Archives for 2013

Oppenheimer Staffs Up Investment Bank Team

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Oppenheimer & Co. has added two new members to its investment banking team with the hires of David Brown and Robert Cramer. Both Mr. Brown and Mr. Cramer will report to Bruce McCarthy and Marc Thompson, Managing Directors and Co-Heads of Investment Banking.

“We are pleased to recruit such high quality professionals to our firm. Both of these individuals are proven leaders who are well positioned to deliver a full suite of banking products and services to Oppenheimer’s middle market clients,” said Mr. McCarthy.

David Brown joins the firm as Managing Director – Head of Capital Markets Origination and will be based in Oppenheimer’s headquarters in New York. Mr. Brown was previously at Barclays where he served as Managing Director, Investment Banking – Global Finance. At Barclays, Mr. Brown was responsible for advising clients on capital raising, refinancing, capital structure and capital deployment decisions. Prior to Barclays, he spent 11 years at Lehman Brothers, where he worked in both corporate finance and equity capital markets.

Also joining the Investment Banking Division is Robert Cramer, who will serve as Managing Director – Specialty Finance. He will be based at Oppenheimer’s investment banking office in Boston. Mr. Cramer has over 20 years of experience in the specialty finance sector, and comes to Oppenheimer from RBC Capital Markets where he was a Managing Director in the Financial Services Group for the last 12 years. At RBC, he formed and managed a national specialty finance vertical with equity capital markets capabilities including IPOs, follow-ons, convertibles and preferreds, as well as mergers and acquisitions and advisory services.

“We believe this is an opportune time to add highly productive and entrepreneurial senior bankers that can leverage our firm’s capabilities and who will fit well within our platform,” said Mr. Thompson. In recent months, Oppenheimer has also added several other senior bankers including Conrad Vlak in Real Estate, Roderick Moon in Internet/Digital Media, and Arun Master in Healthcare.

Oppenheimer & Co. provide a range of wealth management, securities brokerage and investment banking services to high net worth individuals, families, corporate executives, local governments, businesses and institutions. The firm is headquartered in New York (www.opco.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-22-13

Centerfield Closes Third Fund Above Target

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Centerfield Capital Partners has held a final closing of its third fund, Centerfield Capital Partners III, with total commitments of approximately $171 million. Commitments to the new fund exceeded Centerfield’s $150 million target.

“Our firm provides capital to businesses generating $15 million to $100 million in revenue. Our goal is to invest approximately two-thirds of our capital in high coupon subordinated debt and one third in equity,” said Tom Hiatt, Founding Partner of the firm. “Typically, we invest between $4 million and $12 million in each transaction, although we have the capacity to arrange up to $30 million in financing with participation from our institutional limited partners.”

The new fund follows Centerfield’s second fund which closed in October 2008 with $116 million of committed capital. Like its predecessor funds, Centerfield III, which has already made eight investments, will invest a combination of subordinated debt and equity in middle market companies primarily in the Midwest that have EBITDAs from $3 million to $15 million. Sectors of interest include manufacturing; business services; consumer products and services; value-added distribution; specialty chemicals; specialty foods; infrastructure components; education services; and healthcare services.

“Regardless of fluctuations in the economic environment, we maintain a disciplined approach to investing,” said Scott Lutzke, Founding Partner. “We back companies with a history of growth and profitability which are led by strong management teams. Conservative valuations are also a critical element to our strategy. We are cautious in the amount of leverage we use to finance our portfolio companies, and believe this discipline has been instrumental to our success.”

Centerfield provides capital for change of control transactions, recapitalizations, acquisitions, and growth initiatives. “We pride ourselves on our flexibility to invest a combination of subordinated debt and equity that meets the needs of the sponsor,” said Matt Hook, Partner. “We work closely with funded and independent financial sponsors, and with management teams, who acquire control ownership positions in companies poised for growth. We have a broad range of industry interests, and a particular interest in firms engaged in manufacturing and business services.”

“Centerfield provides a logical alternative to a business owner or management team who may not want to sell a controlling interest in their company. Often, a business owner or management team may wish to raise capital for an acquisition, to take out a retiring partner, or to diversify wealth while maintaining operating control of a company and participating in another stage of growth,” said Faraz Abbasi, Partner. “Centerfield prefers to invest in situations where most of the individuals responsible for a company’s past successes will continue to stay involved to take the company to the next level.”

Centerfield is based in Indianapolis (www.centerfieldcapital.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-21-13

Private Equity Activity Plummets in First Quarter

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GF Data’s first quarter analysis confirms what private equity buyers and financial professionals have sensed since the beginning of the year – that the explosion in transaction activity heading into the end of 2012 carried no momentum into 2013.

The 183 private equity firms that are active contributors to GF Data reported 92 transactions closed in the fourth quarter of 2012. The same universe reported 14 deals completed in the first quarter. The GF Data universe encompasses transactions with total enterprise values in the $10 million to $250 million range.

“We’re sorry to confirm the anecdotal impression of business buyers and other deal professionals,” said GF Data CEO Andrew Greenberg. “Notwithstanding fundamentally good economic, corporate and capital market conditions, there were very few transactions in process once the deluge of deals aiming to close by year end worked their way through the system.”

Overall multiples for the first quarter were 5.9x TTM Adjusted EBITDA, essentially in line with the 6.0x mark seen in the fourth quarter but well off the 6.8x mark in the third quarter.

GF Data’s principals noted, however, that a closer reading of the data suggests aggregate multiples are not in decline. According to B. Graeme Frazier, GF Data Co-Founder and Principal, the end-of-2012 groundswell appears to have been driven by individual or family sellers, presumably motivated at least in part by concerns about federal tax rates. “Non-institutional sellers drove a disproportionate share of the volume in Q4, and we saw the drop in aggregate pricing,” said Mr. Frazier. “This trend continued in the first quarter. It seems clear that pricing is at worst holding steady once these calendar-driven sellers come out of the mix.”

“Although M&A volume was practically shut off in the first quarter, we are anticipating the year to be back end-loaded with deal activity,” commented Dan Shea, Managing Director at BDO Capital Advisors. “Lenders are actively supporting M&A transactions and we are starting to see nice momentum as a result of three years of improving corporate performance since the Great Recession. We believe valuations are likely to rise along with volume over the next several quarters.”

GF Data Resources provides data on private equity sponsored M&A transactions with enterprise values of $10 million to $250 million, offering private equity firms and other users external information to use in valuing and assessing M&A transactions. GF Data collects transaction information from private equity groups on a blind and confidential basis. Data contributors and paid subscribers receive two products ‐‐ high‐level valuation and leverage data via electronically delivered quarterly reports, and continuous access through the firm’s web site to detailed valuation data organized by NAICS industry code. GF Data is based in West Conshohocken, PA.

For information on subscribing to GF Data or to contribute data as a private equity participant, contact Bob Wegbreit at [email protected] or visit the firm’s website at www.gfdataresources.com.

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-21-13

Neuberger Berman and Athyrium Close New Healthcare Fund

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Neuberger Berman Group and Athyrium Capital Management have closed Athyrium Opportunities Fund to invest in structured healthcare investments. The new fund was oversubscribed and closed at $507 million.

The limited partners of Athyrium Opportunities Fund include more than 35 institutional investors, including public and private pensions, insurance companies, funds-of-funds, endowments and foundations. To date, the new fund has made five investments representing over 20% of committed capital.

Athyrium Opportunities Fund’s senior investment team is comprised of co-head Jeffrey Ferrell, Founder and Managing Partner of Athyrium Capital Management; co-head Samuel Porat, Managing Director at Neuberger Berman Alternatives; and Laurent Hermouet and Richard Pines, Partners at Athyrium Capital Management.

“Small- and medium-sized companies often have limited access to the capital markets and other sources of financing, and the Athyrium Opportunities Fund offers these companies an attractive alternative for their capital needs while limiting potential equity dilution,’’ said Mr. Ferrell. “Our goal is to customize capital solutions that meet our investment objectives while providing flexible and creative capital solutions to the industry. Our investment team has its roots in the private equity business and this informs how we approach our relationship with portfolio company management.”

Athyrium Opportunities seeks to invest from $25 million to $75 million in small- to medium-sized healthcare companies in the US, Europe and Asia. The fund will focus on partnering with management teams of pharmaceutical, medical device and diagnostics companies with commercial-stage products and services who are looking for long term capital to grow their businesses. The fund has flexibility in structuring its investments and possible transaction structures include loans, notes, royalties or royalty-backed debt, preferred stock, convertible or other structured securities.

“Client response to the Athyrium Opportunities Fund has been high and we’re thankful for the trust our investors have placed in us,” said Mr. Porat. “Our aim is to create a diversified portfolio of investments that can generate relatively high current income while also offering a level of downside protection commensurate with fixed income investments.”

Athyrium Capital Management is an asset management company which invests in opportunities in the global healthcare sector. Sectors of interest include biopharma, medical devices and products, and services. The firm was founded in 2008 and is based in New York (www.athyrium.com).

Neuberger Berman is a private, independent, employee-controlled investment manager with$216 billion in assets under management. The firm is based in New York (www.nb.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-21-13

BelHealth Adds New Associate

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Lower middle market private equity firm BelHealth Investment Partners has added Paul Barrett to its investment team as a new Associate.

“Paul’s strong credit market and healthcare experience complements our existing team, and we are delighted to have him as a member of BelHealth. Our investment team now has a balance of senior team members and junior resources and we are in a strong position to execute on our strategic plan going forward,” said Inder Tallur, Managing Director.

Mr. Barrett will be active in executing new transactions and working with existing portfolio companies. Previously, Mr. Barrett worked as an Associate and Analyst in the healthcare investment banking division of CIT Group, where he focused on mergers & acquisitions and leveraged finance transactions. Prior to CIT, Mr. Barrett worked at Thomson Reuters in their Corporate Advisory Services group. Mr. Barrett received a bachelor’s degree in Foreign Affairs and History from the University of Virginia.

BelHealth Investment Partners is a healthcare private equity firm focused on lower middle market companies. The firm invests from $10 million to $25 million in companies in three healthcare segments: services, information technology, and products & distribution. BelHealth is based in New York (www.belhealth.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-21-13

KPS Capital Partners Forms Expera Specialty Solutions

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KPS Capital Partners has formed a new company, Expera Specialty Solutions, to complete the previously announced acquisitions of Wausau Specialty Paper from Wausau Paper, and the specialty paper business (“Thilmany Papers”) of Packaging Dynamics Corporation, a portfolio company of Kohlberg & Company. Closing of these acquisitions are expected to occur simultaneously during the second or third quarter of 2013.

“We are very excited to create Expera. Through the acquisitions of Wausau Specialty Paper and Thilmany, Expera immediately becomes North America’s leading manufacturer of specialty paper solutions with an industry leading portfolio of brands,” said Raquel Palmer, a KPS Partner. “The new company, with its reputation for exceptional quality, customer focus, technical expertise and product innovation, coupled with KPS’s capital resources, will be perfectly positioned to capitalize on the growth in niche, non-commodity markets, where engineered and applied technological solutions are critical to success.”

Wausau Specialty Paper is a manufacturer of specialty paper products for use in the tape, pressure-sensitive release liner, coated products, industrial and food packaging segments. Wausau Specialty Paper has approximately 900 employees across two mills located in Rhinelander, WI and Mosinee, WI (WausauSpecialtyPaper).

Thilmany Papers manufactures a range of specialty bleached and unbleached lightweight papers and pressure sensitive release base papers used by customers for food and non-food packaging in such applications as: sandwich wraps; box closure taping system; insulation backing; microwave popcorn bags; and confectionary cups. The company’s pressure sensitive release base papers are also used by customers to provide a protective backing for self-adhesive materials including: business and consumer labels; airline baggage tags; food labels; industrial tapes and sealants; consumer ID labels; feminine hygiene; medical products; and laser & inkjet applications. Thilmany Papers has approximately 900 employees at manufacturing facilities located in Kaukauna and De Pere, WI (www.thilmany.com).

“The creation of Expera was the result of two distinct and complex acquisitions that were negotiated and signed in parallel,” said Ms. Palmer. “We look forward to growing Expera aggressively, both organically and through acquisition on a global scale. We thank the United Steelworkers Union for its critical support of our vision for the specialty paper industry in North America, the creation of Expera and its first two acquisitions.”

Financing will be provided by a syndicate of banks and institutional investors with Goldman Sachs and GE Capital Markets acting as Lead Arrangers.

KPS Capital Partners is the manager of the KPS Special Situations Funds, a group of private equity funds with over $6 billion of committed capital focused on investing in restructurings, turnarounds and other special situations. The KPS investment strategy targets manufacturing and industrial companies with strong market positions that are going through a period of transition or experiencing operating or financial difficulties. The firm’s portfolio companies have aggregate annual revenues of approximately $6.8 billion, operate 85 manufacturing plants in 25 countries, and employ over 29,000 associates worldwide. KPS Capital Partners is headquartered in New York (www.kpsfund.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-21-13