Archives for 2013

Leveraged Finance Backs Melanoma Research Alliance

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The Melanoma Research Alliance (MRA) , the largest private funder of melanoma research, will hold its second annual Leveraged Finance Fights Melanoma benefit on May 21 at the Summer Garden and Sea Grill at Rockefeller Center. Funds raised at the event will support the MRA’s global research program.

Chaired by Jeff Rowbottom, KKR’s Head of Capital Markets in the Americas and an MRA board member, and Brendan Dillon, Managing Director, Global Leveraged Finance Syndicate, from UBS, the host committee and attendees include professionals working in leveraged finance, spanning all the top banks, investment houses, law firms, select issuers, and private equity sponsors. Special attendees at this year’s event include Apollo’s Leon Black, KKR’s Henry Kravis, Oak Hill’s Glenn August, Oaktree’s Howard Marks, and Simpson Thacher Bartlett’s Dick Beattie.

Last year, about 600 professionals attended the MRA’s inaugural event at the Bryant Park Grill with $925,000 raised from 45 sponsors and more than 200 individual donations. 100% of all public donations to the MRA go directly to support research programs working toward eliminating suffering and death from melanoma.

“Melanoma is the fastest growing cancer in the U.S. and worldwide. Nearly 80,000 Americans will be diagnosed in 2013. As Memorial Day weekend and the summer approaches, it is vital to know how to protect yourself and your loved ones against the sun’s harmful rays. With this event, we will raise funds for crucial research, while also raising awareness. Melanoma can usually be defeated if diagnosed early, but if neglected, it can become fatal,” said Mr. Rowbottom.

In support of the 2013 event, a group led by the market intelligence and technology firm Ipreo and executives from KKR has made a $250,000 pledge that provides $100 to MRA for every person who has completed a skin check in the last six months or vows to make an appointment within the next three months. Individuals can sign up to participate on Ipreo’s Debt Domain site http://www.debtdomain.com/LFFM.

Approximately 1 in 50 men and women will be diagnosed with melanoma of the skin during their lifetime. The overall 5-year survival rate for patients, whose melanoma is detected early, before the tumor has spread to regional lymph nodes or other organs, is about 98 percent in the U.S. The survival rate falls to 62 percent when the disease reaches the lymph nodes, and 15 percent when the disease metastasizes to distant organs.

More details, including how to purchase tickets for the Leveraged Finance Fights Melanoma benefit on May 21 at the Summer Garden and Sea Grill at Rockefeller Center, can be found by clicking HERE.

The Melanoma Research Alliance is a public charity formed in 2007 under the auspices of the Milken Institute, with the generous founding support of Debra and Leon Black (www.curemelanoma.org).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-14-13

Petra Closes Fund 3 at $230 Million

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Petra Capital Partners has completed fundraising on Petra Growth Fund III with $230 million of capital. The new fund is structured as a small business investment company licensed by the U.S. Small Business Administration.

“We are very pleased with the response from our existing investors and several important new investors for Fund III and the strong support we received from the SBIC program,” said Mike Blackburn, Partner at Petra.

Petra provides subordinated debt and preferred stock to high growth companies for expansion, acquisition, buyout, refinancing or recapitalization in partnership with the founding management team. The firm invests up to $20 million in companies that possess a minimum of $10 million in revenue and positive EBITDA at the time of investment. Sectors of interest include business, healthcare and information technology services companies. Petra Capital Partners is based in Nashville (www.petracapital.com).

The new fund has already acquired its first portfolio company with the May 3rd investment in Highstreet IT Solutions. Highstreet was formed by a team of IT Services executives led by CEO Mac Slingerlend and is a provider of enterprise software and cloud-based services to middle-market and larger clients. The company is headquartered in Denver (www.highstreetit.com).

“We are excited to partner with Mac Slingerlend and the rest of the outstanding executive team at Highstreet,” said Rob Smith, Partner at Petra. “Highstreet fits squarely into our investment strategy of backing exceptional management teams of high growth service businesses in the areas of information technology, business services and healthcare services in need of growth capital.”

With the closing of the new fund the firm has also added two new Associates to its team with the hiring of Matt Sotelo and Charles Webb. Mr. Sotelo joins Petra from Marwit Capital where he was an Associate. He is a graduate of University of Southern California. Mr. Webb joins Petra from Commerce Street Holdings where he was a Senior Analyst. He is a graduate of Southern Methodist University.

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-14-13

Brentwood Associates Recapitalizes K-Mac and Paper Source

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Brentwood Associates has completed dividend recapitalizations of two of its portfolio companies, K-Mac Holdings, Corp. and Paper Source. Brentwood’s ownership stake in both companies remains unchanged. Brentwood first invested in K-Mac in March 2011 and in Paper Source in June 2007.

“Great operating results at both K-Mac and Paper Source, coupled with strong credit markets, have allowed us to return a significant amount of proceeds to our investors, while continuing to maintain financial flexibility at both companies. We are excited about the continued growth prospects at both K-Mac and Paper Source,” said William Barnum, Jr., a Partner at Brentwood.

The K-Mac dividend, which provides a significant return on Brentwood’s original investment in the company, was financed through excess capacity under the company’s existing $252 million credit facility. Bank of America Merrill Lynch, Wells Fargo Bank, and SunTrust Robinson Humphrey were joint lead arrangers on the senior debt financing for K-Mac.

K-Mac is the largest Taco Bell franchisee in the country, operating 214 Taco Bell restaurants. K-Mac also operates 18 KFC and 6 Golden Corral restaurants. The company has a regional concentration in the South Central region of the U.S. with restaurants located in Arkansas, Indiana, Missouri, Oklahoma, Tennessee, Texas and Illinois. The company was founded in 1964 and is headquartered in Fort Smith, AR (www.kmaccorp.com).

The Paper Source dividend was financed through a new $50 million credit facility from Golub Capital, and provides a return that exceeds Brentwood’s original investment in the company.

Paper Source is a multi-channel retailer of paper products in distinctive colors and formats. The company sells specialty paper, invitations, stationery, envelopes, greeting cards, albums, crafting tools, gifts and novelties through its company-owned retail stores. Paper Source has 67 stores across 22 states and the District of Columbia. The company also has a direct-to-consumer business (catalog and e-commerce), and a wholesale business with over 1,000 accounts. The company is based in Chicago (www.paper-source.com).

These two transactions cap a highly active twelve months for Brentwood. During this time, Brentwood completed three new portfolio investments, including Sundance Holdings Group, Soft Surroundings, and The Veggie Grill. Brentwood also completed the sale of five portfolio investments, including Ariat International and Chamilia from the firm’s fourth private equity-dedicated fund, and Array Marketing Group, Filson Holdings, and Pacific Island Restaurants from the firm’s third private equity-dedicated fund. Other activities included the sale of all of the Texas locations of Brentwood’s portfolio company Spectrum Athletic Clubs, and K-Mac’s add-on acquisition of No Limits, LLC, a Missouri-based Taco Bell franchisee that owns and operates 25 Taco Bell restaurants.

Brentwood Associates is a consumer-focused private equity investment firm with over $650 million of capital under management. Sectors of interest include branded consumer products; consumer and business services; direct marketing, including direct mail and e-commerce; education; health and wellness; restaurants; and specialty retail. The firm was founded in 1972 and is based in Los Angeles, CA (www.brentwood.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-14-13

Private Equity Activity Slows in Q1

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The frenzied private equity activity during the fourth quarter of 2012 receded in first quarter of 2013. The Private Equity Growth Capital Council’s Private Equity Index, which measures overall private equity activity in the U.S., decreased 42 percent from its fourth quarter level to 75.0 during the first quarter of 2013. However, when evaluated on an annual basis, private equity fundraising and exit volumes continue to trend upward.

The PEGCC Private Equity Index is a composite measure of U.S. private equity activity based on three factors: the dollar value of total private equity-backed investment, fundraising, and exits. The Index measures 100 when all three components are at their 10-year moving average. These three factors collectively capture the most fundamental elements of the private equity market.

“Uncertainty surrounding changes in U.S. fiscal policy in 2013 heightened the pace of private equity deal making on the buy and sell side at the end of 2012,” said Bronwyn Bailey, PEGCC Vice President of Research. “This amplified activity normalized in the first quarter of 2013, and it is likely that some first quarter activity was accelerated into the fourth quarter of last year. When examined on an annual basis, private equity activity remains on track.”

Key findings in the first quarter of 2013 include:

  • Quarterly U.S. private equity investment deal volume fell from $126 billion in the fourth quarter of 2012 to $52 billion in the first quarter of 2013.
  • Fundraising volume decreased from $33 billion in the fourth quarter to $16 billion in the first quarter.
  • Exit volume decreased from $62 billion in the fourth quarter to $16 billion in the first quarter.

Click HERE for a free copy of the Private Equity Growth Capital Council’s quarterly performance analysis.

The Private Equity Growth Capital Council is an advocacy, communications and research organization, and resource center established to develop, analyze and distribute information about the private equity and growth capital investment industry and its contributions to the national and global economy. Established in 2007, the PEGCC is based in Washington, D.C. (www.pegcc.org).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-14-13

Providence Hires Renée Beaumont to Lead Business Development

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Providence Equity Partners has hired Renée Beaumont as a Managing Director and Global Head of Business Development. Ms. Beaumont will oversee all business development, marketing and investor relations activities globally across the firm’s private equity and credit funds.

Ms. Beaumont joins Providence from Goldman Sachs where since 2004 she has served in a variety of senior positions, including most recently as a Managing Director in the firm’s Merchant Banking Division. She led the bank’s institutional business development efforts in a variety of markets and managed its co-investment program across multiple funds.

“We regularly add top talent in every area of our business, and we are pleased to welcome such a seasoned leader to our business development team at Providence,” said Jonathan Nelson, Chief Executive Officer of Providence. “Renée’s track record of successful capital raising, strong network of relationships with institutional investors around the world, and her deep understanding of the private capital markets makes her an ideal candidate to lead our business development team. We look forward to her contributions as we continue to grow, expand our private equity and credit product offerings, and meet the rapidly evolving needs of our international base of investors over the long-term.”

Prior to serving as a Managing Director in the Merchant Banking Division, Ms. Beaumont was Head of the Americas Utility/Power & Communications Investing for the Infrastructure Fund at Goldman Sachs, where she was responsible for sourcing, negotiating and financing infrastructure investments. Prior to Goldman Sachs, Ms. Beaumont was a Senior Corporate Associate at law firm Shearman & Sterling where she represented and provided legal and business counsel to Fortune 500, multinational and national companies, investment banks and private businesses. In addition, she led and negotiated financings, spin-offs, acquisitions, securities and private equity transactions. Ms. Beaumont has a Bachelor of Arts degree in Political Science from the University of Victoria and a Bachelor of Law degree from the University of New Brunswick.

Providence Equity Partners invests in the media, entertainment, communications and information industries and has approximately $28 billion of equity capital under management. The firm was founded in 1989 and is based in Providence, RI with additional offices in New York, Los Angeles, London, Hong Kong, and New Delhi (www.provequity.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-14-13

Altus Acquires Rocla Concrete Tie

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Altus Capital Partners has acquired, in partnership with the company’s senior management team, Rocla Concrete Tie, a manufacturer of pre-stressed concrete railroad ties.

“Altus is pleased to partner with the Rocla management team in acquiring the leading producer of concrete railroad ties in the United States. We recognize and value management’s depth of capabilities, which has earned Rocla its industry leadership position,” said Russell Greenberg, Managing Partner of Altus Capital Partners. “We look forward to working with and supporting management to expand both within its existing customer base as well as to take advantage of international opportunities that are available.”

Rocla Concrete Tie manufactures pre-stressed concrete railroad ties and turnout ties for Class I railroads, commuter passenger operations, transit authorities and industrial operations. Major customers include Amtrak, Burlington Northern and Union Pacific, as well as other Class I railroads, light rail/transit projects, high speed corridors and industrial/ports. The company has manufacturing plants in Pueblo, CO; Amarillo, TX; and Bear, DE. Rocla was founded in 1986 and is based in Denver (www.roclatie.com).

“We are extremely excited about the opportunity of working with Altus Capital Partners to accelerate growth and create additional value through expansion both in the United States and internationally. Combining our history, assets and people with the investment and energy of Altus Capital Partners gives all of us at Rocla a great feeling of optimism for our future,” said Peter Urquhart, Rocla’s Chief Executive Officer.

CoView Capital, a New York based investment bank specializing in middle-market mergers and acquisitions and private placements (www.coviewcap.com), advised the seller, AH Belco S.A., on this transaction.

Altus Capital Partners invests in corporate divestitures, management-led buyouts, and privately held or family-owned businesses with manufacturing operations based primarily in the Midwest and Eastern regions of the United States. Target companies will have at least $5 million of EBITDA and an enterprise value from $30 million to $100 million. The firm is headquartered in Wilton, CT with an additional office in Lincolnshire, IL (www.altuscapitalpartners.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-14-13