Archives for April 23, 2013

Blackstone Buys Secondaries Business of Credit Suisse

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Blackstone has reached an agreement with Credit Suisse to acquire Strategic Partners, Credit Suisse’s dedicated secondary private equity business with $9 billion in assets under management. The transaction is expected to close by the end of the third quarter 2013. The sale of Strategic Partners is part of Credit Suisse’s strategic divestment plans that were announced last summer.

“We are thrilled that the people of Strategic Partners are joining Blackstone. Many of us here at Blackstone were once colleagues of the Strategic Partners team, and this gives us high confidence that it will be a seamless cultural fit here at the firm. Strategic Partners complements Blackstone’s existing businesses, and we expect to be able to grow its franchise and help it enter new product areas,” said Tony James, President and Chief Operating Officer of Blackstone.

Strategic Partners seeks capital appreciation through the purchase of secondary interests in private equity funds from investors seeking liquidity. Transaction sizes range from $250,000 to more than $1 billion. Founded in 2000, Strategic Partners has raised over $11 billion of capital commitments, completed over 700 transactions, and acquired over 1,400 underlying limited partnership interests. The firm’s team of 26 secondary investment professionals is headed by Stephen Can and Verdun Perry. For more information on Strategic Partners click HERE.

“Strategic Partners is a leader in the secondary private equity space. We are pleased to have reached this agreement and are confident that with Blackstone, Strategic Partners will continue to build on its excellent track record,” said Alastair Cairns, Co-Head of Credit Suisse’s Legacy Asset Management business.

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-23-13

New Private Equity Research Consortium Formed

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Scholars from a number of universities have created a new consortium for research on private equity. The Private Equity Research Consortium will conduct and promote research on how these private capital investments affect both financial results and broader economic issues.

The Private Equity Research Consortium (PERC) will be housed at the University of North Carolina Kenan-Flagler Business School. The formation of PERC was made possible by a grant from the UAI Foundation, a non-profit foundation devoted to supporting research in finance.

Members of PERC’s founding advisory board are Professor Gregory Brown, University of North Carolina, Kenan-Flagler Business School; Professor Robert Harris, University of Virginia, Darden School of Business; Professor Tim Jenkinson, Oxford University, Said Business School; Professor Steven Kaplan, University of Chicago, Booth School of Business; and James Bachman, Director of Research, Burgiss Group.

“Over the last two decades, private equity has grown to become an important part of the investment landscape, yet little is known about the industry. Historically, researchers who want to study private equity confront a major barrier: high-quality data,” said Professor Brown. “Our goal is to help remove that barrier.”

The advisory board charts the consortium’s research agenda and will review applications from academic researchers for access to data available through the consortium in collaboration with Burgiss Group, a provider of portfolio management software, data and analytics to asset owners investing in private capital. The Burgiss Group is based in Hoboken, NJ (www.burgiss.com).

“PERC provides a powerful opportunity to bring together scholars and industry professionals with a common goal: a better understanding of private equity’s effects on both financial results and broader economic outcomes,” said Professor Harris.

PERC’s activities include creating research for publication in academic and practitioner journals, developing and testing data, providing access to data for academic researchers, hosting an annual conference of academics and industry professionals, and producing short reports on topics of current interest in private equity. This year’s conference will be held in November at UNC-Chapel Hill.

For more information about the Private Equity Research Consortium, access to complete and ongoing research projects, and how to apply for access to data available through the consortium, click HERE.

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-23-13

Altus Capital Partners Adds Three to Professional Staff

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Middle market private equity firm Altus Capital Partners has added three new staff members to its investment team. Joining the firm are Senior Associate Scott Johnson, Associate Mike Barry, and Assistant Controller Joseph Melo.

“We will continue to invest in resources as we move ahead in investing Altus Capital Partners II and managing our portfolio. These three additions to our staff, at both our Connecticut and Illinois offices, bring additional depth to our investment and support teams,” said Russell Greenberg, Co-Founder and Managing Partner of Altus.

Mr. Johnson joined Altus Capital this month. He has over five years of combined private equity and M&A experience, and prior to joining Altus Capital worked for Parthenon Capital Partners and Performance Equity Management. At Performance Equity Management, he completed direct investments and fund investments across a variety of company sizes and industry sectors. Mr. Johnson began his career at Deloitte Consulting, where he focused on M&A transactions within Deloitte’s Strategy and Operations practice. He is a graduate of Boston University and holds an MBA from Dartmouth.

Mr. Barry started his career as an analyst in the Investment Banking Group of BB&T Capital Markets, where he worked on both buy-side and sell-side M&A, leveraged buyout, and equity capital markets transactions across a range of industries. He is a graduate of the University of South Carolina with a dual degree in Corporate Finance and International Business. Mr. Barry will work in the firm’s Lincolnshire, IL office.

Mr. Melo joined Altus Capital in March and has over nine years of accounting, reporting, operations and client service experience in the private equity industry. He was most recently at the Morgan Stanley private equity administration arm, where he was a Fund Controller in New York. He has extensive knowledge of buyout, fund of funds, venture capital and private equity fund accounting and managing all aspects of financial operations. Mr. Melo is a graduate of Berkeley College, where he earned his Bachelor of Business Administration in Accounting.

Altus Capital Partners invests in corporate divestitures, management-led buyouts, and privately held or family-owned businesses with manufacturing operations based primarily in the Midwest and Eastern regions of the United States. Target companies will have at least $5 million of EBITDA and an enterprise value from $30 million to $100 million. The firm is headquartered in Wilton, CT with an additional office in Lincolnshire, IL (www.altuscapitalpartners.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-23-13

Private Equity Active in Information Industry

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Berkery Noyes has just published its Q1 2013 mergers and acquisitions trend report for the Information Industry. The report features companies in the Media and Marketing, Software, and Online and Mobile Industries and analyzes M&A activity during Q1 2013 and compares it with the past four quarters. A link to a free copy of the report is available at the end of this article.

According to Berkery Noyes, the transaction volume in the Information Industry decreased two percent since Q4 2012. Deal flow in the latter part of 2012 was driven by several factors, including an expected rise in capital gains taxes in the beginning of 2013.

In the first quarter, private equity acquirers accounted for 13 percent of the industry’s transaction volume, which was nearly the same as in Q4 2012. The Information Industry’s largest overall deal in Q1 2013 was CVC Capital Partners’ announced acquisition of Cerved Group, a corporate information database, for $1.5 billion.

Overall transaction value decreased 62 percent, from $45.3 billion in Q4 2012 to $17.4 billion in Q1 2013. The industry’s highest value during the last 15 months occurred in Q4 2012, which was one component behind this quarter-to-quarter value decrease. In addition, the median revenue multiple between Q4 2012 and Q1 2013 declined from 1.8x to 1.6x, while the median EBITDA multiple fell from 9.5x to 8.3x.

Mobile related transactions in the Information Industry rose 33 percent in Q1 2013. Notable acquirers in the mobile geo-location subset included Apple’s acquisition of WifiSlam and Groupon’s acquisition of Glassmap. In the Health & Pharmaceutics segment, the highest value deal in the quarter involved Epocrates, a mobile point-of-care medical application. Epocrates was acquired by Athena Health for $216 million.

Regarding other markets in the Information Industry, M&A volume in the broad based governance, risk, and compliance (GRC) space increased 17 percent between 2011 and 2012. There were several associated transactions within the finance vertical in Q1 2013, such as Temenos Group’s acquisition of TriNovus, a provider of SaaS based compliance solutions.

“The GRC market currently consists of vendors offering fragmented products on different systems,” said Peter Ognibene, Managing Director at Berkery Noyes. “This can lead to a business process that silos off various risks and data. GRC vendors are working to fix this problem by adding content and combining their package offerings, thereby enabling them to provide a holistic solution for their clients that measures and reports on a wide range of risk factors. Many companies are placing more of an emphasis on corporate governance and risk management in their day-to-day operations. This could allow for further consolidation as large GRC vendors make acquisitions to supplement their offerings.”

A free copy of the Q1 2013 mergers and acquisitions trend report for the Information Industry is available by clicking HERE.

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-23-13

O’Brien Capital Acquires Classic Equine Equipment

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O’Brien Capital has acquired Classic Equine Equipment, a designer and manufacturer of horse stalls and stable equipment.

“O’Brien is excited to partner with the strong management team at Classic Equine to launch a new chapter of growth for the business and bring new opportunities for the company’s customers and employees,” said Bob O’Brien, Founder of O’Brien Capital.

Classic Equine Equipment is a designer and manufacturer of equine stall systems, barn components, exercisers and accessories for the equine industry. Products include Dutch doors, stable windows, composite flooring, free run exercisers, and full stride horse treadmills. The company was founded in 1991 and is based in Fredericktown, MO (www.classic-equine.com).

R.L. Hulett & Company (www.rlhulett.com), a St. Louis based investment bank, originated the transaction for O’Brien Capital and acted as the firm’s exclusive financial advisor in negotiating the transaction and facilitating the closing. “R.L. Hulett’s M&A knowledge and expertise were instrumental in sourcing and negotiating the transaction,” said Mr. O’Brien.

O’Brien Capital invests in lower middle-market manufacturing and industrial service businesses in the Midwest. The firm is based in St. Louis (no website found).

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-23-13

Vector Capital Exits RAE Systems

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RAE Systems, a provider of  and radiation detectors, and a portfolio company of Vector Capital, has entered into an agreement to be acquired by Honeywell for $340 million in cash. Vector acquired RAE Systems in June 2011. The closing of this transaction is expected to occur in the second quarter of 2013.

“We have had a very successful investment in RAE and partnership with the founders and management team. We are pleased to have selected a buyer for RAE that will continue to invest in the company and its products to further grow the business. RAE Systems is the most recent example in Vector’s long history of partnering with management to realize significant value by growing and transforming technology companies,” said David Fishman, a Managing Director at Vector Capital.

RAE Systems designs and manufactures gas sensors and radiation detectors. The company offers fixed and portable gas detection products, including handheld and personal chemical, compound and radiation detection instruments. The company’s products are used in energy production, refining, industrial and environmental safety, public venue safety, and government first responder markets. RAE Systems is based in San Jose, CA (www.raesystems.com).

“With the full support of Vector Capital, we have broadened our product offerings, expanded our global presence, and optimized our internal operations. Our range of products, innovation in photo-ionization detection and wireless technology are highly complementary to Honeywell,” said Robert Chen, CEO of RAE Systems.

Vector Capital invests in spinouts, buyouts and recapitalizations of private or public technology businesses. The firm is based in San Francisco (www.vectorcapital.com).

Citigroup Global Markets is acting as financial advisor to RAE Systems and Vector Capital, and Shearman & Sterling is acting as RAE and Vector Capital’s legal advisor.

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-23-13

Highlander Acquires Tradesman Truck Accessories

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Lund International, a portfolio company of Highlander Partners, has acquired the assets of Tradesman Truck Accessories, a manufacturer of truck and utility boxes.

“This acquisition, Lund’s second in the last sixty days, confirms our strategy to seek strategic opportunities that build on and expand Lund’s existing business and product offering. We continue to evaluate numerous other potential acquisitions and expect to make additional acquisitions in the future,” said Jeff Hull, Chairman of Lund and Managing Partner of Highlander.

Tradesman Truck Accessories is a manufacturer of aluminum and steel truck and utility boxes and liquid storage tanks. The company was founded in 1973 and is based in Winters, TX (www.tradesmantruck.com).

Lund International is a designer, manufacturer and marketer of branded automotive aftermarket accessories for passenger cars, light trucks, and heavy trucks. Its products include vent visors, hood shields, floor mats, tonneau covers, storage boxes, and running boards, among others. The company is based in Buford, GA (www.lundinternational.com).

“This acquisition bolsters Lund’s existing aluminum box offering and provides us a complete category line-up by expanding our capabilities into the steel box and liquid storage tank markets. Tradesman is an excellent strategic fit for Lund and we will be able to offer our existing and new customers virtually any box or transfer tank product,” said Mitch Fogle, President of Lund.

Highlander Partners makes investments in middle market businesses in targeted industries in which the principals of the firm have significant operating and investing experience. Sectors of interest include healthcare, basic manufacturing, food, and building materials. The firm has over $500 million in capital under management and is based in Dallas (www.highlander-partners.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-23-13