American Capital received $127 million in debt and equity proceeds on the sale of Paradigm Precision. The firm’s compounded annual rate of return earned on its senior debt, subordinated debt and equity investments since its first investment in Paradigm Precision in the first quarter of 2007 was 11%, including interest, dividends and fees earned over the life of its investment.
“American Capital is proud of its role in building Paradigm Precision into a leader of precision machined aerospace engine parts,” said Myung Yi, Senior Vice President and Managing Director, American Capital Special Situations Group. “American Capital has been fortunate to partner with an outstanding management team, which has driven Paradigm Precision’s growth and successful expansion into global markets.”
Paradigm Precision is a manufacturer 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 locations in Peabody (headquarters) and Malden, MA; East Berlin, CT; Tempe, AZ; Guaymas, Mexico; and Tunis, Tunisia (www.paradigmprecision.com).
Dynamic Precision Group 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, Dynamic Precision Group 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 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.
“Over the course of our investment, Paradigm built a strong position in all key and next-generation engine platforms,” said Yaniv Zief, Vice President, American Capital Special Situations Group. “We believe that Paradigm Precision is a great addition to Dynamic Precision Group’s business.”
American Capital is a publicly traded private equity firm and 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).
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 firm 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 • 2-21-13