Archives for June 28, 2013

Kohlberg & Company Acquires Risk Strategies Company

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Kohlberg & Company has acquired Risk Strategies Company (RSC), an insurance & benefits brokerage firm. Kohlberg invested in Risk Strategies Company through its new $1.6 billion fund, Kohlberg Investors VII, which closed in May 2013.

As part of the transaction, insurance industry executive Roger Egan has joined RSC as Executive Chairman. Mr. Egan brings 40 years of insurance brokerage experience in executive management and operations and as a director and investor in various companies and institutions across the insurance industry. He previously served as CEO of Integro, a commercial insurance brokerage, and spent more than 30 years in operating and executive management roles, including President, at insurance broker and risk adviser Marsh.

Risk Strategies Company is a national insurance & benefits brokerage and risk management firm. Customers include middle and upper-middle market commercial companies and high-net-worth individuals. RSC’s vertical industry expertise includes manufacturing, construction, social service, healthcare, higher education, private equity, private client and real estate. The company was founded in 1997 and is headquartered in Boston (www.risk-strategies.com).

RSC’s management and employees have retained a significant ownership interest in the company and its executive team, led by Chief Executive Officer and Founder Michael Christian, will remain with the company.

“Today Risk Strategies reaches a major milestone in our continued evolution as a national insurance brokerage industry leader,” said Mr. Christian. “With the support of our new partners, we will rapidly accelerate our plans to be a more powerful force in the brokerage arena. Kohlberg & Company’s track record of investment success and singular focus on value creation in the middle market makes them the ideal investment partner for Risk Strategies, and Roger Egan’s deep industry experience will be invaluable in our continuing development and implementation of our strategic growth plans. I look forward to working closely with Roger and Kohlberg to take our company to new heights.”

Kohlberg & Company is a control investor in a variety of industries including industrial manufacturing; consumer products; business services; healthcare services; and financial services. The firm concentrates on transactions with EBITDA between $20 million and $100 million where it can invest between $50 million and $200 million of equity. Kohlberg was founded in 1987 and is based in Mt. Kisco, NY (www.kohlberg.com).

“Risk Strategies has carefully and steadily grown organically and through thoughtful M&A to become one of the premier insurance brokerage firms serving the mid-market and upper mid-market during the past fifteen years,” said Mr. Egan. “I am excited about working with Michael Christian and his team as we seek to expand the firm’s national footprint, add resources, and build value for clients, partners and shareholders.”

© 2013 PEPD • Private Equity’s Leading News Magazine • 6-28-13

Bridgepoint Exits Permaswage

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Permaswage, a designer and manufacturer of aerospace fluid fittings and a portfolio company of Bridgepoint, has been sold to Precision Castparts for $600 million in an all cash transaction. Bridgepoint acquired Permaswage in 2007.

Permaswage is an aerospace component supplier manufacturing permanent and separable couplings used to connect hydraulic, air, fuel or other tubing in all types of civil and military aircraft. Permaswage also supplies components used by utilities for electricity sub-stations. The company’s customers include Airbus and Boeing and four of the top five US utility companies. Permaswage has facilities in Los Angeles (headquarters), Paris and Suzhou (China) (www.permaswage.com).

Precision Castparts is a diversified manufacturer of complex metal components and products sold to the aerospace, power, and general industrial markets. Products include large investment castings, airfoil castings, forged components and fasteners for aerospace applications. Precision Castparts also manufactures extruded seamless pipe, fittings, forgings, and clad products for power generation and oil & gas applications; commercial and military airframe aerostructures; and metal alloys and other materials to the casting, forging, and other industries. The company is headquartered in Portland, OR (www.precast.com).

Bridgepoint typically acquires businesses valued between €200 million and €1 billion in a range of sectors. The firm has offices in Frankfurt, Istanbul, London, Luxembourg, Madrid, Milan, Paris, Stockholm and a portfolio development office in Shanghai (www.bridgepoint.eu).

Lazard served as the exclusive financial advisor to Permaswage on this transaction.

© 2013 PEPD • Private Equity’s Leading News Magazine • 6-28-13

Keating Capital Completes Tremor Video IPO

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Tremor Video, a portfolio company of Keating Capital, has completed the pricing of its initial public offering of 7.5 million shares of common stock at a price of $10 per share. The company’s shares are now trading on the New York Stock Exchange under the ticker symbol TRMR.

Keating Capital invested $4 million in Tremor Video in September 2011. Based on the IPO price, Keating Capital’s investment in Tremor Video common stock would have a value of approximately $6 million, representing 1.5x its investment cost. Keating Capital’s stock is not eligible for resale until after the 180-day post-IPO lockup period.

Tremor Video is an online video technology and advertising company that provides video advertising services to major brand advertisers and publishers of Web videos. The company was founded in 2005 and is headquartered in New York (www.tremorvideo.com).

Keating Capital is a business development company that specializes in making pre-IPO investments in growth companies that are committed to and capable of becoming public. Tremor Video is the fourth Keating Capital portfolio company (out of a total of 20 portfolio company investments) that has successfully completed an IPO since Keating Capital’s first portfolio company investment in January 2010. Keating Capital has also exited one other portfolio company as part of a sale of a controlling stake to a private equity firm. Keating Capital is based in Greenwood Village, CO (www.keatingcapital.com).

Credit Suisse and Jefferies acted as joint book-running managers for the Tremor Video IPO which raised $75 million in gross proceeds. Canaccord Genuity and Oppenheimer & Co acted as co-managers for the offering.

© 2013 PEPD • Private Equity’s Leading News Magazine • 6-28-13

Fulcrum Equity Adds Partner

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Jim Douglass has joined Fulcrum Equity as a Partner. In his new role, Mr. Douglass will work with Fulcrum’s existing portfolio companies and will also be tasked with sourcing new investment opportunities.

“We’ve known Jim for over 20 years and have enjoyed watching his career develop and blossom,” said Fulcrum Founding Partner Jeff Muir. “We place a strong emphasis on surrounding ourselves and our companies with individuals of the highest caliber, and we’re certain that Jim will be a tremendous addition to our team.”

Mr. Douglass has more than 25 years of operations management, development and financial experience with companies in the financial services, marketing services and healthcare industries. He was most recently CEO of Vesdia, a provider of card-linked marketing programs for financial services, airline and hospitality companies. Vesdia merged with Cartera Commerce in January 2011. Mr. Douglass still serves on Cartera’s board of directors. Prior to his time at Vesdia, he served as CEO of Visionary Systems, a provider of decision systems for credit providers and retailers that was acquired by Trans Union in 2004. Mr. Douglass also served as CFO at CheckFree Corporation. He began his career with KPMG in its financial services practice.

“I’m excited to be joining Fulcrum – they’ve built a strong reputation as high quality, value-added investors,” said Mr. Douglass. “The substantial operating experience of both the partners and investor group makes Fulcrum the standout choice for many entrepreneurs.”

Fulcrum Equity Partners invests from $1 million to $5 million in companies that have revenues of $2 million to $75 million and are based in the Southeast. Sectors of interest include healthcare, information technology and technology-enabled operating companies. In February, Fulcrum closed its second fund, Fulcrum Growth Fund II, with capital commitments in excess of $93 million, surpassing its target of $75 million. Fulcrum has $140 million in capital under management and is based in Atlanta (www.fulcrumep.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 6-28-13

LBC Backs Monomoy’s Recapitalization of MPI

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LBC Credit Partners was Administrative Agent and Lead Arranger for a $35 million second lien term loan to support a recapitalization of MPI Products by Monomoy Capital Partners. Monomoy acquired MPI Products in November 2012.

MPI Products is a manufacturer of automatic transmission products, supplying automotive original equipment manufacturers with clutch plates, separator plates, and backing plates. The company’s automotive customers include several large car makers and an array of Tier I automotive suppliers. MPI also manufactures safety-critical and hydraulic components for heavy duty vehicles and general industrial customers. The company has approximately 700 employees at its four North American manufacturing facilities and is headquartered in Rochester Hills, MI (www.mpiproducts.com).

Monomoy Capital Partners has $700 million in assets under management and makes control investments in middle market businesses in the manufacturing, distribution, consumer product and foodservice industries. Over the past five years, Monomoy has closed over 40 middle market acquisitions, and its companies currently produce over $1.2 billion in combined sales and employ more than 4,000 people. The firm is headquartered in New York (www.mcpfunds.com).

LBC Credit Partners is a provider of middle market financing to companies with EBITDAs generally greater than $10 million. Products include senior term, unitranche, second lien, junior secured and mezzanine debt and equity co-investments supporting sponsored and non-sponsored transactions. LBC invests from $10 million to $50 million per transaction supporting acquisitions, growth strategies, refinancings, recapitalizations, and restructurings. LBC has more than $1.3 billion of capital under management and is headquartered in Philadelphia with additional offices in Chicago and New York (www.lbccredit.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 6-28-13