April 24, 2013
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Archives for April 24, 2013

H.I.G. Capital Acquires Pegasus Financial Services

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H.I.G. Capital has acquired Pegasus Financial Services, a processor of commissions payments between hotels and travel agencies.

Pegasus Financial Services (PFS) is a processor of commissions paid by hotels to travel agencies. Services include commissions receipt and disbursement, foreign currency exchange, and reconciliation and tracking services. PFS was founded in 1992 and is based in Dallas (hwww.pegs.com).

Prospect Capital provided a $34.4 million senior secured financing to support this acquisition. “Prospect quarterbacked and structured a creative debt financing solution on an accelerated timeline, demonstrating again why we have worked with Prospect on multiple occasions,” said William Nolan, a Managing Director of H.I.G.

H.I.G. Capital specializes in providing capital to small and medium-sized companies and invests in management-led buyouts and recapitalizations of manufacturing or service businesses. H.I.G. Capital has more than $11 billion of equity capital under management. The firm was founded in 1993 and is based in Miami with additional offices in Atlanta, Boston, Chicago, Dallas, New York, San Francisco, London, Hamburg, Madrid, Paris, and Rio de Janeiro (www.higcapital.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-24-13

Charterhouse Acquires TrustHouse Services

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Elior, a contract food services company and a portfolio company of Charterhouse Capital Partners, has acquired TrustHouse Services, a contract food services company and a portfolio company of Gryphon Investors. This transaction closed in March 2013.

TrustHouse Services Group is a food service provider focused on the healthcare, education and corrections sectors. Divisions of TrustHouse include Aladdin Food Management (Wheeling, WV); AmeriServe Food Management (Columbia, MO); Fitz Vogt & Associates (Walpole, NH); A’viands (Minneapolis, MN); Lindley Food Services (New Haven, CT); and Valley Services (Jackson, MS). TrustHouse manages over 675 client accounts across 45 states. The company is headquartered in Charlotte, NC (www.trusthouseservices.com).

Elior provides contract catering and related services worldwide. It offers catering and services within the education, business and industry, and healthcare and seniors sectors, as well as in leisure, culture and travel sectors. The company also provides support services, including cleaning services and facilities management services. In addition, it operates concessions in the national museums sector, railway stations, and the leisure market. Elior’s concessions business comprises food services, retail facilities, and a range of related services provided on a daily basis at motorway service areas, airports, sports stadia, railway stations, and national museums. The company was founded in 1991 and is headquartered in Paris, France (www.elior.com).

Charterhouse Capital Partners invests up to €1 billion per transaction in the industrial and commercial sectors with a particular interest in service companies. Target companies are typically headquartered in Western Europe and have equity values between €400 million and €4 billion. The firm is based in London (www.charterhouse.co.uk).

CIT Group has arranged a $220 million senior secured credit facility to support the acquisition. CIT Corporate Finance served as Sole Lead Arranger and Administrative Agent for the transaction. Financing was provided by CIT Bank, the U.S. commercial bank subsidiary of CIT.

“We are pleased to continue our growth strategy for Elior as it partners with TrustHouse to create a world-class food services business. We selected CIT to lead the financing of this transaction because of their relationship with TrustHouse Services and their expertise in underwriting and syndicating senior loans in the U.S. market,” said Jamie Arnell, Partner of Charterhouse.

CIT is a bank holding company with more than $33 billion in assets. Sectors of interest include small business and middle market lending, factoring, retail finance, aerospace, equipment and rail leasing, and vendor finance. CIT was founded in 1908 and is based in New York (www.cit.com).

“This transaction demonstrates the commitment CIT has to providing comprehensive financial solutions to private equity firms as they complete acquisitions,” said Eric Toizer, Managing Director of CIT Sponsor Finance.

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-24-13

H.I.G. Acquires Petrochem Carless

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Haltermann, a producer of specialty hydrocarbons and a portfolio company of H.I.G. Europe, has acquired Petrochem Carless, a UK-based refiner and producer of hydrocarbon chemicals.

Petrochem Carless (PCL) is a specialty oil and chemicals company that supplies condensate products like naphtha, kerosene and white spirit. The company also produces aromatic solvents, drilling fluids, process oils, performance fuels as well as antifreeze and brake fluid products. PCL’s products are used in the downstream chemicals, agrochemicals, oil and gas, consumer goods, printing, and automotive sectors. The company’s revenues in 2012 were approximately £350 million. PCL operates a specialist refinery in Harwich, UK and blending sites in Gunness, UK and Ghent, Belgium. The company was founded in 1859 and is headquartered in Leatherhead, UK (www.petrochemcarless.com).

Haltermann is a producer of specialty hydrocarbons with a particular focus on pentanes, high purity hydrocarbons and test and reference fuels. H.I.G. Europe acquired Haltermann from Dow Chemical in July 2011. Haltermann is based in Hamburg, Germany (www.haltermann.com).

“With this milestone follow-on investment, H.I.G. Europe brings together two strong players in the European specialty hydrocarbon landscape. It is our goal to ensure that both companies continue their growth trajectory. This investment underlines H.I.G.’s investment strategy which focuses on supporting its portfolio companies to drive significant value creation through various growth and efficiency improvement initiatives,” said Paul Canning, Managing Director at H.I.G. Europe.

The H.I.G. deal team for this acquisition consisted of Mr. Canning, Wolfgang Biedermann, Johannes Natterer, Alastair Mills, and Amer Khatoun.

H.I.G. Capital specializes in providing capital to small and medium-sized companies and invests in management-led buyouts and recapitalizations of manufacturing or service businesses. H.I.G. Capital has more than $11 billion of equity capital under management. The firm was founded in 1993 and is based in Miami with additional offices in Atlanta, Boston, Chicago, Dallas, New York, San Francisco, London, Hamburg, Madrid, Paris, and Rio de Janeiro (www.higcapital.com) (www.higeurope.com).

“PCL and Haltermann are an almost perfect fit. With their common technology and raw material markets, and yet complementary sales patterns with regard to products and regions, they together will have a significantly enlarged product offering and regional coverage which we intend to leverage to generate strong growth and better serve our customers,” said Dr. Johannes Natterer, Director at H.I.G. Europe.

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-24-13

U.S. Restaurant Industry Growing, Private Equity Active

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The U.S. restaurant industry is beginning to sizzle, according to the 23rd edition of the Chain Restaurant Industry Review, published by GE Capital, Franchise Finance. Merger and acquisition activity increased to $3.9 billion from $3.7 billion, and the total volume of syndicated leveraged loans in the restaurant space increased almost 21 percent last year.

[Highlights of the 2013 Chain Restaurant Industry Review will be presented by Todd Jones, Managing Director for GE Capital, Franchise Finance, in a webinar on Tuesday, April 30, 2013 at 2:00pm EDT. Click HERE to register]

In a sign that the American consumer was feeling more confident about disposable income levels, nominal restaurant sales rose 4.2 percent to $425.6 billion in 2012. Sales are projected to increase 3.8% to $441.9 billion this year.

The Top 100 restaurant chains’ system-wide sales were nearly $210 billion, representing more than half of all restaurant sales last year, and gaining 0.5 percent market share from 2011. Their sales grew 4.7 percent year-over-year, outperforming both the foodservice and the restaurant industries, as well as nominal GDP. Total unit growth for the Top 100 at 1.8 percent was the highest since 2007. Franchised unit growth jumped 180 basis points to 77.3 percent of the total — the largest share since the survey’s inception 23 years ago.

Private equity firms paid premium purchase prices — multiples of eight to 10 times revenues — for growth companies and franchisors. Non-sponsor deals jumped 46.0% to $11.2 billion in 2012, while sponsor deals declined 11.2%. Nearly three-quarters (73 percent) of the total volume was driven by refinancing activity. After two years of single initial public offerings, four were successfully completed in 2012. Three companies went private.

“In contrast to the slow but promising recovery in the global financial markets, the U.S. restaurant industry has been very focused on growing and expanding,” said Agustin Carcoba, president and CEO of GE Capital, Franchise Finance. “The activity has been driven by the improving economy, changing consumer habits and shifting U.S. demographics. People who are investing in the restaurant industry understand the importance of three factors — operational performance, financial metrics and asset strategy — and how they have changed through the latest cycle.”

Full service restaurant (FSR) sales increased 3.1 percent to $202.2 billion, while quick service restaurant (QSR) sales increased 5.6 percent to $179.3 billion. The FSR category includes family, casual, high-end casual and fine dining restaurants, typically those that provide table service. The QSR category includes limited service, fast casual or take-out restaurants with limited menus and, typically, no table service. QSR menu prices increased at a 3.2 percent annual rate in 2012 compared to 2.2 percent in 2011. FSR menu prices increased 2.6 percent in 2012 compared to 2.3 percent in the prior year.

With the cost of goods sold (COGS) and labor costs comprising more than 60 percent of operating expenses at both FSRs and QSRs, it’s important for operators to understand how to achieve higher margins. By carefully managing COGS as well as advertising, rent, royalties, etc., operators may be able to achieve substantial savings and, thus, increase profits.

“Restaurants typically have relatively limited profit margins, so operators are always trying to adapt to changing consumer tastes while balancing their other costs,” said Mr. Carcoba. “Ultimately, these are successful entrepreneurs who are trying to grow their businesses by enhancing their endangered brand equity and pleasing their customers. When they’re able to reinvest, they can make capital expenditures — for example, investing in new technologies or making equipment purchases — and eventually open new locations and hire more employees. It’s the American dream in action.”

GE Capital, Franchise Finance specializes in financing mid-market operators with multiple stores in the restaurant and hospitality industries. With more than 30 years of experience and $9 billion in served assets, it provides financing to more than 2,000 customers and 16,000 property locations (www.gefranchisefinance.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-24-13

AUA Private Equity Adds Operating Partner

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AUA Private Equity Partners has hired Robert Sigel, a food industry executive, as a new Operating Executive. Mr. Sigel will focus on consumer, food and beverage and family-owned business opportunities.

“I have had the pleasure of working with Bob on several opportunities. He brings a unique operating perspective and has deep industry relationships within our targeted investment areas. We are fortunate to have Bob join us as an Operating Executive to expand our capabilities in the food and beverage sectors,” said Andy Unanue, Managing Partner of AUA Equity.

Mr. Sigel started his career at Millbrook Distribution Services, a value added distributor of health, beauty care, general merchandise, and specialty food products. In 1986, Mr. Sigel played a key role in the sale of Millbrook to McKesson Corporation and he became President and Chief Executive Officer of McKesson’s Service Merchandising Division. In 1997, McKesson decided to focus strictly on health care related businesses, and Mr. Sigel, together with an investment partner, purchased Millbrook from McKesson.

Mr. Sigel’s vision was to grow the specialty food portion of Millbrook as well as to vertically integrate the company by acquiring food brands. He and his partners formed a branded food group and eventually bought Manischewitz®, Guiltless Gourmet®, and Rokeach®. In 2007, Mr. Sigel led the successful sale of Millbrook to United Natural Food (UNFI) where he held the titles of President and CEO of Millbrook, and was named an Executive Officer of UNFI and President of Specialty Distribution. He retired from UNFI in 2008 and formed R.A. Sigel and Company to acquire, invest in and consult to branded food businesses. Mr. Sigel graduated from Bowdoin College with a BA in Economics, and The Whitman School at Syracuse University with an MBA in Accounting and Finance.

AUA Private Equity Partners makes equity investments in companies in the consumer, media and business services sectors with a particular focus on Hispanic-oriented companies and family-owned businesses located in the United States. The firm invests from $10 million to $30 million of equity in companies that generate $3 million to $15 million in EBITDA. The firm is based in New York (www.auaequity.com).

“I have looked at a number of opportunities with the AUA Equity team and have been extremely impressed with their intimate knowledge of the food space, vast access to investment opportunities and unique approach and understanding of family-owned business issues and concerns,” said Mr. Sigel. “I am excited to join AUA Equity as an Operating Executive where I can leverage my background and relationships to expand their already impressive effort in the food space. Together, we have an unparalleled ability to partner with growing branded consumer companies seeking operating expertise, distribution relationships and strategic capital.”

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-24-13

Payments Processing Pro Joins Satori Capital

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Satori Capital has added Mike Beltz to its investment team as a new operating partner. Mr. Beltz will assist Satori with identifying and investing in companies within the payments processing sector, typically with enterprise values ranging from $25 million to $75 million.

Mr. Beltz joins Satori with more than 25 years of experience in the financial technology and payments processing industry, including board and executive positions with companies such as First Data Corporation, Alliance Data Systems, and ChoicePay.

Mr. Beltz began his career at First Data Corporation where he spent 14 years leading a variety of sales, marketing, and merger and acquisition initiatives, including the pursuit, negotiation, and acquisition of Signet, Europe’s largest association of credit card processors. After the acquisition of Signet, he was instrumental in creating the Merchant Alliance Program, which created strategic partnerships between eight of the nation’s largest merchant acquirers and First Data Corporation. Mr. Beltz was then recruited to Alliance Data Systems where he led various corporate development strategies that grew revenues from $100 million to $500 million.

“In a rapidly evolving industry with emerging payments technologies, I’m thrilled to share my experiences with others as they attempt to navigate this dynamic market,” said Mr. Beltz. “From my experience, a strategic capital partner can significantly assist middle-market companies in their evolution to the next echelon. Satori’s team of former CEOs and executives provides an operational mindset that helps it better collaborate with a management team to accelerate the growth of a business. I am enthusiastic about the opportunity to work with Satori, a firm with a long-term partnership philosophy that is unique in the private equity landscape.”

Satori Capital invests in companies that have revenue of $25 million to $200 million and free cash flow of $3 million to $15 million. Sectors of interest include business services; consumer products; e-commerce; financial services; manufacturing; and software/IT/telecom. Satori Capital is based in Dallas (www.satoricapital.com).

“Mike’s deep payments processing proficiency coupled with Satori’s strategic, operational, and financial resources offer business owners a compelling partnership opportunity. Mike has a unique ability to leverage his experience leading multi-billion dollar enterprises in a way that addresses the challenges and opportunities facing emerging middle-market businesses. We are thrilled to work with Mike to invest in and build businesses with enduring value,” said
Sunny Vanderbeck, a Satori Managing Partner.

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-24-13

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