Archives for February 21, 2014

Blackstone and GIC Invest in Kronos

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Blackstone and Singapore sovereign wealth fund GIC Private Limited have agreed to make a minority investment of $750 million in Kronos in return for a 44% equity interest. Blackstone and GIC will invest in Kronos alongside existing investors Hellman & Friedman and JMI Equity. Hellman & Friedman will remain the majority investor in the company. The transaction is expected to close in the first half of 2014.

Kronos is a provider of workforce management software and related services. The company’s products and services are used by tens of thousands of companies and more than half of the Fortune 1000 to control labor costs, minimize compliance risk, and improve workforce productivity. The company was originally a manufacturer of time-clocks and introduced the world’s first microprocessor-based time-clock in 1979. Kronos was founded in 1977 and is headquartered north of Boston in Chelmsford, MA (www.kronos.com).

“We are thrilled to have Blackstone and GIC join the Kronos team. Their significant investments validate our company’s strategy and growth potential and support us as we rapidly extend our Kronos cloud offerings; expedite our pace of product innovation; continue to broaden our vertical expertise; and accelerate our global expansion strategy,” said Aron Ain, chief executive officer of Kronos.

Kronos was taken private by Hellman & Friedman and JMI Equity in March 2007 in a transaction valued at just over $1.7 billion. Since that time, Kronos revenues have increased 45 percent and EBITDA has increased 114 percent. Kronos is fast approaching $1 billion in annual revenue.

“Kronos has the unique combination of industry leadership and expertise, entrepreneurial spirit, market-leading products, and a loyal customer base. The company has tremendous potential and we are excited to partner with the Kronos management team on growth initiatives,” said Chinh Chu, a Blackstone Senior Managing Director.

Blackstone is one of the world’s leading investment and advisory firms. The firm’s alternative asset management businesses include the management of private equity funds, real estate funds, hedge fund solutions, credit-focused funds and closed-end funds. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Blackstone is based in New York (www.blackstone.com).

“As a long-term investor, GIC has been following the Kronos story since Hellman & Friedman’s initial investment. The company’s track record speaks for itself, and we are delighted to work with management and our partners to drive Kronos’ continuing success,” said Eric Wilmes, head, North America Direct Investments Group, GIC Special Investments.

GIC Private Limited is among the world’s largest fund management companies with assets under management of more than $100 billion. GIC was founded in 1981 to manage Singapore’s foreign reserves and to become an active global private equity investor through investments in private equity funds as well as directly in companies. GIC is headquartered in Singapore with a network of offices in nine cities worldwide (www.gic.com.sg).

© 2014 PEPD • Private Equity’s Leading News Magazine • 2-21-14

Black Diamond Buys Assets of Star Growers of Colorado

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Color Spot Nurseries, a portfolio company of Black Diamond Capital Management, has acquired certain assets of Color Star Growers of Colorado through a Chapter 11 Section 363 process which closed last month.

Color Star was a grower and wholesaler of flowers and nursery stock with greenhouses and distribution centers in nine locations in Colorado, Missouri and Texas. The company was the fourth largest bedding plant distributor in the US based on square footage, with market positions in over 20 states (www.colorstargrowers.com).

The demise of Color Star was caused by stagnant consumer spending, slow housing starts, retailer consolidation and adverse weather conditions during the company’s peak growing season in 2013. As a result, the company faced liquidity constraints and filed for Chapter 11 Bankruptcy protection in the US Bankruptcy Court for the Eastern District of Texas in December 2013. SSG Capital Advisors (www.ssgca.com) was retained in September 2013 as Color Star’s investment banker to explore strategic alternatives, including a sale of substantially all of the company’s assets.

SSG coordinated the sale of Color Star’s assets to three buyers – Color Spot Nurseries, Altman Plants, and Raindrop Partners. Color Spot purchased Color Star’s Sanger, TX assets. Altman Plants purchased the company’s Giddings, TX, Harrisonville, MO and Peyton, CO assets; plus equipment and inventory at the Austin, TX, Carthage, MO and Jasper, MO facilities. Raindrop Partners purchased all of the company’s Old Fort Lupton, CO and New Fort Lupton, CO assets.

Black Diamond ‘s portfolio company, Color Spot Nurseries, is a distributor of bedding plants, vegetables, herbs, shrubs, premium blooming plants, ground cover, and ornamentals to more than 2,000 retail and commercial customers throughout the United States. The company operates 12 production facilities throughout the United States and is headquartered in Fallbrook, CA (www.colorspot.com).

Black Diamond invests in performing and distressed markets through the following four platforms: control distressed/private equity; hedge fund; mezzanine funds; and CLOs and other structured vehicles. The firm was founded in 1995 and employs more than 80 people across multiple offices, including Greenwich, CT; Lake Forest, IL; and London, UK (www.bdcm.com).

Raindrop Partners makes equity investments of up to $5 million in Colorado-based companies with revenues of up to $20 million and EBITDA of up to $3 million. Sectors of interest include business and consumer services; consumer staples and food; real estate, construction, and building products; and minerals & mining. Raindrop Partners owns Circle Fresh Farms, a Colorado-based greenhouse vegetable operation focused on providing locally grown, fresh produce year-round to Colorado’s metropolitan areas, including Denver, Boulder and Colorado Springs. Raindrop Partners is headquartered in Denver (www.raindroppartners.com).

Altman Plants is the nation’s fifth largest grower for the horticulture industry with 1,100 employees and 6 million square feet of greenhouse operations over 1,200 acres in three states. Altman Plants is headquartered in Vista, CA (www.altmanplants.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 2-21-14

LBC Agents Facility to Back Promus’ Buy of Alliance Steel

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LBC Credit Partners has agented a $15 million second lien term loan to support the acquisition of Alliance Steel by Associated Steel Group, a portfolio company of Promus Equity Partners and Jon Vesely, an independent sponsor, formed in August 2012 to consolidate the metal building industry.

Alliance is a fully integrated manufacturer of metal building systems, structural steel and components, focused primarily on serving non-residential customers in Oklahoma, Texas and other surrounding states. Alliance specializes in the construction of complex, highly-engineered low-rise metal buildings which it manufactures at its Oklahoma City facility and either ships the materials to customer job sites or makes them available at the plant for customer pick-up; Alliance does not provide on-site erection services. Building types include office and retail buildings, warehouses, manufacturing plants, churches, schools, agricultural buildings and aircraft hangers. The company is led by President Larry Thomas and operates from a 415,000 square foot facility in Oklahoma City (headquarters) with 340 employees (www.allianceokc.com).

Airplane hanger by Alliance Steel

Associated Steel Group (ASG) is a designer and manufacturer of custom engineered metal buildings, roofing systems and components for the non-residential construction industry. Building types include churches, schools, industrial structures, warehouses, aircraft hangers, municipal complexes and other retail structures. ASG distributes its products through a contractor base that promotes ASG building system and roofing solutions in their local markets. . The company is headquartered in Nashville (www.acibuildingsystems.com).

ASG is led by Tim Ritchie, CEO, and Jon Vesely, Chairman of the Board, who both have past experience consolidating the metal building industry. With the acquisition of Alliance Steel ASG has now completed three add-on acquisitions having previously purchased ACI Building Systems (Mississippi) and AIM Metals (Georgia). According to ASG, the acquisition of Alliance makes ASG the fourth largest company in the metal building systems industry.

LBC Credit Partners is a provider of middle market financing to companies with EBITDAs generally greater than $10 million. Products include senior term, unitranche, second lien, junior secured and mezzanine debt and equity co-investments supporting sponsored and non-sponsored transactions. LBC invests from $10 million to $50 million per transaction supporting acquisitions, growth strategies, refinancings, recapitalizations, and restructurings. LBC has more than $1.4 billion of capital under management and is headquartered in Philadelphia with additional offices in Chicago and New York (www.lbccredit.com).

Promus Equity Partners is a private equity investment firm affiliated with Promus Holdings, a multi-family asset management firm with approximately $500 million of capital under management. Promus targets lower-middle market companies with EBITDA of $15 million or less. The firm is based in Chicago (www.promusequity.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 2-21-14

Ultra-High Net Worth Pro Joins USCA

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US Capital Advisors (USCA) has hired Mark Casey as a new Managing Director. Mr. Casey will be active in developing USCA’s ultra-high net worth and family office platform in Texas and he will also assume a key role in business development. Mr. Casey comes to USCA from Merrill Lynch’s Private Banking and Investment Group where he was a Regional Manager.

US Capital Advisors is a financial services company with primary business lines in wealth management and capital Markets. The wealth management division is headed by Patrick Mendenhall, Managing Partner, and provides advisory services to high net worth individuals and family offices. USCA was founded in 2010 and is headquartered in Houston with additional offices in Dallas and Austin (www.uscallc.com).

“We are excited to have Mark join USCA, following our formal expansion into his home city of Dallas,” said Mr. Mendenhall. “Mark has deep experience in recruiting and managing large and sophisticated financial advisors teams. USCA’s integrated regional financial services platform provides this type of advisor the ability to offer customized solutions and unique investment opportunities that are needed by ultra-high net worth and family office clients.”

Mr. Casey will work closely with other members of the wealth management division including Ford McTee in Austin and Steve Head in Dallas.

© 2014 PEPD • Private Equity’s Leading News Magazine • 2-21-14