Archives for April 29, 2014

Charterhouse Exits Rudi’s Organic Bakery

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The Hain Celestial Group, an organic and natural products company, has acquired Rudi’s Organic Bakery, a portfolio company Charterhouse Equity Partners. The purchase price of $61.3 million consisted of cash and common shares of Hain Celestial.

Rudi’s is a marketer, manufacturer and distributor of certified organic and certified gluten-free breads, buns, muffins, tortillas, wraps and soft pretzels and GFCO-certified natural breads, buns, pizza crusts, tortillas, snack bars and stuffing in the United States and Canada.  The company primarily sells branded products through natural food chains, independent health food stores, conventional supermarkets and the club channel. In calendar year 2013, Rudi’s generated approximately $60 million in net sales.  Rudi’s is based in Boulder, CO (www.rudisbakery.com).

“We are very excited by the strategic acquisition of Rudi’s, a leading certified organic bread brand, which expands our participation into 11 of the top 20 natural categories in the United States.  At Hain Celestial we look for the latest trends, and consumers are increasing their purchases of whole grains, organic and gluten-free product offerings,” said Irwin Simon, Founder, President and Chief Executive Officer of Hain Celestial.

The Hain Celestial Group (NASDAQ: HAIN) is a food company whose main focus is natural and organic foods and personal care products. The company’s products range from herbal teas, offered through the Celestial Seasonings brand, to organic free range chickens through the FreeBird brand.  The company also provides organic, whole grain foods through Arrowhead Mills.  Hain Celestial assumed its current form in May 2000 through the merger of the Hain Food Group with Celestial Seasonings. The company is headquartered on Long Island in Lake Success, NY (www.hain-celestial.com).

Charterhouse Equity Partners invests in businesses with enterprise values between $25 million and $150 million through a variety of private equity transactions – sector build-ups, buyouts and growth capital financings.  Charterhouse commenced operations as the US Investment arm of the UK-based Charterhouse Bank four decades ago. In the mid-1980’s, Charterhouse became an independent entity and invested pledged capital on behalf of a group of high-net worth families and institutional investors. The firm raised its first dedicated fund, Charterhouse Equity Partners, LP, with third-party institutional capital, in 1989. The firm is currently seeking new platform investment opportunities as well as strategic add-on investments for its existing portfolio companies.  Charterhouse is headquartered in Summit, NJ (www.charterhouseequity.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 4-29-14

Grey Mountain Acquires Fleetwood Industries

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Grey Mountain Partners has invested in Fleetwood Industries, a provider of retail display systems.

“Our new financial partnership with Grey Mountain Partners provides us access to the capital required to continue to grow and lead our industry through innovation and the highest possible quality and service levels. We are proud of our legacy and now proud to have Grey Mountain supporting our path into the future,” said Don Doherty, Fleetwood’s President and CEO.

Fleetwood Industries (dba Fleetwood Fixtures) is a provider of retail display systems and related program management services. The company sells its products globally to retailers and consumer products brands. Services include design, engineering, program management, global sourcing and logistics support.  The company was founded in 1968 and is headquartered in Leesport, PA (a 287,000 sq. ft. facility).  Fleetwood also has service locations in New York and Chicago as well as an Asian headquarters in Shanghai (www.fleetwoodfixtures.com).

“We are thrilled to partner with Don Doherty and his team as they execute upon an exciting business plan and continue serving Fleetwood’s diverse customer base,” said Will Pucillo, Senior Associate at Grey Mountain.

Grey Mountain Partners invests up to $75 million in control acquisitions of companies with enterprise values between $30 million and $150 million. Sectors of interest include aerospace & defense, building products & materials, business process outsourcing, diversified manufacturing, energy & power, financial services, food & beverage, healthcare services & technology, industrial services, packaging, professional services, specialty chemicals, technology, transportation & logistics, wholesale and distribution.  The firm has approximately $700 million of assets under management and is currently investing from its third fund, which was raised in 2013.  Grey Mountain was founded in 2003 by Managing Partners Rob Wright and Jeff Kuo and is based in Boulder with an additional office in Minneapolis (www.greymountain.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 4-29-14

H.I.G. Acquires Cornerstone Research from Sun Capital

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Integrity Nutraceuticals, a portfolio company of H.I.G. Growth Partners acquired in January 2014, has acquired Cornerstone Research and Development, a portfolio company of Sun Capital Partners.

“We are thrilled to combine our resources with Integrity,” said Mike Beardall, President of the combined company. “This is great news for our customers and changes the game for nutritional supplement manufacturing.  With expanded capacity, enhanced capabilities, and new product development resources, we will continue to build on Cornerstone’s strong heritage of providing best-in-class services to our customers.”

Integrity Nutraceuticals, acquired by H.I.G. in January 2014, provides product development and value-added manufacturing services to branded nutritional supplement companies. Integrity develops, produces, and packages a range of powder and capsule products for a number of industry leaders, with particular expertise in sports nutrition.  The company was founded in 1999 and is based in Spring Hill, TN (www.integritynutmfg.com).

Cornerstone, acquired by Sun Capital in 2012, develops, produces, and packages a range of capsule, tablet, and powder products for a variety of customers in the vitamin, mineral, and supplement industry. The company was founded in 1992 and is based in Ogden, UT (www.crdius.com).

According to Integrity and Cornerstone, the merger – in combination with a capital investment program – will create world-class formulation, product development and production capabilities across 600,000 square feet of manufacturing space.

“This is great news for our customers and changes the game for nutritional supplement manufacturing. With expanded capacity, enhanced capabilities, and new product development resources, we will continue to build on Cornerstone’s strong heritage of providing best-in-class services to our customers,” said Peter Miller, CEO of the combined company.

“This is a bellwether event in the evolution of the nutrition industry,” said board member Greg Horn, an experienced nutrition executive who has previously served as the CEO of both General Nutrition Centers and Garden of Life. “Compliance and enforcement have raised the bar for manufacturers, and this merger creates a formidable player with a critical mass of scale and capabilities in an otherwise fragmented segment of the market. It will be a one-stop shop for innovators in nutrition.”

H.I.G. Growth Partners is the growth capital investment affiliate of H.I.G. Capital. H.I.G. Growth Partners makes majority and minority equity investments of $5 million to $30 million in growth-oriented businesses with revenues of $10 million to $100 million. The firm invests across all industries but focuses on certain high-growth sectors where the team has in-house expertise such as healthcare, technology, internet & media, consumer products and technology-enabled financial and business services (www.higgrowth.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 4-29-14

Swander Pace Closes Fund V at $350 Million

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Swander Pace Capital has closed its fifth and largest fund – SPC Partners V, LP – with $350 million in commitments from institutional investors, endowments, and family offices. The new fund will continue the firm’s strategy of investing in consumer products companies.

“We are honored to have once again attracted a best-in-class group of limited partners that recognize Swander Pace’s track record of success and ability to provide strong returns to investors. Our team’s commitment to, and execution of, our investment strategy has built Swander Pace into a leading middle-market consumer products private equity firm and valued partner to family-run or entrepreneurially driven businesses,” said Andrew Richards, Co-Founder and 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 $400 million in revenues. Swander Pace was founded in 1996 and has offices in San Francisco, CA; Bedminster, NJ; and Oakville, ON (www.spcap.com).

“The partners at Swander Pace Capital are thrilled to welcome back our existing limited partners and welcome our new limited partners to Fund V,” said Mark Poff, Managing Director at Swander Pace. “We are grateful for the strong support we received from our existing investors and believe that support is a validation of our strategy, focus, and performance. Swander Pace is well positioned to leverage the success of our preceding funds and our deep expertise in the consumer sector, and we are excited to execute our strategy in this new fund. We have already begun investing Fund V with the successful acquisitions of glo Professional, Aden & Anais and Recochem”

Swander Pace has substantial experience in the consumer products industry, including in sectors such as food and beverage, health and wellness, natural and organic, beauty and personal care, household products, pet products, soft goods and accessories, juvenile products, and ingredients, among many others.

“Fund V is the largest fund in our firm’s history, and we are eager to continue implementing our strategy of proprietary deal sourcing and strategic and tactical value addition that we have honed by staying focused on consumer products for the past 18 years,” said Mr. Richards.  “The consistency of our focus in the consumer sector has built a set of playbooks we can replicate with each new investment that includes growth strategies, channel migration, marketing, operational improvement or cost reductions. The execution of this strategy over our past four funds has enabled Swander Pace to identify, acquire and partner with high-potential consumer product companies that are in attractive niche sectors.”

© 2014 PEPD • Private Equity’s Leading News Magazine • 4-29-14

Half of PE Executives Focus On Operational Improvements Before Signing LOI

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The Deal and Pepper Hamilton have today published a new report titled “Strengthening Companies: Operational Improvement Trends” which outlines the findings from a new survey of private equity executives. The survey demonstrates the importance of operational improvement and the thought that private equity firms put into the process.  A link to a free copy of the report is available at the end of this article.

“In an environment where middle-market private equity firms are holding onto portfolio companies longer, it is of strategic importance to the funds to focus on operational improvements within these companies to create value and returns,” said  Bruce Fenton, partner and chair of the Private Equity Practice Group and Investment Funds Industry Group for Pepper Hamilton.  “We are seeing many of these issues with our private equity clients around the country and it is helpful to be able to share these insights of senior private equity professionals.”

Survey highlights include:

  • 48.4% of those surveyed said they begin focusing on operational improvements before signing a letter of intent while only 11.6% said they begin after reaching a definitive agreement and 11.6% said they do so after closing.
  • Asked how they plan for operational improvements after closing, 47.5% said they use a 100-day program, while just 16.8% said they use a three- to five-year plan.
  • Nearly 80% of respondents said they believe operational improvements are more important now than it was before the financial crisis.
  • Respondents agreed that former CEOs and senior executives are most effective at identifying problematic operational issues at every stage: during due diligence, after a definitive agreement and after one year.
  • The survey also revealed wide agreement that sales execution has been the most important operational improvement to their investment thesis. Healthcare cost improvement was seen as the least important issue.

“Our survey results reveal some of the thinking that goes on in the middle market private equity space, looking at everything from when and how operational improvements are considered to how employees impact these changes,” said Jeffrey Kanige, Editor in Chief of The Deal.  “What was most interesting to hear was feedback about private equity thinking pre- and post-crisis. Those tough financial times are undoubtedly playing a major role in decision-making today.”

For a free copy of “Strengthening Companies: Operational Improvement Trends” click HERE.

© 2014 PEPD • Private Equity’s Leading News Magazine • 4-29-14