Archives for February 13, 2013

High Street Capital Acquires ShoreMaster

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Otter Tail Corporation has sold substantially all of the assets of ShoreMaster, its waterfront equipment manufacturing business, to High Street Capital.

ShoreMaster is a manufacturer of boat lifts, docks, and accessories for residential and marina use in the waterfront equipment industry. The company was founded in 1972 and is based in Fergus Falls, MN (www.ShoreMaster.com).

“This transaction will enable us to leverage High Street Capital’s experience in growing middle market companies with the knowledge of ShoreMaster’s management team in the waterfront equipment industry,” said Joseph Katcha, a Principal at High Street Capital.

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 (www.HighStreetCapital.com).

Otter Tail was established in 1907 as an electric utility but has pursued a diversification strategy since the late 1980’s to acquire interests in the health services, manufacturing, plastics, construction, transportation, telecommunications, energy services, and entertainment industries. The company has over $1.2 billion in annual revenues and more than 4,000 employees.  Otter Tail’s stock trades on the NASDAQ under the symbol OTTR. The company has offices in Fergus Falls, MN and Fargo, ND (www.ottertail.com).

“This is a good outcome for Otter Tail Corporation, High Street Capital and ShoreMaster,” said Otter Tail Corporation president and CEO Edward J. “Jim” McIntyre. “It fits with our ongoing strategy of business portfolio alignment, while also adding a great opportunity for High Street Capital to acquire an experienced leader in the production of waterfront equipment.”

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

MVC Capital Exits Summit Research Labs

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MVC Capital has signed an agreement to sell its portfolio company Summit Research Labs, a specialty chemical company, to One Rock Capital Partners.  The transaction is expected to close by March 31, 2013.  Lazard Middle Market served as financial advisor to Summit Research Labs on this transaction.

This transaction does not include the assets of Summit Custom Spray Drying (“SCSD”) which will be purchased separately by MVC and other existing Summit shareholders.  SCSD provides custom spray drying products to the food, pharmaceutical, nutraceutical, flavor and fragrance industries. SCSD will operate as a stand-alone business following the closing of the Summit sale.

Assuming full realization of the closing conditions and the sale of SCSD, MVC Capital would receive gross proceeds from its equity investment of approximately $63 million resulting in an estimated gross IRR of 31% since August 2006 (the time of the original investment).  As part of the sale, MVC will provide Summit with a $22 million second lien loan.

Summit Research Labs is a specialty chemical company that manufactures antiperspirant actives — chemical ingredients that give antiperspirants their sweat-blocking ability – that are sold to large consumer products and personal care products companies. Summit Research Labs is based in Huguenot, NY (www.summitreheis.com).

“We are pleased to have reached an agreement to monetize our investment in Summit, expected to result in a realized gain of approximately $47 million. This gain is in addition to the $12 million special dividend MVC received from Summit in 2012, adding to the overall return of this investment and highlighting our ability to build shareholder value,” said Michael Tokarz, Chairman and Portfolio Manager of MVC.

MVC invests from $3 million to $25 million in middle market companies that have revenues of $10 million to $200 million and EBITDAs of $3 million to $25 million. Sectors of interest include but are not limited to consumer products; industrial manufacturing and services; food and food services; financial services; value-added distribution; and specialty chemicals. MVC is traded on the NYSE under the symbol MVC.  The company is based Purchase, NY (www.mvccapital.com).

One Rock makes equity investments of $10 million to $50 million in companies operating in the chemicals, industrial and consumer durables, business services, environmental services, healthcare products, and automotive retail sectors. The firm is based in New York (www.onerockcapital.com).

“We have enjoyed working with Summit’s highly skilled management team to build the company into a leading global manufacturer of antiperspirant actives, and we look forward to continuing to support the success of the team as a lender under One Rock ownership,” said Shivani Khurana, Director of Summit and Managing Director of TTGA, investment adviser to MVC Capital.

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

BB&T Capital Partners Exits Cline

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BB&T Capital Partners has sold its investment in Cline Acquisition Corp., a provider of aftermarket power transmission parts and services, to Rexnord Corporation.

Cline is a provider of aftermarket power transmission parts and services to the pulp and paper, steel and other end markets. Cline’s aftermarket capabilities include inspection and repair, rebuild, predictive and preventative maintenance and other on-site technical field services. Cline is based in Taylors, SC (www.theclineco.com).

BB&T Capital Partners manages over $725 million in committed capital across three funds which are all focused on the middle market. The firm makes direct equity investments in control transactions of privately-held companies; provides subordinated debt or mezzanine capital in support of transactions led by financial sponsors and others; and invests in other private equity funds. BB&T is an investment arm of BB&T Corporation and principally targets companies in business, government, healthcare and industrial services, niche manufacturing, value-added distribution and education.  The firm was founded in 1998 and is based in Winston-Salem, NC (www.bbtcp.com).

Rexnord is a global industrial manufacturer comprised of two strategic platforms, Process & Motion Control and Water Management.  The Process & Motion Control platform designs, manufactures, markets and services specified, highly-engineered mechanical components used within complex systems. The Water Management platform designs, procures, manufactures and markets products that provide and enhance water quality, safety, flow control and conservation. Rexnord has approximately 7,300 employees worldwide and is headquartered in Milwaukee (www.rexnord.com).

Quarton Partners acted as the exclusive financial advisor to Cline in this transaction.  “Quarton Partners ran a high quality process under a demanding timeline. With Quarton Partners’ knowledge of the power transmission sector they were able to deliver several strategic buyers to the table which ultimately allowed us to choose a strategic partner that shares our vision for growing the business and dedication to world-class customer service,” said Bob Buchanan, President and CEO of Cline.

Quarton Partners is a specialty investment banking firm serving privately held and publicly traded companies as well as private equity firms.  Quarton assists its clients with mergers and acquisitions, private capital raising, restructurings, valuations, and other financial advisory services.  The firm is headquartered in Birmingham, MI (www.quartonpartners.com).

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

Here’s the Latest on What LP’s think of GP’s

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Duff & Phelps, in collaboration with Mergermarket, has published a new report titled “Alternative Investments Outlook 2013”.  This report is based on interviews with 100 limited partner investors operating across North America and Western Europe.   

Here are the report’s top six findings. At the end of this article is a link to download a free copy of the report.

  • Nearly half of respondents say that their private equity investments have surpassed their expectations and, of those who plan to adjust their allocation to private equity within the next year, the overwhelming majority (95%) expect to increase the amount apportioned to the asset class. 
  • Limited partners are increasingly looking to side-step general partners to provide direct lending to companies. This is attributed partly to the opportunity afforded by the lack of bank lending and, among those who foresee more direct lending, 73% see this as a new and growing area for limited partners. 
  • A key trend to emerge from the survey is an increased interest in the market for secondary private equity commitments. Nearly three-quarters of respondents expect limited partner investors to acquire more secondary commitments. 
  • Three in four respondents stated that they have asked general partners for greater transparency in the last 24 months. When choosing a fund manager, 70% of those surveyed indicated that transparency was the most important factor, ahead of even the fund manager’s strategy and track record of performance. 
  • There is also increased demand for timely valuation information, with 63% of respondents citing the timeliness of reporting as the most common problem with valuation information. 
  • Many limited partners respondents are optimistic about the climate in Europe. Although Northern Europe is most frequently mentioned by respondents as fitting with their investment strategies, over half of interviewees see Southern Europe, including Portugal, Spain and Italy, as offering up attractive opportunities. 

For a free copy of Duff & Phelps’ Alternative Investments Outlook 2013 click HERE. 

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

MVision Opens New office in Sydney

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Private equity placement agent MVision has opened an office in Sydney, Australia.  MVision has a number of outstanding investment manager clients in Australia and opening this office will allow the firm to expand its reach further into the rapidly developing Asia Pacific private equity market.

“We believe our Sydney office will allow us to not only reach investors and managers in the Asia Pacific region more effectively, but also better serve our existing client base in conjunction with our current Hong Kong operations,” said Mounir Guen, CEO of MVision.

In July 2012 MVision acted as the global placement agency for CHAMP Ventures Investments Trust No.7 which closed at A$475 million, exceeding its targeted hard cap of A$450 million. CHAMP Ventures is the lower mid-market arm of the CHAMP Group, one of Australia’s leading private equity managers with over A$2 billion in funds under management.

MVision is  one of the world’s leading independent alternative assets advisory firms, focusing on Private Equity, Infrastructure, Real Assets and direct transactions, in both developed and emerging markets. MVision has offices in London, New York, Hong Kong and Sydney (www.mvision.com).

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

Baird Capital Promotes Three

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Baird Capital has promoted Gordon C.C. Liao and Yongshan Zhang to Principals of the firm, both were previously Vice Presidents, and Alex Kessel was promoted to Vice President from Senior Associate.  “Gordon, Yongshan and Alex have made substantial contributions to our business and investors, and these promotions reflect their hard work in driving value in our portfolio,” said Gordon Pan, Managing Partner of Baird Capital.

Mr. Liao joined Baird Capital in 2008 and focuses on investment opportunities in the consumer products sectors with the U.S. Private Equity fund.  He currently works with Baird Capital portfolio companies Qualitor, New Vitality, Eckler’s and Backyard Discovery.  Prior to joining Baird, Mr. Liao was with private equity firms Reliant Equity Investors and Wind Point Partners, where he focused on buyouts in the lower middle market. He began his career in Merrill Lynch’s investment banking group. Mr. Liao received his bachelor’s degree from the University of Illinois at Urbana-Champaign and an MBA from Harvard Business School.

Mr. Zhang joined Baird Capital in 2008 and works with the China Growth Equity fund. Prior to joining Baird, Mr. Zhang was with EG Capital Group, a New York-based middle market growth equity and buy-out fund, conducting transactions in the consumer sector. He also worked in IBM’s sales and distribution division, serving financial services clients. Zhang received his bachelor’s degree from State University of New York at Buffalo and an MBA from the Leonard N. Stern School of Business at New York University. He also holds a master’s degree from The University of Maryland.

Alex Kessel joined Baird Capital in 2011 and works with the U.S. Private Equity fund.  Prior to joining Baird, Kessel was with Willis Stein & Partners focusing on buyouts in the business services, consumer services, education and manufactured products sectors. Before that, he worked for Bear Stearns in their  technology, media and telecom investment banking group. Mr. Kessel received his bachelor’s degree from the Kelley School of Business at Indiana University and an MBA from The University of Chicago Booth School of Business.

Baird Capital also announced today that John DiGiovanni is rejoining the firm as a Senior Associate. He originally joined Baird Capital as an Analyst in 2007.  In 2010 he left the firm to attend graduate school and was recently awarded a joint MBA/MPA degree from a program between Northwestern University’s Kellogg School of Management and Harvard University’s Kennedy School of Government. Mr. DiGiovanni will now focus on investment opportunities in the business services, industrial and consumer products sectors. Prior to his original start at Baird, Mr. DiGiovanni worked as an investment banking analyst at Bank of America Merrill Lynch, focusing on mergers and acquisitions, restructurings and equity and debt offerings.  He received his bachelor’s degree from The Eli Broad College of Business at Michigan State University.

Baird Capital makes venture capital, growth equity and private equity investments in strategically targeted sectors in the U.S., U.K. and China. Having invested in more than 260 companies over its history, Baird Capital partners with entrepreneurs and leverages its executive networks to build exceptional companies. Baird Capital provides operational support to its portfolio companies through teams on the ground in Asia, a proactive portfolio operations team and a network of relationships which together deliver enhanced shareholder value. Baird Capital is the direct private investment arm of Robert W. Baird & Co. (www.bairdcapital.com).

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