May 15, 2013
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Archives for May 15, 2013

Babson Moves into Middle Market

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Babson Capital Management has formed Babson Capital Finance (BCF) as a new operating subsidiary to provide financing to middle-market companies and specialized industries.

“We plan on establishing Babson Capital Finance as a leading global finance company serving middle market companies, especially those backed by financial sponsors and in certain specialized industries,” said Tom Finke, CEO and Chairman of Babson Capital Management, who notes that many regional banks and other traditional financiers have either reduced their activity levels or withdrawn completely from the leveraged finance market in recent years due to increasing financial regulations and changing economic conditions.

“As these traditional providers reduce their footprint in the leveraged finance market it presents a unique opportunity for Babson Capital Finance. As a global business with teams located in the U.S., Europe, Asia and Australia, we are well positioned to fill that void,” said Mr. Finke.

Mike Hermsen, Managing Director of Babson Capital Management, has been named as CEO of BCF, and will report to Tom Finke, CEO and Chairman of Babson Capital Management. Mr. Finke will also serve as chairman of BCF’s Board of Directors.

Babson Capital has $180 billion in assets under management and is a member of the MassMutual Financial Group. The firm has offices in Boston and Springfield, MA, New York, Chicago, Charlotte and Los Angeles and nine other offices in Europe, Asia and Australia (www.BabsonCapital.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-15-13

Carlyle’s David Rubenstein Discusses Changes to PE

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The Carlyle Group has released the latest installment of the firm’s ValuCast audio podcast series with Co-Chief Executive Officer David Rubenstein discussing the top ten changes to the private equity industry following the Great Recession.

During the podcast, which runs just under nine minutes, Mr. Rubenstein discusses trends and developments in the industry, including:

  • Increased regulatory and public scrutiny
  • Emergence of the individual investor
  • Changes in fundraising dynamics
  • Institutional investors seeking a greater variety of products and strategies
  • Traditional private equity firms becoming alternative asset managers
  • Increased focus on operational improvement versus financial engineering

Click HERE to listen to the podcast.

The Carlyle Group invests in buyouts, growth capital, real estate and leveraged finance in Africa, Asia, Australia, Europe, North America and South America. Sectors of interest include aerospace & defense; automotive & transportation; consumer & retail; energy & power; financial services; healthcare; industrial; infrastructure; technology & business services; and telecommunications & media. The Carlyle Group employs 1,400 people in 34 offices across six continents and is based in Washington, DC (www.carlyle.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-15-13

Wind Point Partners Creates $1 billion Contract Food Manufacturer

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Wind Point Partners will merge two of its portfolio companies – Hearthside Food Solutions and Ryt-way Industries, to create a contract food manufacturer with over $1 billion in sales and 19 manufacturing facilities across seven states.

Wind Point acquired Hearthside in April 2009 and Ryt-way in August 2008. Since being acquired by Wind Point, both Hearthside and Ryt-way have completed three add-on acquisitions that have diversified each company’s customer base and product portfolio.

Hearthside is an independent bakery and a contract manufacturer of grain-based food and snack products. Hearthside operates 12 food manufacturing facilities in five states and is headquartered in Downers Grove, a suburb of Chicago (www.hearthsidefoods.com).

Ryt-way is a provider of dry-food contract manufacturing to food and consumer products companies. Through its Ryt-way Equipment Group the company also provides packaging equipment installation services to food and beverage companies. Ryt-way operates seven production facilities across four states and is headquartered in Lakeville, a suburb of Minneapolis (www.rytway.com).

Rich Scalise, CEO of Hearthside Food Solutions, will assume the role of CEO for the combined business. Mr. Scalise is a 35-year veteran of the food industry who most recently served as President of Ralcorp Frozen Bakery Products, a division of Ralcorp Holdings (NYSE:RAH). He previously spent 18 years with ConAgra Foods in a number of roles including his last position as President and COO of ConAgra’s $3 billion Refrigerated Foods Division.

“Hearthside and Ryt-way have a complementary customer base and supply chain capabilities. The combined company will be not only significantly larger but also able to deliver a wider array of services,” said Mr. Scalise.

Wind Point Partners invests from $20 million to $70 million of equity in companies with revenues from $100 million to $500 million and EBITDAs of at least $8 million. Industries of interest include business services, consumer products, healthcare and industrial products. The firm has approximately $2.5 billion in capital under management and has completed more than 90 investments and 161 add-on acquisitions across its seven private equity funds. Wind Point Partners is based in Chicago (www.wppartners.com).

“This is a great opportunity for our customers. By offering a broader suite of capabilities, Hearthside and Ryt-way will become a one-stop shop for contract manufacturing,” said David Finch, CEO of Ryt-way.

“Rich and David have done an excellent job driving strong revenue growth, commercializing new products and completing accretive acquisitions at Hearthside and Ryt-way,” said Mark Burgett, a managing director at Wind Point. “By combining two industry leaders, we are able to create significant growth opportunities for the business in addition to value for our investors. Given the similarities between the businesses, we expect to start realizing benefits immediately.”

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-15-13

Quarton Advises Crown on Sale to High Road and Charter Oak

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Quarton Partners acted as the exclusive financial advisor to The Crown Group, a provider of coating services to the automotive, agricultural, heavy truck and industrial markets, on its recent sale to High Road Capital Partners and Charter Oak Equity. The sellers of Crown were members of the Baer family which founded the company in 1965.

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).

Robert Parker, Managing Director, led the transaction for Quarton. Other team members for Quarton included Greg McGowan, Director, and Mike Knoblock, Analyst.

The Crown Group provides coatings for electrocoat, powder coat, and liquid applications to the automotive, agricultural, heavy truck and other industrial end markets. The company also provides assembly, warehousing, and sequencing services, as well as component finishing operations and inventory management. The Crown Group has facilities in the Michigan cities of Port Huron, Detroit and Shelby Township; Fort Wayne, IN; Portland, TN; Waterloo, IA; and Greenville, SC. The Crown Group was founded in 1965 by Philip Baer and is headquartered in Warren, MI (www.thecrowngrp.com).

“Crown’s disciplined and systematic operational approach, including the ability to seamlessly integrate itself in its customer’s supply chain and provide value-added logistics services, is highly valued by its customers for whom avoiding business interruption or delays is paramount,” said William Connell, High Road Partner. “We are excited to work with Crown’s outstanding management team and Charter Oak to drive multiple growth initiatives.”

High Road Capital Partners invests in manufacturing, service, or value-added distribution businesses with revenues of $10 million to $100 million and EBITDAs of $3 million to $10 million. High Road was formed in 2007 and currently manages over $335 million of committed capital. The firm is based in New York (www.highroadcap.com).

Charter Oak Equity invests in niche manufacturing, packaging, medical products & services, specialty chemicals, consumer products and financial services companies ranging in size from start up to $150 million of enterprise value. Since founding in 1992, the firm has invested over $500 million in 27 portfolio companies and completed more than 50 acquisitions. Charter Oak is based in Westport, CT (www.charteroak-equity.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-15-13

Jason Gelberd Joins Comvest as Managing Director

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Comvest Partners has hired Jason Gelberd as a Managing Director in its lending business, Comvest Capital. In his new position, Mr. Gelberd will be responsible for originating, structuring, and managing Comvest Capital debt investments.

“We are delighted to have Jason join our lending team. He comes to us with a very strong credit background, and has demonstrated excellence developing creative structures to serve specialty industries that are relatively under-banked,” said Robert O’Sullivan, a partner of Comvest Capital. “Jason’s expertise lending to the specialty finance, education and healthcare industries is particularly complementary given that these are core industries of focus for Comvest. His addition marks a significant milestone as we continue to strengthen our lending platform serving less competitive segments of the lower middle market.”

Mr. Gelberd has nearly 20 years experience financing sponsored and non-sponsored middle-market companies in a variety of industries throughout the capital structure. Previously, Mr. Gelberd was a Director with Goldman Sachs Specialty Lending Group where he focused on underwriting and structuring senior and junior debt transactions to middle-market companies. Prior to Goldman Sachs, he was a Vice President at Antares Capital, providing senior and junior capital to private equity sponsor backed middle-market companies. He began his lending career at First Source Financial and LaSalle National Bank. Mr. Gelberd received an MBA from DePaul and a BBA in Finance from the University of Iowa.

The Comvest Group provides debt and equity to middle-market companies. For debt investments the firm will invest from $2 million to $20 million per transaction in companies with $10 million to $200 million of revenue that have positive or negative EBITDA. For equity investments the firm will invest from $10 million to $50 million per transaction in companies with $15 million to $500 million of revenue that have positive or negative EBITDA. Since 2000, Comvest has invested more than $1.7 billion of capital in over 115 public and private companies worldwide. The firm is based in West Palm Beach (www.comvest.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-15-13

Trivest Acquires American Covers

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Trivest Partners has acquired American Covers (dba HandStands), a designer and supplier of automotive air freshener products. The existing HandStands shareholders have retained a significant equity interest in the company. The acquisition of HandStands represents the 1st platform company investment for Trivest Fund V, a $415 million fund which closed in October 2012.

Chris Anderson, HandStands’ CEO, along with the company’s current management team, will continue to lead daily operations. “From our first meeting with Trivest, it was clear that they not only have the experience and capital to support HandStands in our next chapter of growth and success, but, and perhaps more importantly, the Trivest and HandStands teams share overlapping cultures based on transparency, sustainability and trust,” said Mr. Anderson.

HandStands designs and markets automotive air freshener products. The company’s products are sold through the mass market, automotive aftermarket, value, and food & drug channels. Brand names include Refresh Your Car!, DRIVEN and Bahama & Co.  HandStands was founded in 1983 and is based in Draper, UT (www.handstands.com).

“We are delighted the HandStands team identified Trivest as the best partner to help build on the company’s impressive track record. Chris Anderson and his team are among the most talented and capable managers we have worked with in the lower middle market. We continue to be impressed not only with management’s ability to drive industry growth through innovation, but also their focus on the long-term success of their retail partners,” said Troy Templeton, Trivest’s Managing Partner.

Trivest invests in founder or family owned businesses in the United States and Canada that have revenues of at least $25 million and cash flows of at least $5 million. Sectors of interest include business services, niche manufacturing, consumer products, and franchisors. The firm was founded in 1981 and has completed 190 transactions totaling more than $5 billion in value. Trivest is headquartered in Miami (www.trivest.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-15-13

Fulcrum Invests in Tradesmen

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Fulcrum Capital Partners has made a C$20 million equity investment in Tradesmen Enterprises, a facility and pipeline construction contractor. Tradesmen is the sixth investment for Fulcrum’s fourth investment fund.

Tradesmen Enterprises is a facility and pipeline construction contractor with a particular focus on modular fabrication. The company has completed over 300 projects throughout Northern Alberta and British Columbia. Tradesmen Enterprises was founded in 2006 and is headquartered in Grande Prairie, Alberta (www.tradesmenenterprises.com).

The new investment will be used to facilitate Tradesmen’s growth plans, including the planned construction of a new fabrication and modular construction facility that will more than triple the company’s capacity.

Fulcrum Capital Partners manages over C$750 million of capital and invests both equity and subordinated debt in companies with revenues of C$10 million to C$250 million. Sectors of interest include services, manufacturing, consumer products, distribution, food and retail. The firm has office in Vancouver and Toronto (www.fulcrumcapital.ca).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-15-13

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