Archives for January 27, 2014

Sentinel Acquires Checkers from Wellspring

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Sentinel Capital Partners has reached an agreement to acquire Checkers Drive-In Restaurants from Wellspring Capital Management. Wellspring acquired Checker’s in February 2006 for approximately $188 million.

Checkers Drive-In Restaurants develops, owns, operates and franchises approximately 800 Checkers and Rally’s restaurants. Checkers Drive-In Restaurants was founded in1986 in Mobile, AL and Rally’s Drive-In Restaurants was founded in 1985 in Louisville, KT. The two companies merged in 1999. Checkers is headquartered in Tampa, FL (www.checkers.com).

Checkers was offered for sale in 2012 but after failing to find a buyer, Wellspring instead closed on a $160 million recapitalization. The proceeds of the recapitalization were used to refinance the company’s existing debt and to pay its investors a dividend.

Wellspring Capital Management is a middle-market private equity firm that manages more than $3 billion of private equity capital. The firm was founded in 1995 and is based in New York (www.wellspringcapital.com).

Sentinel Capital Partners invests in middle market companies in the United States and Canada in partnership with management. The firm invests in management buyouts, recapitalizations, corporate divestitures, and going-private transactions of businesses with EBITDAs between $7 million and $40 million. Sentinel targets eight industry sectors: aerospace & defense, business services, consumer, distribution, food & restaurants, franchising, healthcare, and industrials. The firm is headquartered in New York (www.sentinelpartners.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 1-27-14

Cyprium Exits Alpha Sintered Metals

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Cyprium Partners has sold its investment in Alpha Sintered Metals to the management of the company and O2 Investment Partners. Key Principal Partners, the predecessor to Cyprium Partners, first invested in Alpha Sintered Metals in 2004.

Alpha Sintered Metals (ASM) is a designer and manufacturer of powdered metal components, such as spur, bevel, and helical gears; sprockets, cams, and flanges. These components are used primarily in small engines, transmissions and mechanical drive applications for the outdoor power equipment (including lawn and garden), automotive, and general industrial markets. The company is headquartered in Ridgway, PA (www.alphasintered.com).

“ASM has been a prime example of the type of initiatives we pursue with our portfolio companies,” said Leland Lewis, a Managing Partner at Cyprium. “We team with management to assist with organic growth, acquisitions and operational improvements in order to position our companies to withstand a changing marketplace and to take advantage of growth opportunities. We wish the ASM team much success as they start the next chapter in the company’s history.”

In addition to its original subordinated debt and equity position, Cyprium invested additional capital in ASM to allow the company to establish off-shore manufacturing operations as well as to facilitate the acquisition of a competitor in the stainless steel exhaust and turbocharger components market.

Cyprium Partners provides capital for acquisitions, growth, shareholder or partnership buyouts, refinancings and personal dividend distributions, without requiring majority control. The firm invests subordinated debt, preferred stock and/or common stock of $10 million to $60 million per transaction in privately-held companies based in the US and Canada that have more than $10 million of EBITDA. Cyprium will also selectively invest in control (majority ownership) positions. In June 2011, as a result of the Dodd–Frank Wall Street Reform and Consumer Protection Act, the investment and finance teams at Key Principal Partners resigned to form Cyprium Partners. The firm has offices in Cleveland, New York, and Chicago (www.cyprium.com).

Stout Risius Ross (www.srr.com) led the sale process for Cyprium.

© 2014 PEPD • Private Equity’s Leading News Magazine • 1-27-14

Olympus and Goldman Acquire PSAV from Kelso

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Olympus Partners and Goldman Sachs have acquired PSAV, an event technology and audiovisual company from Kelso & Company. PSAV has been a portfolio company of Kelso since February 2007.

“We are thrilled to complete our acquisition by Olympus Partners and Goldman Sachs,” said Mike McIlwain, President & CEO of PSAV. “We are eager to work with them to continue providing exceptional service and value to more customers in more geographies.”

PSAV is an event technology and audiovisual company that serves planners, producers and customers in the corporate, association and special event markets. Services include computer interfaces, high-definition imaging, rigging, power distribution, component video, special effects, concert sound and lighting, high speed internet access, virtual meetings, and equipment supply. PSAV employs more than 4,750 full-time professionals in 1,300 resorts and hotels throughout the United States, Canada, Mexico, Europe and the Middle East. The company was founded in 1937 when Mr. P. Ray Swank and his wife, Lucille Swank, founded Swank Audio Visuals, a subsidiary of PSAV. The company began in St. Louis as a “portable projection service,” predating technology such as color television, FM radio, 8-tracks and audio tape. PSAV is today headquartered in Long Beach, CA (www.psav.com).

“We are excited to partner with Goldman Sachs to invest in PSAV, a market leader with an unmatched range of event technology and services and a blue chip customer base of hotel clients,” said Manu Bettegowda, Partner at Olympus Partners. “We look forward to working with PSAV’s talented management team to continue to drive the company’s growth.”

Olympus Partners, with $5 billion of capital under management, provides equity capital for middle market management buyouts and for companies needing capital for expansion. Sectors of interest include business services, restaurants, consumer products, healthcare services, and financial services. The firm was founded in 1988 and is based in Stamford, CT (www.olympuspartners.com). The investment in PSAV is Olympus’ first investment out of its$2.3 billion sixth fund.

The Goldman Sachs Group is a global investment banking, securities and investment management firm. Goldman Sachs is headquartered in New York (www.gs.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 1-27-14

Insight Equity Acquires Midstate Berkshire

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Insight Equity has acquired Midstate Berkshire from Precision Holding, a portfolio company of Cerberus and SAC Capital.

Midstate Berkshire is a provider of precision machining, fabrication and assembly services for the aerospace, defense, power generation, and oil & gas industries. The company has over 200,000 square feet of manufacturing space with the capacity to produce both large and small scale components and has the ability to handle volumes ranging from prototyping to full-scale production. Midstate Berkshire’s operations include more than 100 state-of-the-art, multi-axis CNC machines. The company is headquartered in Westfield, MA (www.berkshireindustries.com).

“Midstate Berkshire has differentiated itself through its ability to deliver complexity, quality and value to its customers. We are looking forward to partnering with its president, Duane Pekar, and the rest of the management team to provide further resources and accelerate the company’s trajectory,” said Victor Vescovo, COO & Managing Partner at Insight Equity.

Insight Equity makes control investments in middle market, asset intensive companies across a range of industries and specializes in partnering with companies experiencing some level of underperformance. Insight Equity also seeks complex and challenging situations, including public to private transactions, corporate divestitures, bankruptcies, restructurings and private family ownership. The firm is based in Southlake, TX (near Dallas) and also has an office in New York (www.insightequity.com).

“Midstate Berkshire is a key supplier of critical parts to companies across several attractive end-markets. We are excited to work with the management team to continue to expand the company’s capabilities and product offerings”, said James Jackson, a Senior Vice President at Insight Equity.

© 2014 PEPD • Private Equity’s Leading News Magazine • 1-27-14

KKR to Acquire Sedgwick

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KKR has signed an agreement to acquire Sedgwick Claims Management Services, a provider of claims and productivity management services, for approximately $2.4 billion from its current group of investors, which includes Hellman & Friedman and Stone Point Capital. The transaction is expected to close during the first quarter of 2014.

“We couldn’t ask for a better partner in the next stage of Sedgwick’s evolution,” said David North, president and CEO of Sedgwick. “KKR has an exceptional record of investing in financial services companies and will be a valuable strategic resource for our organization. We share a commitment to continued innovation in the claims and productivity management industry. My colleagues and I look forward to collaborating with KKR as we develop solutions for the changing needs of our clients.”

Sedgwick Claims Management Services is a provider of technology-enabled claims and productivity management services. The company specializes in workers’ compensation; disability, family medical, and other employee absence; managed care; general, automobile, and professional liability; warranty and credit card claims services; fraud and investigation; structured settlements; and Medicare compliance. On an annual basis, Sedgwick handles more than 2.1 million claims and has fiduciary responsibility for claim payments totaling more than $11 billion. Sedgwick and its affiliated companies have more than 11,000 colleagues in some 200 offices located in the US and Canada. The company is headquartered in Memphis (www.sedgwick.com).

“This is a critical time for employers as they adjust to an evolving health care delivery model, the shifting demographics of the workforce and a multitude of additional challenges,” said Tagar Olson, Member of KKR and head of its financial services investment practice. “Sedgwick has an exceptional management team, a strong track record of innovation and the technology-driven solutions to address these challenges. We believe our partnership will enable them to maintain and enhance their leadership position in the industry.”

KKR makes private equity, fixed income and other investments in companies in North America, Europe, Asia and the Middle East. The firm has $90 billion in assets under management. KKR was founded in 1976 and in addition to its New York headquarters the firm has offices in Menlo Park, San Francisco, Houston, Washington DC, London, Paris, Hong Kong, Tokyo, Beijing, Mumbai, Dubai and Sydney (www.kkr.com).

Equity for the investment was provided principally by KKR’s North American XI private equity fund. UBS Securities, Deutsche Bank Securities, Morgan Stanley, Mizuho, KKR Capital Markets and MCS Capital Markets provided financing for the transaction.

Hellman & Friedman invests from $200 million to $750 million in companies across a range of industries including energy & industrials, software, business & marketing services, internet & digital media, financial services, insurance, media, and healthcare. Founded in 1984, the firm has raised and managed over $25 billion of committed capital and invested in over 60 companies. The firm is currently investing its sixth fund, with $8.4 billion of capital commitments. Hellman & Friedman is based in San Francisco with additional offices in London and New York (www.hf.com).

Stone Point Capital serves as the manager of the Trident Funds, which have raised more than $10 billion in committed capital to make investments in the insurance, employee benefits and financial services industries. The firm is located in Greenwich, CT (www.stonepoint.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 1-27-14

Mining Exec Joins Warburg Pincus

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Warburg Pincus has appointed Peter Kukielski as a new Executive-in-Residence to work with the firm to identify and evaluate investment opportunities in the global mining industry with a view to forming a new mining company.

“The reduction in capital available to the mining sector and greater uncertainty in the commodities environment create a compelling investment environment for experienced operators with available capital and a long-term, patient view,” said Mr. Kukielski.

The Executives-in-Residence program at Warburg Pincus is designed to provide executives the opportunity to identify and evaluate investment opportunities and construct a business plan prior to launching a business with capital from Warburg.

“I am excited to be working with Warburg Pincus and believe that now is the right time to build a new world-class mining company that is committed to the highest standards of environmental, social and corporate governance,” continued Mr. Kukielski.

Mr. Kukielski was previously Chief Executive of ArcelorMittal Mining where he built the company’s mining business into one of the world’s five largest iron ore and metallurgical coal producers. Prior to joining ArcelorMittal, he held senior executive positions at several other mining companies, including Teck Resources, Falconbridge and Noranda (now Glencore Xstrata) and Rio Algom (now BHP Billiton).

“Peter has tremendous depth and experience in the mining industry globally, most recently as the leader of one of the world’s largest mining businesses. We believe that there are a number of attractive investment opportunities to evaluate in the mining sector and are pleased to be partnering with such an experienced individual as Peter,” said Somit Varma, Managing Director, Warburg Pincus.

Warburg Pincus has more than $35 billion in assets under management and has raised 13 private equity funds which have invested more than $45 billion in approximately 675 companies in 35 countries. The firm was founded in 1966 and is headquartered in New York with offices in Amsterdam, Beijing, Frankfurt, Hong Kong, London, Luxembourg, Port Louis, Mumbai, San Francisco, Sao Paulo and Shanghai (www.warburgpincus.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 1-27-14

Daniel Hodges Promoted at AUA

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AUA Private Equity Partners has promoted Daniel Hodges to Senior Associate. Mr. Hodges focuses on investments in the consumer, media and business services sectors and has over seven years of private equity and corporate finance experience.

“We are very pleased to have Dan as part of our team. We believe in cultivating talent and promoting from within our organization to acknowledge hard work and experience and we intend to foster those efforts in building the best investment team that we can. Dan has proven to be a valuable asset to AUA Private Equity,” said Andy Unanue, Managing Partner of AUA.

Mr. Hodges joined AUA in 2013 after receiving his MBA from Columbia. He previously held positions at Alliance Consumer Growth, Seguin Partners, American Capital and Wachovia Securities. In addition to his Columbia MBA, he received his BA in Economics from Duke University.

AUA Private Equity Partners makes equity investments in companies in the consumer, media and business services sectors with a particular focus on Hispanic-oriented companies and family-owned businesses located in the United States. The firm invests from $10 million to $30 million of equity in companies that generate at least $3 million of EBITDA. The firm is based in New York (www.auaequity.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 1-27-14