Archives for November 1, 2013

Riverstone Launches New Platform Company

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Riverstone Holdings has committed $200 million of capital to Abaco Energy Technologies, a new platform company formed by Riverstone to acquire, integrate and develop energy related manufacturing and service businesses.

In launching Abaco, Riverstone has partnered with Ken Babcock and Roger Rivet, the former CEO and CFO of Titan Specialties and International Logging, two prior portfolio companies of Riverstone. Titan, which was acquired by Riverstone in March 2007, was sold to Hunting in September 2011; and International Logging, which was acquired by Riverstone in March 2006, was sold to Weatherford in August 2008.

“We are very excited to be partnering again with Riverstone. We look forward to building another company that contributes significantly to improving and enhancing oilfield technology and processes that ultimately allow operators to produce hydrocarbons faster and cheaper,” said Mr. Babcock, President and Chief Executive Officer of Abaco.

Abaco will focus primarily on acquiring North American based manufacturing and service business related to drilling, completion and production and associated infrastructure. The company is headquartered in Houston (no website found).

“This investment is another example of Riverstone’s strategy of partnering with proven management teams to pursue service and manufacturing opportunities related to the energy industry,” said John Lancaster, a Partner at Riverstone. “Ken and Roger are long-time energy executives who both played critical roles in identifying and executing growth opportunities in their previous roles as managers of Riverstone portfolio companies, sourcing strategic add‐on acquisitions and integrating new businesses and employees into the organizations that they led. We will aim to build a company that is exposed to attractive secular trends in the oil and gas market through both acquisition and direct investment.”

Riverstone Holdings has approximately $27 billion of capital under management across seven investment funds. Riverstone invests in midstream, exploration & production, oilfield services, power and renewable sectors of the energy industry. Riverstone closed its latest private equity fund, Riverstone Global Energy and Power Fund V, in June 2013, with total commitments of $7.7 billion. Fund V’s original target was $6 billion. The firm was founded in 2000 and has offices in New York, Houston and London (www.riverstonellc.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-1-13

Babson Backs Latest High Road Acquisition

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Babson Capital Management has provided subordinated debt and made an equity co-investment to support High Road Capital Partners’ acquisition of SMB Machinery Systems. Babson Capital was the sole provider of subordinated debt for the transaction.

“High Road Capital Partners is pleased to work with Babson Capital’s Mezzanine & Private Equity Group on our investment in SMB Machinery Systems,” said Benjamin Schnakenberg, High Road Principal. “Babson Capital’s deep experience and expertise in the middle market, combined with the familiarity we share from collaborating on many previous investments, made for a smooth and efficient process leading to a successful and timely close.”

SMB Machinery Systems is a provider of used packaging and process equipment to the food and beverage industries. The company offers a suite of related services including removal, installation, storage, relocation and demolition. SMB was founded in 1993 and is based in Ball Ground, GA (www.smbsales.com).

“Babson Capital deeply values the relationship we enjoy with High Road, and we appreciate the trust and confidence that High Road’s principals have placed in us over the past two decades,” said Michael Klofas, Managing Director and Head of the US Mezzanine & Private Equity Group.

Babson Capital has $188 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).

“With its exceptional management team, differentiating suite of services and leadership position in many of the markets it serves, SMB is well positioned to take advantage of High Road’s financial and operational support to pursue new growth opportunities, and we look forward to participating in the company’s success,” said Mr. Klofas.

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 $450 million of committed capital. High Road has completed 26 transactions, comprising 24 acquisitions – 11 platform investments, 13 add-on acquisitions – and two exits since its founding in 2007. The firm is based in New York (www.highroadcap.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-1-13

Private Equity Returns to the Energy Deals Table in Q3

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Foreign buyers and private equity investors returned to the deals table as buyers of energy assets during the third quarter of 2013, helping drive the bulk of merger and acquisition activity in the sector, according to PwC.

While divestiture activity contributed 36 total transactions, representing 84 percent of total deal volume, a significant decline in midstream M&A activity coupled with a lack of mega deals, resulted in a decline in deal value for the third quarter of 2013 compared to the same time last year.

For the three month period ended September 30, 2013, there were a total of 43 oil and gas deals with values greater than $50 million, accounting for $16.4 billion, a slight decrease from the 45 deals worth $37.6 billion in the third quarter of 2012. On a sequential basis, deal volume in the third quarter dropped by nine percent compared to the second quarter of 2013, with deal value falling by 46 percent during the same time period. Divestiture deals accounted for $13.9 billion in total deal value.

“After a brief pause in the second quarter, foreign buyers and private equity investors came back to the deal table in the third quarter looking for attractive assets to add to their portfolios,” said Doug Meier, PwC’s US energy sector deals leader. “Divestitures continue to drive deal activity. Acquirers continue to insist on performing broader and deeper diligence in order to get the right deal done at the right price. As a result, we continue to see increased demand for our divestiture services as sellers spend more time performing their own diligence on the assets to be divested before beginning the marketing process. While deal value declined, activity remains robust, including in the shale plays and with master limited partnerships – and PwC expects that to continue through the remainder of the year.”

For deals valued at over $50 million in the third quarter, upstream deals accounted for 26 transactions, representing 61 percent of total deal volume totaling $11.2 billion. Additionally, there were four midstream deals, accounting for nine percent of total deal volume in the quarter worth a total of $1.3 billion. There were 10 oilfield services deals worth $3.0 billion, and three downstream deals added $886 million.

Shale deals were also a major driver of deal activity in the third quarter, as 17 shale deals contributed $5.4 billion, or 33 percent of total deal value. In the upstream sector, shale deals represented 15 transactions and accounted for $5.0 billion, while the midstream sector saw no shale deal activity in the third quarter of 2013.

The most active shale plays for deals with values greater than $50 million during the third quarter of 2013 include the Eagle Ford in Texas with seven total transactions contributing $1.7 billion, the Bakken in North Dakota with three deals totaling $1.8 billion, followed by the Utica with two deals adding $284 million.

Financial investors’ deal activity returned in the oil and gas industry with six total transactions, representing $4.9 billion, or 30 percent of total deal value during the third quarter of 2013, compared to four deals, accounting for $1.5 billion, or five percent of total deal value in the second quarter of 2013.

“Financial investors continue to focus on exploration and production opportunities but stepped into three oilfield service transactions in the third quarter,” said Rob McCeney, PwC’s US energy private equity deals leader. “Financial investors also accounted for one mega exploration and production transaction in the third quarter and continue to seek orphan businesses from corporate sellers.”

PwC’s Oil & Gas M&A analysis is a quarterly report of announced US transactions with values greater than $50 million analyzed by PwC using transaction data from IHS Herold (www.ihs.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-1-13

Jason Munoz Named Managing Director at GMB

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Investment bank Green Manning & Bunch has promoted Jason Munoz to managing director in the firm’s Building Materials & Services practice.

“Jason played an integral role in successfully closing three recent transactions for our Building Materials & Services practice,” said Warren Henson, president and senior managing director of GMB. “He has a superb understanding of how to handle the complexities that are typical for transactions within the building materials and services industry. Jason’s promotion to managing director is well-earned.”

Mr. Munoz joined GMB in 2006 and has 17 years of investment banking experience. He has executed numerous buy-side and sell-side merger and acquisition transactions, public and private debt and equity capital raises, and financial advisory and valuation assignments with a focus on the building materials and services sector. Mr. Munoz has an MBA from the University of Virginia and a BA in Finance from the University of Colorado.

Green Manning & Bunch specializes in mergers and acquisitions, private placements of equity and debt, and strategic financial advisory services for middle market companies and has closed transactions totaling more than $17 billion. The firm is based in Denver (www.gmbltd.com).

“Jason’s work with our clients and overall expertise within the building materials and services industry have been key to the growth of our practice. Moving forward Jason will continue to work closely with all of our clients, but also play an even larger role in the management of our practice and its continued expansion nationwide,” said Aaron Bachik, managing director of the Building Materials & Services practice.

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-1-13

Lynx Equity Acquires Majestic Media

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Lynx Equity has acquired Majestic Media, a developer of social media campaigns and applications. Majestic, Lynx’s first media-focused acquisition, is among Lynx’s three acquisitions in the past month, and seventh of 2013.

Majestic Media is a developer of custom social campaigns and applications with a focus on digital and mobile marketing programs. Products include Facebook applications, mobile and emerging technologies, microsites, web applications and platforms and infographics. Customers of Majestic include, among others, Scotiabank, Maple Leaf Foods, and Virgin Mobile. The company is based in Toronto (www.majesticmedia.ca).

“We are thrilled to acquire a world-class, multi-national brand. This is a new platform for Lynx, and we look forward to the tremendous potential for growth within this space,” said Dustin Mandel, Lynx Partner.

Lynx Equity, a subsidiary of Succession Capital Corporation, acquires small to medium sized companies with enterprise values of C$2 million to C$8 million. Sectors of interest include manufacturing, business services, financial services, industrial products, food and consumer products. The firm is based in Toronto (www.lynxequity.com).

“We are always pleased to add a new industry to our portfolio, especially one that is experiencing similar growth to ours. Majestic will be a valued addition to our group,” said Brad Nathan, Lynx President.

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-1-13