Archives for May 2014

Pfingsten Acquires ZSi-Foster

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Pfingsten Partners has acquired ZSi and Foster Manufacturing Co. (collectively ZSi-Foster), a manufacturer and supplier of clamping and coupling products. Pfingsten acquired the company on May 23, 2014, marking the fifteenth platform investment for Pfingsten’s $525 million Fund IV.

“The ZSi-Foster team has built an outstanding business with leading brand names and the highest quality clamping and coupling products in the industry,” said Scott Finegan, Managing Director, Pfingsten. “The company is well positioned to capitalize on the demands of the diverse end markets and customers they serve.”

ZSi-Foster is a supplier to the general industrial, fluid power, HVAC, refrigeration and electrical end markets. The company sells a product portfolio with over 11,500 SKUs to a diverse customer base of distributors and OEMs.  The company is headquartered near Detroit in Canton, MI, with a second manufacturing facility in Springfield, MO (www.zsi-inc.com and www.couplers.com).

“Our experienced team, Pfingsten’s operational expertise, and a conservative balance sheet will allow ZSi-Foster to take full advantage of its market opportunities,” said ZSi-Foster CEO, Kris Weger. “We are excited about the next step in our journey and have the right partner to help us accelerate ZSi-Foster’s growth.”

Pfingsten Partners invests in middle market manufacturing, distribution and business services companies. Since completing its first investment in 1991, Pfingsten Partners has acquired 94 companies and has over $1 billion of capital under management. The firm is based in Chicago and has additional offices in India and China (www.pfingsten.com).

2014 PEPD • Private Equity’s Leading News Magazine • 5-29-14

Ontario Teachers’ Invest in Flynn Restaurant Group

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Flynn Restaurant Group (FRG), the largest restaurant franchise group in the US, has received a strategic investment of approximately $300 million from Ontario Teachers’ Pension Plan (OTPP), one of Canada’s largest and most active pension investors. The current investment by OTPP values FRG at over $1 billion.

FRG’s management team, led by its founder, chairman and chief executive officer, Greg Flynn, also participated in the investment and has significantly increased its direct ownership position in the company as a result of the transaction.

OTPP, through its Teachers’ Private Capital group, and FRG management purchased certain of their interests from an investment fund managed by Goldman Sachs and Weston Presidio, which most recently invested in FRG in 2011. A predecessor GS Capital Partners fund was previously an investor in the company from 2001-2005, and an earlier Weston Presidio fund was an investor from 2005-2011.

“We are pleased to welcome Ontario Teachers’ as an investor,” said Mr. Flynn. “They have access to large amounts of evergreen capital, and they do not face any of the issues related to fund timing that conventional private equity firms face. They are very experienced investors and have generated an impressive track record over decades of making direct investments into companies like ours. They are also just really great people, and it has been a pleasure completing this transaction with them. We now have enhanced resources to continue to grow through a variety of initiatives, including existing restaurant revitalizations, new restaurant development, and potential new acquisitions.”

Flynn Restaurant Group has grown to become the largest restaurant franchisee in the US, and one of the 50 largest foodservice companies of any kind. It was the first US franchise group to exceed $1 billion in sales, and it is the first group to be valued at greater than $1 billion. With 470 Applebee’s and 170 Taco Bell restaurants generating $1.4 billion in annual sales, FRG employs approximately 36,000 people in 27 states. The company was founded in 1999 and is based in San Francisco (www.flynnrestaurantgroup.com).

“FRG has experienced tremendous growth since its founding and we see a number of opportunities for additional expansion,” said Jane Rowe, Senior Vice-President of TPC.  “Greg and his team have done an outstanding job of delivering strong financial results by fostering a culture of continuous improvement and by delivering consistently enjoyable and affordable dining experience to its guests. We are excited to have the opportunity to support Greg and his team as they continue to execute their strategic plan and enter the next stage of their growth.”

Teachers’ Private Capital is one of the world’s largest private equity investors, having participated as a long-term investor in numerous management buyouts in Canada, the United States and Europe. It is the private investment division of the Ontario Teachers’ Pension Plan, the largest single-profession pension plan in Canada. Teachers’ Private Capital is based in Toronto with offices in New York and London (www.teachersprivatecapital.com).

2014 PEPD • Private Equity’s Leading News Magazine • 5-29-14

The CapStreet Group Closes Fourth Fund at $340 Million

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The CapStreet Group has held a final closing of CapStreet IV, LP (CapStreet IV) at $340 million.  CapStreet did not engage an intermediary to assist in the fundraising process.

CapStreet launched fundraising for CapStreet IV on November 5, 2013, with the opening of an electronic data room, held a first close in December 2013 with commitments of $249.5 million and a second close in February 2014. On May 6, 2014, CapStreet IV held a final close with total commitments of $340 million, significantly above its $250 million initial target.

“We are extremely grateful for the tremendous support from both existing and new investors in successfully raising CapStreet IV,” said George Kelly, CapStreet founder and CEO.

Similar to the strategy of the firm’s previous fund, CapStreet III, LP, CapStreet IV will continue to make control investments in privately held, lower middle market companies headquartered in Texas and surrounding states. CapStreet targets industrial and diversified business service companies, with annual EBITDA between $5 million and $20 million.  Since the firm’s founding in 1990, CapStreet has invested in 35 platform companies.  CapStreet is headquartered in Houston (www.capstreet.com).

2014 PEPD • Private Equity’s Leading News Magazine • 5-29-14

Safeguard Capital Enters Private Equity

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Safeguard Properties has announced the formation of Safeguard Capital Group, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

With equity capital in excess of $100 million, Safeguard Capital Group leverages the operational strength and expertise of Safeguard Properties, the largest mortgage field services company in the United States with over $1.3 billion of annual revenue.

Safeguard Capital Group will be actively investing across a variety of business services industries, with particular focus on real estate services; healthcare; consumer/retail; financial; industrial; and energy/environmental markets generating between $20 and $500 million in revenue.

Safeguard Capital is headed by Jonathan Ives, Managing Director; Sean Dorsey, Managing Director; and Tod Burkert, VP of Business Development. The company is headquartered in Cleveland (www.safeguardcap.com).

Some of the characteristics that Safeguard Capital is looking for in target companies include: strong operating history; quality leadership team; niche focus or competitive advantage; located in North America; closely held businesses in transition or in need of liquidity; corporate divestitures; private equity backed companies’ and; possible turnarounds.

“We’re looking to partner with companies that have a compelling operating strategy and where we can invest for the long-term,” said Alan Jaffa, CEO of Safeguard Properties and Safeguard Capital Group Advisory Board Member. “Our focus is on business services companies in varying degrees of transition that can benefit from the vast resources of Safeguard Properties,” added Mr. Jaffa.

2014 PEPD • Private Equity’s Leading News Magazine • 5-29-14

Blue Point Acquires Hilsinger

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Blue Point Capital Partners has acquired The Hilsinger Company, a designer, manufacturer and distributor of eyewear and eye care accessories, supplies and equipment. Hilsinger represents the second platform investment for Blue Point III, the firm’s third middle-market buyout fund.

Hilsinger supplies more than 20,000 products to independent eye care professionals and optical chains in a range of categories, including prescription protective eyewear, consumer and professional optical accessories, and ophthalmic products.  With more than 25,000 customers globally, the company serves the market through five primary brands: Hilco, Wilson Ophthalmic, Leader, OnGuard Safety and i-Promotions. Hilsinger was founded in 1956 and is headquartered south of Boston in Plainville, MA, and has additional operations in North America, Europe and Australia (www.hilco.com).

The business has grown and diversified substantially over the past 15 years through a combination of internal growth and several business acquisitions, most notably Wilson Ophthalmic (1998); Shield Lens Care (1999); Leader Sports (2001); Quality Accessories (2006), OnGuard Safety (2007), and Sadler Optical Tools & Findings (2007).

“Hilsinger’s market leadership and history of successful acquisitions create a strong platform for future growth. We plan to support the company in executing additional domestic and international acquisitions and optimizing its sourcing capabilities with our Shanghai-based supply-chain team,” said John LeMay, a partner with Blue Point.  “Blue Point looks forward to collaborating with the excellent management team at Hilsinger to build on its historical success.”

Blue Point Capital Partners is a lower-middle-market private equity firm that invests in manufacturing, distribution and service businesses generating $20 million to $200 million in revenue. The firm has over $800 million in committed capital and has offices in Charlotte, Cleveland, Seattle, and Shanghai (www.bluepointcapital.com).

“Hilsinger has been a leader in the optical industry for nearly sixty years, and we will benefit from the unique value and fresh perspective that Blue Point will bring to our company,” said Bob Nahmias, chief executive officer of Hilsinger. “Blue Point’s access to exceptional resources, including its presence in China, will be invaluable to Hilsinger as we look to expand into other markets and broaden our eyewear and eye care product offerings. With Blue Point’s strategic and operational guidance, we look forward to the opportunities on the horizon for Hilsinger.”

2014 PEPD • Private Equity’s Leading News Magazine • 5-28-14

Blackstone Acquires Outerstuff

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Outerstuff, a designer, manufacturer and marketer of licensed children’s sports apparel for all of the major sports leagues in North America, today announced that it has closed an investment with Blackstone.

Blackstone will invest alongside founder and CEO Sol Werdiger, who will roll over equity in the transaction, and Blackstone will share equal economics and governance with the current shareholders. Blackstone will support Outerstuff in the next phase of its growth as it expands its presence in the sports apparel industry, both domestically and internationally.

“At Outerstuff, our vision is to become the preeminent global provider of apparel serving our sports league and brand partners,” said Sol Werdiger, Outerstuff founder and chief executive officer. “Our partnership with Blackstone gives us the financial resources and expertise we need to realize that vision. I am extremely excited about working with Blackstone as we begin the next chapter of our growth story.”

Outerstuff has established itself as an industry leader in the branded youth apparel market by leveraging its in-house design team, low-cost manufacturing, sophisticated demand-planning methodology and long-standing relationships with the leagues, brands, and retailers. Outerstuff designs and produces children’s jerseys, t-shirts and other clothing items for the leading brands in American sports, including the NFL, MLB, NBA, NHL, MLS, US Olympic Committee, and more than 200 leading colleges and universities, as well as Adidas’ youth apparel. The company operates via exclusive contracts with the leagues to produce their branded youth apparel, which it sells through specialty sporting goods stores and general retailers. Outerstuff was founded in 1983 by Sol Werdiger and is based in New York (www.outerstuff.com).

“Sol Werdiger is a visionary entrepreneur who has built Outerstuff into a unique and important strategic partner to sports leagues and sports apparel companies alike,” said Peter Wallace, a Senior Managing Director with Blackstone’s Private Equity business. “We are excited to partner with Sol and his outstanding management team and we look forward to supporting Outerstuff’s continued growth and expansion.”

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 headquartered in New York (www.blackstone.com).

Sullivan & Cromwell served as legal advisor to Outerstuff during the transaction. Blackstone was advised by Wells Fargo Securities and Simpson Thacher & Bartlett.

2014 PEPD • Private Equity’s Leading News Magazine • 5-28-14