Archives for April 25, 2014

GI Partners Closes Fund IV at $2 Billion

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Middle market private equity firm GI Partners has completed the final closing for GI Partners Fund IV at its $2 billion hard cap, surpassing its $1.5 billion fundraising target.  Fund IV investors include a domestic public and corporate pension plans, sovereign wealth funds, funds of funds, foundations, and family offices.

“We are grateful for the strong support from our existing investors and are very pleased to welcome a highly regarded set of new investors to GI. We believe the interest expressed by our limited partners demonstrates their appreciation of GI’s experienced team, deep sector knowledge, and unique position in the middle market landscape,” said Rick Magnuson, Founder and Executive Managing Director of GI Partners.

In addition to Mr. Magnuson, GI Partners is led by managing directors Howard Park, Hoon Cho, Alexander Fraser, and Greg VandenBosch.

Fund IV will continue the investment strategy GI has pursued since inception in 2001.  The firm invests from $50 million to $250 million in companies with enterprise values of $100 million to $750 million.  Sectors of interest include IT infrastructure & services; healthcare services; leisure & retail; and financial & real estate services.  Since founding, GI has managed $6 billion across four private equity funds and invested in 38 platform investments. GI Partners is based in Menlo Park (www.gipartners.com).

UBS Securities served as placement agent for GI Partners and Kirkland & Ellis served as legal counsel.

© 2014 PEPD • Private Equity’s Leading News Magazine • 4-25-14

GE Antares Backs Castle Harlan Buy of Gold Star

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GE Antares was the administrative agent on a $66 million senior secured credit facility to support the acquisition of Gold Star Foods, a food distributor to K-12 schools and a portfolio company of Prospect Partners, by Castle Harlan.  Castle Harlan invested in Gold Star through its fifth fund, Castle Harlan Partners V.

“GE Antares is a long-term partner to Castle Harlan. Their constructive financing structure and ability to move quickly through every stage of the deal process made them an excellent financing partner,” said Bill Pruellage, Co-President of Castle Harlan.

Gold Star Foods is a food distributor to K-12 schools in California, Arizona and Nevada. The company serves 380 school districts comprised of more than 3,500 schools, enabling them to provide students meals through federal and state programs for breakfasts and lunches that include program-approved healthy ingredients.  Gold Star purchases products from more than 600 food manufacturers and farms and sells over 6,000 products of fresh bread and produce, as well as refrigerated, frozen and dry menu items. The company is headquartered near Los Angeles in Ontario, CA (www.goldstarfoods.com).

“I’m excited to be financing another successful acquisition by Castle Harlan,” said Doug Cannaliato, managing director of GE Antares, “In partnership with management, Castle Harlan will enable Gold Star Foods to continue to grow, and we look forward to helping finance this growth.”

GE Antares is a unit of GE Capital with offices in Atlanta, Chicago, Los Angeles, New York, and San Francisco. Specializing in the middle market, GE Antares is a “one-stop” source for GE’s lending and other services to middle market private equity sponsors (www.geantares.com).

Castle Harlan makes control investments in middle-market companies in North America, Europe and, together with CHAMP Private Equity, in Australia.  Since its inception, Castle Harlan has invested in more than 54 companies representing more than $11 billion in enterprise value. The firm was founded in 1987 and is based in New York (www.castleharlan.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 4-25-14

Svoboda Promotes Harpster to Managing Director

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Svoboda Capital Partners has promoted Richard Harpster to the position of Managing Director.  Mr. Harpster joined the firm as an analyst in August 2004.

“We are extremely proud of Rick’s accomplishments as he continues to excel at Svoboda Capital.  Rick has played a key role in sourcing and managing a number of new investments and continues to add significant value to our portfolio companies,” said John Svoboda, the firm’s Managing Director.

Mr. Harpster is responsible for sourcing and evaluating potential investment opportunities, leading due diligence, structuring and negotiating transactions, and managing portfolio company investments. He serves on the boards of Databank, Cape Electrical Supply, GPA, and Border Construction Specialties.

Prior to joining Svoboda Capital Partners, Mr. Harpster was an Investment Banking Analyst at Merrill Lynch in Chicago.  He holds a BBA degree with in Accounting and Finance from the University of Michigan and also received a Masters of Accounting degree from the University of Michigan.

Svoboda Capital Partners invests from $10 million to $20 million in business services, value-added distribution, and consumer products companies that have revenues from $10 million to $100 million and EBITDAs from $3 million to $15 million. The firm was founded in 1998 and has over $300 million of capital under management.  Svoboda Capital is based in Chicago (www.svoco.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 4-25-14

Fort Point Capital Exits Lone Star Overnight

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Fort Point Capital has completed the sale of Lone Star Overnight, a parcel delivery company, to Eagle Merchant Partners.  The sale of Lone Star Overnight marks the first portfolio realization for Fort Point Capital which was founded in 2010.

Lone Star Overnight (LSO) is a regional provider of overnight parcel delivery service in the southwest United States. The company delivers thousands of packages every business day to nearly 3,000 ZIP codes in Texas, Oklahoma, Louisiana, New Mexico, Arkansas and Mexico. The company is headquartered in Austin (www.lso.com)

“The LSO team, led by Chief Executive Officer, Rick Jones, and Chief Financial Officer, George Stephens, did an excellent job of repositioning LSO as the best-in-class service provider in the Southwest while expanding its geographic footprint and customer base,” said Brooke Ablon, Partner at Fort Point Capital.  “We are thankful to the LSO management team and employees for such a great effort and wish them continued success with Eagle Merchant Partners.”

During Fort Point’s ownership, the firm supported the company’s growth by adding several key members to the senior management team and board; created a business development program; launched a profitability enhancement project; and made investments in the company’s infrastructure, including a modernization of its fleet.

“Fort Point’s operating expertise and strategic oversight significantly helped enhance LSO’s profitability, cash flow and success.  In addition, the transaction team worked closely with our team to evaluate new growth opportunities and optimize the company’s capital structure,” said Rick Jones, CEO of LSO.

Fort Point Capital invests from $5 million to $25 million in service-oriented, lower middle market companies across a range of sectors, including business services, healthcare, consumer, and software and information. Fort Point Capital is currently investing from FPC Small Cap Fund I. The firm is based in Boston (www.fortpointcapital.com).

MRL Capital (Stamford, CT) (no website found) and Pilgrim Capital (Fairfield, CT) (www.pilgrimcap.com) co-invested with Fort Point Capital in acquiring Lone Star Overnight in 2011.

The buyer of LSO, Eagle Merchant Partners, invests in companies with revenue between $20 million and $200 million and EBITDA between $5 million and $40 million.  Sectors of interest include consumer, business services, and industrial.  Eagle Merchant Partners is headquartered in Atlanta (www.eaglemerchantpartners.com).

BB&T Capital Markets served as financial advisor to Lone Star Overnight.

© 2014 PEPD • Private Equity’s Leading News Magazine • 4-25-14

Swander Pace to Exit Insight Pharmaceuticals

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Swander Pace Capital has agreed to sell its over-the-counter products portfolio company, Insight Pharmaceuticals, to Prestige Brands for $750 million.

“It has been a pleasure working with CEO Gary Downing, the Insight team and our co-invest partner, Ontario Teachers’ Pension Plan, to grow Insight into one of the leading OTC pharmaceutical companies,” said Mo Stout, Managing Director at Swander Pace. “By implementing our investment playbook – including investing in brand development, driving cost improvements, and executing two strategic acquisitions – we were able to transform the company in five years and substantially increase its value.”

During the term of ownership, Insight expanded its product portfolio of OTC women’s health and personal care products, adding brands e.p.t, a home pregnancy testing brand, and MONISTAT, a leading brand in the vaginal anti-fungal category.

Today, Insight Pharmaceuticals markets a portfolio of niche over-the-counter brands including Anacin, Bonine, Dermarest, e.p.t., Gentle Naturals, MONISTAT, NIX, and Sucrets that are sold to food, drug, and mass retailers throughout the US and Canada. The company is based near Philadelphia in Trevose, PA (www.insightpharma.com).

“During our ownership, Insight was able to grow sales from approximately $79 million to over $200 million.  This transaction represents another successful execution of our consumer products investment strategy to attract and partner with world class teams, implement effective marketing strategies, optimize sales force productivity and drive operating efficiencies,” said Corby Reese, Managing Director at Swander Pace.

Swander Pace Capital invests in middle-market consumer products companies including branded and non-branded, manufacturers, marketers, and distributors that sell through a range of retail and institutional channels. The firm generally targets companies that have up to $300 million in revenues. Swander Pace was founded in 1996 and has offices in San Francisco, CA; Bedminster, NJ; and Oakville, ON (www.spcap.com).

Ontario Teachers’ Pension Plan, with $140.8 billion in assets as of December 31, 2013, is the largest single-profession pension plan in Canada and is based in Toronto (www.otpp.com).

“The Swander Pace team was essential in providing the guidance and financial support to aggressively grow our business,” said Gary Downing, CEO of Insight. “Through research-driven marketing and sales execution, we were able to significantly strengthen our product portfolio. On behalf of our team, I would like to thank Swander Pace and Teachers’ for their commitment and support as we enter our next phase of growth with Prestige.”

Prestige Brands (NYSE: PBH) markets and distributes over-the-counter healthcare and household cleaning products.  It was formed by the merger of Medtech Products, Prestige Brands International, and The Spic and Span Company in 2005.  Among the brands owned by Prestige include Chloraseptic sore throat products, Clear Eyes, Compound W wart remover, Dramamine, Efferdent, Luden’s, and the Comet and Spic and Span cleaning products.  The company is headquartered in Tarrytown, NY (www.prestigebrands.com).

Kirkland & Ellis LLP served as legal advisor to Swander Pace on the sale of Insight to Prestige Brands.

© 2014 PEPD • Private Equity’s Leading News Magazine • 4-25-14