our investors.  As a result, we attracted a great deal of interest while fundraising for Fund III and are pleased that we have exceeded our target,” said Andrew Carragher, DW Healthcare Partners Co-Founder and Managing Director.  “We thank all of our limited partners for their commitment to our firm and look forward to forging new partnerships with innovators, founders, and management teams in the healthcare industry”.

During the fundraising period, DW Healthcare Partners (DWHP) completed three Fund III investments, totaling approximately $80 million. Through these investments, DWHP has become equity partners with Z-Medica, a developer and manufacturer of hemostatic agents; Health & Safety Institute, a provider of safety and emergency care content and training, and Med-Pharmex, a veterinary drug manufacturer.

With the closing of Fund III, the firm has opened an office in Toronto to enable the firm to cover the Eastern Coast of the United States and Canada more efficiently. The Toronto office is staffed with Co-Founder Andrew Carragher and Managing Director Rod Boone along with six other professionals.

DWHP’s Fund III investment strategy mirrors the model of its first two funds, working as a strategic resource to founders to accelerate the growth of their businesses. DWHP’s first two funds were $88 million and $162 million in size, and resulted in 16 platform company investments in the medical device, clinical research, wholesale pharmacy and outsourced healthcare service areas. For Fund III, DWHP is seeking investments in companies with EBITDAs of $4 million or more.

Berchwood Partners served as the placement agent on this fundraise for DW Healthcare Partners.  Berchwood Partners assists in raising capital from investors around the world for North American, European, Middle Eastern and Asian fund managers focused on buyout, venture, real estate, and secondary strategies. The firm has offices in New York and London (www.berchwoodpartners.com).

With the closing of Fund III, DW Healthcare Partners now manages over $500 million in committed capital.  The firm is based in Park City, UT (www.dwhp.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-11-13

Capstone Partners Advises Invo HealthCare on Recent Sale

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Investment bank Capstone Partners has advised Invo HealthCare Associates on its recent sale to Post Capital Partners.  The Capstone M&A team of Eric Williams, Managing Director, and Mark Surowiak, Director, managed the transaction on behalf of the company.

“Invo HealthCare was an excellent business to represent, and unique in that it operates at the intersection of two fast-growing industries, outsourced clinical services and education,” said Mr. Williams. “Both of these industries are driven by the needs of their customers to improve outcomes and boost efficiency. As a result, both the outsourced clinical and the educational services sectors are experiencing heightened M&A activity.”

Invo HealthCare is a provider of outsourced clinical services for special needs children in 23 states. It operates through two divisions that serve the needs of preschool children (3-5) and school age children (K-12).  In addition, Invo’s early intervention division provides service delivery to children from birth to 3 years.  Founded in 1993 by Patrick McClain, an occupational therapist and Mary McClain, an educator, Invo HealthCare now operates in 23 states. The company is based in Jamison, PA (www.invohealthcare.com).

Demand for healthcare staffing services related to special education programs in the U.S. is being fueled by rising therapy requirements, a shortage of therapists (particularly speech-language pathologists and occupational therapists) in many regional markets and the growing population of special needs children due to better diagnosis and increased prevalence of developmental disabilities.

“The market’s interest in Invo HealthCare was extremely robust,” said Mr. Surowiak. “Both strategic and financial buyers were interested, and we had a very competitive sales process for the company. We are pleased to team our client with Post Capital Partners, a quality buyer that is committed to working with management to fully capitalize on Invo HealthCare’s reputation for excellence and the strong demand inherent within the sector.”

Capstone is a middle market investment banking firm that provides mergers & acquisitions, private placements, corporate restructuring, valuation advisory, and merchant banking services. In addition to these transaction and financial advisory services, Capstone offers private equity firms, commercial lenders and private businesses with a range of strategic advisory services that are typically utilized for either pre-planning or assessment purposes. The firm is headquartered in Boston with additional offices in Chicago, Philadelphia, Los Angeles, San Diego and Silicon Valley (www.capstonellc.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-11-13

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