November 7, 2013
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Archives for November 7, 2013

Pfingsten Acquires Des-Case Corporation

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descase nfPfingsten Partners has acquired Des-Case Corporation, a provider of contamination control products and services for to the industrial lubricants industry. The senior management team of Des-Case has retained a significant ownership stake in the company.

Des-Case manufactures and provides desiccant breathers (devices that strip the surrounding air of contaminants—both moisture and dirt—to keep lubricants running clean and dry), fluid handling products such as lubricant storage and filtration systems, and consulting/training services. The company primarily sells through distributors and to OEMs (including private-label programs) but also sells product direct to the end user. Des-Case was founded in 1983 and is headquartered near Nashville in Goodlettsville, TN (www.descase.com).

finegan nf“Des-Case is an industry thought leader and has a unique value proposition that delivers customized products and services to a wide range of industries that are just beginning to understand the benefits of lubricant contamination control,” said Scott Finegan, Managing Director at Pfingsten. “The Des-Case management team has built an outstanding business with an excellent brand name, and we are excited to partner with them to assist with further growth in the rapidly expanding equipment reliability market.”

“The new partnership will allow us to embark on our next stage of growth,” said Des-Case President & CEO, Brian Gleason. “Pfingsten’s conservative capital structure and operating capability will provide Des-Case additional resources to further expand our geographic reach both domestically and internationally, customizing our solutions to key end-markets and continuing investment in new product development.”

Pfingsten Partners invests in middle market manufacturing, distribution and business services companies. Since completing its first investment in 1991, Pfingsten Partners has acquired 92 manufacturing, distribution, and business service companies and has over $1 billion of capital under management. The firm is based in Chicago and has additional offices in India and China (www.pfingsten.com).

The acquisition of Des-Case was completed on October 31, 2013 and represents the 14th platform investment for Pfingsten’s $525 million fourth fund.

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-7-13

Spectrum and Great Hill Exit Passport Health

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passport nfExperian has signed an agreement to acquire Passport Health Communications, a portfolio company of Spectrum Equity and Great Hill Partners, for $850 million, payable in cash at closing. Spectrum and Great Hill first invested in Passport in July 2008.

Passport Health is a data and software provider, with sales to over 2,500 hospitals in the US and more than 9,000 other healthcare providers. The company’s products are used by healthcare providers to manage payments between patients, commercial payers (such as insurance companies) and government programs. Passport Health’s revenues are largely subscription based with renewal rates of 95% and average contract duration of 3 to 5 years. Passport Health was founded in 1996 and is based in Franklin, TN (www.passporthealth.com).

In the year ending December 31, 2013, Passport Health is expected to generate revenue of $121 million, representing organic growth of 23%, and EBIT of $30 million. In 2014, Experian expects Passport Health revenue to reach approximately $145 million (of which 84% is already booked and contracted), with EBIT margins in the high twenties.

The administrative tasks associated with obtaining payment for healthcare services have become increasingly costly for healthcare providers, while healthcare payment regulations have increased in complexity. Patients are becoming responsible for a larger portion of their healthcare bill and reimbursement rates covered by insurance policies often fluctuate. This is leading healthcare providers to make improvements in the way they gather information from patients, how they determine patient eligibility for insurance and charitable aid, and how the final bill gets presented.

To reduce costs, hospitals are increasingly relying on data and analytics in order to automate the billings cycle and to make it more efficient. This is driving a period of accelerated growth in the US healthcare payments market with spending by hospitals of $1.9 billion in 2012, forecast to reach over $3 billion by 2017.

Experian is a global information services company, providing data and analytical tools to clients around the world. The Group helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score, and protect against identity theft. Experian is listed on the London Stock Exchange (EXPN). Total revenue for the year ended March 31, 2013 was $4.7 billion. Experian employs approximately 17,000 people in 40 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil (www.experianplc.com).

Spectrum Equity invests in growth companies in the information industry with particular interest in internet and digital media; communications, media and entertainment; and software and information. Spectrum Equity has raised $4.7 billion in capital across six funds. The firm was founded in 1994 and has offices in Boston and Menlo Park (www.spectrumequity.com).

Great Hill Partners manages over $2.5 billion in capital to finance the expansion, recapitalization or acquisition of growth companies in a range of sectors within the media/communications, Internet, business services, consumer services, financial technology, healthcare technology, software, and transaction processing sectors. The firm targets investments of $25 million to $150 million. Great Hill Partners is based in Boston (www.greathillpartners.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-7-13

North Castle Partners Acquires Jenny Craig from Nestle

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jenny craig nfNorth Castle Partners has entered into an agreement to acquire Jenny Craig, an iconic brand in the weight loss industry, from Nestle. North Castle will combine Jenny Craig with Curves International, an existing portfolio company that was acquired in August 2012.

“We are very excited to bring Jenny Craig into the North Castle family and to continue its 30-year tradition of providing consumers with dedicated one-on-one coaching and great tasting, clinically proven food to support their weight loss goals,” said Chip Baird, North Castle’s Founder and Managing Partner. “As a firm focused exclusively on consumer businesses that promote Health, Wellness, and Active Living, we were able to draw upon substantial experience from our current and prior investments in the weight loss, nutrition and fitness industries to evaluate the Jenny Craig opportunity and develop an investment plan that will revitalize the company.”

Jenny Craig is a weight loss, weight management, and nutrition company with more than 700 weight management centers in Australia, the United States, Canada, France, the United Kingdom, New Zealand, and Puerto Rico. Jenny Craig combines individual weight management counseling with a menu of frozen meals and other foods, which are distributed through its centers or shipped directly to clients. The company was founded in 1983 by Jenny Craig and her husband, Sidney Craig, in Melbourne, Australia and began operations in the United States in 1985. Today, the company is headquartered in Carlsbad, CA and has been a part of Nestlé Nutrition since 2006 (www.jennycraig.com).

Curves International is the largest women’s fitness club franchisor in the world with over 1.5 million members across 90 countries. Curves creates clubs specifically designed for women, offering members a convenient and effective workout in an environment that is safe and supportive. In 2012, Curves launched Curves Complete, a weight loss program developed in conjunction with the Cleveland Clinic. The company was founded in 1992 and is based in Woodway, TX (www.curves.com).

Upon completion of the transaction, Monty Sharma, the current chief executive officer of Curves, will become President and CEO of the combined Jenny Craig and Curves business.

“The Jenny Craig and Curves brands will continue to operate independently and provide health, fitness and weight loss solutions to different consumer segments,” said Jon Canarick, North Castle Managing Director. “We believe the two brands give us a unique opportunity to meet the distinct needs of consumers and provide an unmatched consumer value proposition.”

North Castle makes control investments in consumer-driven product and service companies located in North America with enterprise values ranging from $50 million to $500 million. Sectors of interest include: beauty & personal care; consumer health; fitness, recreation & sports; home & leisure; and nutrition. North Castle is headquartered in Greenwich, CT (www.northcastlepartners.com).

“We are very optimistic about the future of the combined company and will work in partnership with management to leverage our knowledge and network across the weight loss, nutrition and fitness industries from our current and prior investments in Atkins, Equinox, World Health Club, EAS and Naked Juice,” concluded Mr. Canarick.

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-7-13

McCarthy Capital Acquires Duck Head Apparel

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duck head nfDuck Head Apparel has been acquired by Prospect Brands, a joint venture formed by McCarthy Capital and Tom Nolan.

Duck Head Apparel is a marketer of clothing under the Duck Head brand name. Products include khakis, knitwear, denim, wovens, sweaters, outerwear, t-shirts, headwear and accessories. Founded in 1865, Duck Head Apparel is one of the oldest apparel brands in the United States. The company is based in Greensboro, NC (www.duckhead.com).

“It is rare in a career to be able to lead such an iconic American brand. I am honored to help write the next chapter of Duck Head’s history by adding the brand to our existing portfolio,” said Tom Nolan, President and CEO of Prospect Brands.

The acquisition of Duck Head expands Prospect Brands portfolio which also includes Gerbing, a wearable technology company specializing in heated apparel that was acquired in December 2012 (www.gerbing.com).

McCarthy Capital invests from $10 million to $30 million in middle market companies with operating profits between $3 million and $25 million. McCarthy partners with existing management teams across a range of industries and is equally comfortable as a minority investor or majority shareholder. Since 1986, McCarthy has invested in over fifty companies, including Cabela’s, Peak 10, Guild Mortgage Company, and Vornado Air. The firm has approximately $700 million in capital under management and is based in Omaha with an additional office in Boston (www.mccarthygroup.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-7-13

The Riverside Company Acquires ARCOS

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arcos nfThe Riverside Company has made a majority investment in ARCOS, a provider of emergency response software used in the utility industry.

ARCOS provides a suite of SaaS products that automatically call and assemble crews to restore power, handle emergency work in power plants and fix gas and water leaks. The ARCOS suite automates complex crew callout and storm management processes for electric and gas utilities, power plants, and mutual assistance groups. ARCOS’ customer base includes 21 of the top 25 utilities in the US. The company is based in Columbus, OH (www.arcos-inc.com).

“ARCOS is a market-leading provider of mission-critical software to the utilities industry,” said Riverside Managing Partner Loren Schlachet. “With utilities facing enormous pressure from regulators and customers for better reliability, improved restoration times and transparency, the ARCOS software suite is the perfect solution to the perfect storm.”

Riverside intends to support ARCOS’ continued growth through investing in product development, adding utility and power plant customers, and expanding sales and marketing efforts.

“Customers trust ARCOS and are deeply loyal to the company because its software ensures fast response times that meet regulatory requirements while complying with complex union rules,” said Riverside Vice President Joe Manning. “ARCOS also has strong growth potential in its new product pipeline, as its new Crew Manager product has received significant interest from utility companies due to its compelling value proposition.”

Working with Mr. Schlachet and Mr. Manning on the transaction for Riverside were Assistant Vice President John McKernan, Associate Ryan Philyaw, Senior Operating Partner Dave Tiley, and Centralized CFO Dan Stankey. Regional Director, Origination Jeremy Holland originated the deal for Riverside.

The Riverside Company is focused on the smaller end of the middle market and invests in businesses valued at up to $250 million (€200 million in Europe). Since 1988, the firm has invested in more than 320 transactions with a total enterprise value of more than $6 billion. The firm’s current portfolio includes more than 70 companies. The Riverside Company is headquartered in New York with additional offices in Atlanta, Chicago, Cleveland, Dallas, Los Angeles, San Francisco, and London (www.riversidecompany.com).

US Bank provided the financing and Jones Day and Deloitte advised Riverside on the investment.

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-7-13

DLJ Investment Partners to Spin Off from Credit Suisse

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credit suisse nfCredit Suisse has reached an agreement to spin off its DLJ Investment Partners business, including the existing investment team led by Igor DaCosta and Charles Harper, to Portfolio Advisors, an investment advisor and fund-of funds management company.  Messrs. DaCosta and Harper will continue to manage the DLJIP Funds and all other investment professionals of DLJIP are expected to join Portfolio Advisors.

DLJ Investment Partners (DLJIP) provides mezzanine debt and equity capital primarily to middle market companies in connection with the financing of leveraged buyout transactions or in support of growth, acquisition, recapitalization and refinancing activity. Since its inception in 1995, DLJIP has raised $3.6 billion of capital commitments dedicated to mezzanine investing and has completed 75 transactions across its various funds.

As a result of the spin off, Portfolio Advisors will become the new investment manager of DLJ Investment Partners, LP; DLJ Investment Partners II, LP; and DLJ Investment Partners III, LP (collectively, the DLJIP Funds). These three funds are nearly fully invested and it is expected that Portfolio Advisors will raise a new mezzanine fund next year.

“The DLJIP team is extremely pleased to be joining Portfolio Advisors, a highly respected name in the private equity fund investing space,” said Igor DaCosta and Charles Harper, Co-Heads of DLJIP. “Their emphasis on private equity investing and long term approach will serve our limited partners well and should increase our mezzanine opportunity set going forward.”

Portfolio Advisors provides investment advisory services on both a discretionary and non-discretionary basis and has approximately $30 billion in assets under management. The firm is also a private equity and private real estate fund-of-funds manager, and has sponsored 19 funds which, in the aggregate, represent over $7 billion in investor commitments. Portfolio Advisors is headquartered in Darien, CT (www.portad.com).

“We are excited that the DLJIP team is joining the Portfolio Advisors platform. The DLJIP team is a group of highly talented and experienced investors and we share significant relationships across both general partners and limited partners. As a result, we view this as an important opportunity to continue to grow our firm and our franchise in private credit,” said Brian Murphy, a Managing Director of Portfolio Advisors.

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-7-13

James Rauh Joins Lubar as Partner

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rauh nfLubar & Co., a Milwaukee-based private investment firm and family office for the Lubar family, has added James Rauh to the firm as a partner. Mr. Rauh brings 40 years of wealth management experience in senior executive positions with Northern Trust, Johnson Financial Group and Robert W. Baird & Co.

“Jim has deep knowledge and experience in wealth management. Throughout his career, Jim has provided valuable counsel to high net worth individuals and their families, and has led teams providing investment management, retirement and estate planning strategies,” said David Lubar, President & CEO of Lubar & Co. “Jim will assume a vital role in the continuing development of our family office as it grows and evolves.”

Prior to joining Lubar, Mr. Rauh was a senior officer of The Northern Trust Company where he formed and led the Advisory Services group of Northern’s Wealth Management division, with national responsibility for business development, marketing, securities brokerage services, the Wealth Advisory client service segment, and advisory services on clients’ privately held businesses, real estate, and minerals, oil & gas holdings.

Before joining Northern Trust, he was a member of the Management Committee of Johnson International, a bank holding company owned by the Samuel C. Johnson family, and President of Johnson Asset Management and Johnson Trust Company. Prior to Northern Trust, Mr. Rauh was a Senior Vice President and Director of Robert W. Baird & Co., where he was a member of the Management Committee and the Investment Policy Committee.

Lubar & Co. invests in middle market companies located from the Great Lakes to Texas that have revenues of $30 million or more and EBITDA of $5 million to $30 million. Sectors of interest include niche manufacturing; business services; energy; food; architecture, engineering and construction; finance and asset management; healthcare; and banking. The firm is based in Milwaukee, WI (www.lubar.com).

“Over the past four decades, I’ve admired how the Lubars have refined a uniquely holistic approach to family wealth management that combines long-term wealth creation with community-oriented stewardship,” said Mr. Rauh. “I’m enthused to help the Lubar family build on this approach to produce lasting value that positively impacts the Lubar family and the companies, employees and communities they serve.”

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-7-13

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