Archives for July 2, 2013

Kohlberg & Company Acquires Steinway Musical Instruments

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Steinway Musical Instruments has entered into an agreement to be acquired by Kohlberg & Company in a transaction valued at approximately $438 million. Upon the completion of the transaction, Steinway Musical Instruments will become a privately held company.

Under the terms of the agreement, Kohlberg will commence a tender offer to acquire all of the outstanding shares of the company’s common stock for $35 per share in cash. The agreement provides for a 45-day go-shop period during which time the company may solicit alternative proposals to the transaction with Kohlberg.

Steinway Musical Instruments, through its Steinway and Conn-Selmer divisions, is a designer, manufacturer, marketer and distributor of musical instruments. These products include Bach Stradivarius trumpets, Selmer Paris saxophones, C.G. Conn French horns, Leblanc clarinets, King trombones, Ludwig snare drums and Steinway & Sons pianos. Through its online music retailer, ArkivMusic, the company also produces and distributes classical music recordings. Steinway is based in Waltham, MA (www.steinwaymusical.com).

“For over 160 years, Steinway’s skilled manufacturing artisans have been crafting the world’s finest musical instruments to perform with unequalled touch and tone. We feel fortunate to be selected to partner with Steinway and further its commitment to serving its artists and customers worldwide by producing the finest pianos and musical instruments available,” said Kohlberg Partner Christopher Anderson. “Kohlberg’s long history of collaboration to grow and expand some of the world’s leading consumer brands makes us an ideal partner for Steinway to accelerate its global expansion, while ensuring the artisanal manufacturing processes that make the company’s products unique are preserved, celebrated and treasured.”

Kohlberg & Company invests in companies in the industrial manufacturing; consumer products; business services; healthcare services; and financial services sectors. The firm concentrates on transactions with EBITDAs between $20 million and $100 million where it can invest between $50 million and $200 million of equity. Kohlberg & Company is currently investing its seventh private equity fund, Kohlberg Investors VII. The firm was founded in 1987 and is based in Mt. Kisco, NY (www.kohlberg.com).

“Our agreement with Kohlberg represents an exceptional valuation for our shareholders, while also representing an important next step in the growth of Steinway,” said Michael Sweeney, Chairman and interim CEO of the company. “Kohlberg has long been one of America’s premier private investment firms. We are delighted that they recognize the bright future for Steinway as well as value our great heritage. We look forward to this partnership as we continue our mission of making the world’s finest musical instruments without compromise.”

Allen & Company is serving as financial advisor to Steinway in this transaction.

© 2013 PEPD • Private Equity’s Leading News Magazine • 7-2-13

JLL Partners Exits NetSpend

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JLL Partners has sold its portfolio company NetSpend, a provider and processor of debit cards, to Total Systems Services.

NetSpend’s products include general purpose reloadable prepaid debit cards, general purpose gift cards and debit card programs for large credit card issuers and other consumer-driven companies. NetSpend is the only company in its market to perform in-house, front-end marketing and back-end processing. NetSpend is based in Austin, TX (ww.netspend.com).

JLL acquired its stake in NetSpend when it merged Skylight Financial, a portfolio company of JLL Funds IV and V acquired in 2007, into NetSpend in July 2008. “As the largest shareholder of NetSpend, we are very proud of the growth and performance achieved since we partnered with the company in 2008. Dan Henry and the NetSpend team have grown earnings in excess of 30% per year. We believe that this will be a transformative acquisition for Total Systems Services,” said Kevin Hammond, a managing director at JLL.

Total Systems Services (NYSE: TSS) is a provider of payment services to financial and nonfinancial institutions. The company is based in Columbus, GA (www.tsys.com).

JLL Partners seeks to invest in companies across a range of manufacturing and service industries. Sectors of specific interest include healthcare services, medical products, food and consumer products, chemicals, broadcasting, transportation, automotive, industrial manufacturing, and distribution. JLL Partners is based in New York (www.jllpartners.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 7-2-13

Leading Ridge Acquires TestTech

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ReverTech Solutions, a portfolio company of Leading Ridge Capital Partners, has acquired substantially all the assets of Test Technology, a provider of electronic repair and reverse logistics services.

Test Technology is a provider of electronic repair and reverse logistics services. Reverse logistics is the process of return or exchange; repair; refurbishment; remarketing; and disposition of products. TestTech serves the telecom, datacom, wireless and consumer electronics sectors. The company is based in Marlton, NJ (www.testtech.com).

ReverTech Solutions is a provider of in and out-of-warranty service parts, depot repair services, and returns management for computers, tablets, projectors, and embedded systems on an exclusive and non-exclusive basis to electronic retail chains, municipalities, OEMs, and warranty companies. The company is headquartered in Wilmington, MA (www.revertech.com).

“The TestTech business adds unique and complimentary capabilities to our existing reverse logistics portfolio of services. We are eager to leverage the strengths of the TestTech team to become a broader, more diversified, reverse logistics company,” said Joseph Bradley, President and CEO of ReverTech Solutions.

Leading Ridge Capital Partners is a private equity firm specializing in acquisitions, recapitalizations, and investments in lower-middle market distribution, logistics, and light manufacturing companies with revenues between $10 million and $100 million. Target companies will have an EBITDA from $1 million to $5 million and will be located, generally, in the Mid-Atlantic region of the US. The firm has offices in Rockville, MD and New York (www.leadingridge.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 7-2-13

Avista Acquires ZEST Anchors from Jordan

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Avista Capital Partners has signed an agreement to acquire ZEST Anchors, a dental products manufacturer and a portfolio company of The Jordan Company.

ZEST Anchors is a manufacturer of a dental products including overdenture attachments used in the treatment of edentulous (the condition of being toothless) patients. ZEST sells its products through OEM implant companies and distributor networks. The company was founded in 1977 and is based in Escondido, CA (www.zestanchors.com).

“Our company is committed, in partnership with our OEM and distribution partners, to continuing to improve the lives of edentulous patients with our existing product portfolio as well as new products focused on overdenture treatment options that we plan to bring to the marketplace,” said Steve Schiess, the CEO of ZEST. “We believe that Avista, which has deep expertise and an impressive track record in the healthcare space, is the ideal partner to help us achieve our goals.”

Avista Capital Partners, with over $5 billion of capital under management, makes control or influential minority investments in growth-oriented energy, healthcare, communications & media, industrials, and consumer businesses. The firm was founded in 2005 and is based in New York with offices in Houston and London (www.avistacap.com).

“The technological differentiation and brand power of ZEST’s core LOCATOR® portfolio provide a strong foundation for growth. ZEST is well positioned to continue delivering valuable innovation to the dental community. Steve Schiess and the ZEST team have created a market leading business, and we look forward to working together to drive the next phase of the company’s growth,” said Sriram Venkataraman, a Partner at Avista.

The Jordan Company, which acquired ZEST Anchors in January 2010, is a middle-market private equity firm with over $6 billion of assets under management. The firm is headquartered in New York and has offices in Chicago and Shanghai (www.thejordancompany.com).

“We congratulate and thank the entire ZEST management team on a fantastic partnership. Centered on the foundation and world-class product portfolio created by Paul Zuest and Scott Mullaly, Steve and the rest of the ZEST team should be commended for their ability to successfully introduce exciting new products and execute upon the growth plan we helped to establish for the business. We wish the ZEST team and their new owners well and expect that the company will continue to build upon their strong performance,” said Jeb Boucher, Managing Partner of The Jordan Company.

Barclays and Sagent Advisors acted as financial advisors to ZEST. Avista was advised by and secured acquisition financing from Deutsche Bank.

© 2013 PEPD • Private Equity’s Leading News Magazine • 7-2-13

Levine Leichtman Exits Sequel Youth and Family Services

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Levine Leichtman Capital Partners has exited its investment in Sequel Youth and Family Services through a recapitalization of the company.

“The Sequel investment has been very successful for our partners, the management team and all of the company’s stakeholders. We are proud of the growth the company has achieved over the past years despite the challenging economic environment and believe it is a testament to the vital services Sequel and its employees provide,” said Lauren Leichtman, CEO of Levine Leichtman. “We are also pleased to provide a very attractive return to our investors through an exit that underscores our commitment to partnering with exceptional management teams in the middle market.”

Sequel is a national provider of behavioral health services for people with behavioral, emotional, or physical challenges. The company operates 29 programs serving approximately 4,000 children and families from 35 states. Program offerings include long-term residential treatment, short-term impact programs, shelter care, therapeutic group homes and foster care, community-based services, in-home services, and alternative education programs. Sequel was founded in 1999 by Adam Shapiro and Jay Ripley and is based in Huntsville, AL (www.sequelyouthservices.com).

Levine Leichtman Capital Partners manages approximately $6.5 billion of capital through private equity partnerships, distressed debt and leveraged loan funds. The firm is currently making new investments through Levine Leichtman Capital Partners V, LP; Levine Leichtman Capital Partners SBIC Fund, LP; and Levine Leichtman Capital Partners Private Capital Solutions II, LP. The firm is based in Los Angeles with offices in Chicago, Dallas, New York and London (www.llcp.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 7-2-13

Charlesbank Invests in Trojan Battery

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Charlesbank Capital Partners has made an investment in Trojan Battery Company, a manufacturer of deep-cycle lead acid batteries. Trojan has been owned by the Godber family since its founding in 1925.

Trojan Battery Company is a manufacturer of deep-cycle batteries. The company’s products are used to power a variety of golf, electric vehicle, aerial work platform, transportation, floor scrubber, renewable energy, and other recreational and auxiliary power applications. The company’s products are produced in manufacturing facilities in California and Georgia and are sold in more than 120 countries through Trojan’s global network of over 50 distributors, as well as over 100 direct customers, including vehicle and equipment OEMs. The company is headquartered in Santa Fe Springs, CA (www.trojanbattery.com).

The investment by Charlesbank was funded with both equity and debt and is the first outside equity ever invested in Trojan Battery. The management of Trojan has co-invested alongside Charlesbank and the Godber family maintains a significant ownership position. GE Antares Capital provided the debt portion of the financing.

“We are very pleased to partner with this talented management team to help continue to grow the business and build on the 88-year legacy of the Godber family,” said Ryan Carroll, Charlesbank Managing Director. “Trojan has a well-respected brand in the battery industry and a reputation for high quality and technology leadership. With this excellent foundation we believe the business is well-developed to grow in its existing markets as well as in newer markets such as renewable energy, transportation and back-up power.”

Charlesbank Capital Partners invests in management-led buyouts and growth capital financings, typically investing from $50 million to $150 million per transaction in companies with enterprise values of $100 million to $750 million. The firm has $2 billion of capital under management and has offices in Boston and New York (www.charlesbank.com).

Houlihan Lokey (www.hlhz.com) served as financial advisor to Trojan Battery on the transaction and Vetus Partners (www.vetuspartners.com) acted as due diligence advisor to Charlesbank.

© 2013 PEPD • Private Equity’s Leading News Magazine • 7-2-13

Clearlake Acquires Agilysys Retail Solutions Group

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Clearlake Capital Group has completed its previously announced acquisition of the Retail Solution Group of Agilysys through a newly-formed company named Kyrus Solutions.

Kyrus Solutions is now a provider of technology and IT managed services to retailers. The company offers retail point-of-sale, self-service and wireless mobility services, business consulting, implementation and maintenance support, and other managed services. Kyrus Solutions is based in Taylors, SC (www.kyrus.com).

Keith Bradley, a Clearlake Executive Operating Advisor, will become the company’s Chairman and CEO. Mr. Bradley was most recently the President of Ingram Micro North America, a wholesale technology distributor and a provider of IT supply-chain, mobile device lifecycle services and logistics. The existing management team, led by General Manager and SVP, Paul Civils, remains in place.

“We are excited to partner with Keith and Paul and the rest of the team as we back Kyrus as a platform to lead industry consolidation,” said Behdad Eghbali and Prashant Mehrotra of Clearlake. “With its core capabilities around providing leading technology and managed services solutions, coupled with Clearlake’s operational and financial capabilities, Kyrus is well suited to assist leading retailers as they continue to make investments in technology solutions.”

Clearlake invests in special situations such as corporate divestitures, recapitalizations, buyouts, restructurings, turnarounds and minority equity investments. Sectors of interest include business services; communication; consumer products and retail; defense and public safety; energy and power; healthcare; industrials; media; and technology. Clearlake currently manages approximately $1.4 billion of equity capital. The firm was founded in 2006 and is headquartered in New York (www.clearlakecapital.com).

“Kyrus is a strong platform that is extremely well-positioned for future growth,” said Mr. Bradley. “I look forward to working with Paul and the rest of the management team to drive the company’s growth strategy of providing our customers with cutting edge solution innovation and industry leading service and support.”

Atlas Technology Group (www.atlastechgroup.com), an investment bank headquartered in San Francisco, advised Agilysys on the sale of RSG to Clearlake.

© 2013 PEPD • Private Equity’s Leading News Magazine • 7-2-13

Private Equity Fundraising at Highest Value Since Financial Crisis

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According to the latest data from Preqin, in the second quarter of 2013 private equity funds held final closings on an aggregate of $122 billion in commitments, the highest value since $171 billion was raised by funds in the fourth quarter of 2008.

The $122 billion was raised by only 154 funds, the lowest quarterly number in the last 10 years. However, an additional 155 private equity funds held an interim close in the second quarter securing $24 billion towards their final targets.

Private equity funds closed in Q2 took an average of 19.2 months to reach a final close, the longest amount of time since 2006.

The average size of private equity funds closed in Q2 was $800 million, the highest figure in the last 10 years. This was a result of several large fund closings and a lower number of private equity funds reaching a final close.

“Private equity fundraising was very strong in Q2, with the highest quarterly value raised since the onset of the financial crisis in late 2008. The fact that the average size of private equity funds closed was $800 million and experienced managers dominated the fundraising environment, shows that investors are increasingly looking to back fund managers with a demonstrable track record,” said Ignatius Fogarty, Head of Private Equity Products at Preqin.

Other notable facts:

  • The top 10 private equity funds closed in Q2 secured $67 billion, 55% of the total capital raised by the 154 funds closed in the quarter.
  • Warburg Pincus’s balanced fund, Warburg Pincus Private Equity XI, was the largest fund to close in the quarter, securing $11.2 billion.
  • 27 buyout funds held a final close in Q2 securing an aggregate $49 billion, more than double the $23 billion raised by buyout funds closed in Q1 2013, and the highest figure since $73 billion was secured in Q4 2008.
  • Silver Lake Partners IV was the largest buyout fund to close in the quarter having secured $10.3 billion, followed by Apax VIII which raised €5.8 billion.
  • 101 North America-focused funds closed in Q2 securing an aggregate $67 billion, while 25 Europe-focused funds secured $32 billion.
  • 13 Asia-focused vehicles closed in the quarter, raising an aggregate $9 billion, while 15 vehicles focused outside of North America, Europe and Asia secured $5 billion.
  • 26 first-time funds closed in Q2 securing an aggregate $5 billion, down from 39 first-time funds closing in Q1 2013 which secured an aggregate $7.5 billion.

“With 1,958 private equity funds on the road, coupled with the average time to reach a final close at its highest level in the period since 2006, fundraising for the second half of 2013 will remain challenging, especially for less experienced or first-time fund managers,” said Mr. Fogarty.

Preqin is a provider of information for the alternative assets industry, providing data and analysis via online databases and publications (www.preqin.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 7-2-13

Morgan Stanley Closes Secondaries Fund Above Target

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Morgan Stanley Alternative Investment Partners (AIP) has raised $770 million in commitments for the Morgan Stanley Global Secondary Opportunities Fund LP II (GSOF II), a fund dedicated to acquiring interests in private equity funds in the secondary market. The capital raised exceeded the initial $600 million target.

GSOF II invests in off-market secondary opportunities with an emphasis on small- and mid-cap buyouts and special situations funds. Investors include existing AIP clients and new limited partners, such as endowments, foundations, public and corporate pension plans, family offices, insurance companies and high net worth individuals.

“This successful fundraising demonstrates the strength of our investment approach and our talented team,” said John Wolak, Co-Head of AIP Private Equity and Head of the AIP Private Equity Secondary team. “As an integrated platform participating in both the primary and secondary markets, AIP is well-positioned to employ its differentiated investment approach to take advantage of secondary opportunities globally.”

GSOF II is the successor fund to AIP’s 2009 vintage secondary fund, Morgan Stanley Global Secondary Opportunities Fund I LP, a $585 million fund that completed its investment program in 2012.

“We believe substantial opportunities continue to exist in areas of the market where we focus and that our solutions-based approach to secondary investing will remain attractive to both sellers and general partners through all phases of the economic cycle. We recently completed several restructuring deals and believe these types of deals are an ever-important and growing part of the broader secondary market,” said Jon Costello, Senior Portfolio Manager for the AIP Private Equity Secondary team. “We continue to be a buyer of secondaries across our platform and will continue to focus on what we believe are less efficient segments of the secondary market globally.”

Morgan Stanley Alternative Investment Partners is part of Morgan Stanley Investment Management which specializes in assisting investors in the design, integration and management of alternative investment programs (www.morganstanleyaip.com).

“The AIP team of private equity professionals is one of the most experienced and knowledgeable in the industry,” said Arthur Lev, Head of AIP. “We are proud that our investment expertise, world-class service for clients and reputation for excellence have led to this successful fundraising result.”

© 2013 PEPD • Private Equity’s Leading News Magazine • 7-2-13

Brian Silver Joins Perella Weinberg Partners as Partner

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Perella Weinberg Partners has added Brian Silver as a new Partner in its New York office. Mr. Silver will work in the firm’s advisory business and will focus on clients in the healthcare sector. He joins Perella’s team of six healthcare sector advisory professionals led by Partners Christopher O’Connor and Philippe McAuliffe in New York, and Managing Director Nick Johnston in London.

Mr. Silver has approximately 20 years of investment banking and corporate legal experience. He was most recently a Managing Director in Morgan Stanley’s Healthcare Investment Banking Group, where he advised a range of biopharmaceutical and pharmaceutical services clients on mergers and acquisitions, initial public offerings, the equity and debt capital markets, and royalty financing. Prior to joining Morgan Stanley in 1998, Mr. Silver was an M&A Associate at Sullivan & Cromwell and an M&A investment banker at Salomon Brothers. Mr. Silver received an AB in Social Studies from Harvard College and a JD from the University of Chicago Law School.

“Attracting high-caliber talent in areas where we believe we can have meaningful impact and where we can provide world-class advice is a primary focus for the firm. Adding Brian to our team illustrates this continued approach and enhances our coverage of the healthcare sector. His broad pharmaceutical and healthcare industry experience complements our existing capabilities and allows us to advise clients across a greater segment of the healthcare sector,” said Peter Weinberg, a Founding Partner and Head of Advisory at Perella Weinberg.

Perella Weinberg Partners provides advisory and asset management services to corporations, institutions and governments. The firm has more than 400 employees and has offices in New York, London, Abu Dhabi, Beijing, Denver, Dubai, and San Francisco (www.pwpartners.com).

“Perella Weinberg Partners is a highly-respected independent advisory firm, with a significant commitment and track record in healthcare investment banking. I am excited to join their experienced team to further expand coverage of the biopharmaceutical and pharmaceutical services sectors,” said Mr. Silver. “Commercial and regulatory changes in the healthcare industry are driving high levels of strategic activity and significant evolution of business models. I look forward to working with my new colleagues to help our clients navigate these challenges.”

© 2013 PEPD • Private Equity’s Leading News Magazine • 7-2-13