Archives for June 4, 2014

HCP & Company Invests in Envy Medical

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Envy Medical, a maker of non-invasive skin rejuvenation therapies, has received a growth capital investment from HCP & Company.  The new funding from HCP will support sales and marketing initiatives, while also allowing the company to accelerate the development and introduction of new skincare products.

Envy Medical develops, markets and sells non-invasive skin rejuvenation therapies for patients suffering from either dermatologic or aesthetic conditions. The company’s lead products include SilkPeel and Dermalinfusion.  Envy is also the exclusive global licensor of skin brightening peptides including Lumixyl, which was developed at Stanford University. The company is based in Westlake Village, CA (www.envymedical.com).

“Looking across the professional skincare and physician dispensed markets, we recognize how very well positioned Envy is to be a dominant player in its market,” said Carlos Signoret, HCP Partner and Co-founder.

HCP & Company makes growth equity and buyout investments of $5 million to $25 million in lower-middle market companies that have revenues of at least $10 million and positive EBITDA. Sectors of interest include business services, consumer products, education, and healthcare services. HCP was founded in 2003 and has $215 million in capital under management. The firm is headquartered in Chicago (www.hcpcompany.com).

“This is the first time in Envy’s history that we have taken on outside growth capital, and we did so with unanimous board and shareholder support,” said Curtis Cluff, Chief Executive Officer. “That support is due in large part to HCP’s business acumen and an understanding that they bring significant experience to the table as Envy accelerates growth towards becoming a major global player in the specialized skincare market.”

Intrepid Investment Bankers (www.intrepidib.com) advised Envy Medical on this transaction.

2014 PEPD • Private Equity’s Leading News Magazine • 6-4-14

Sailing Capital Consortium to Acquire Brookstone

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Sailing Innovation (US), a consortium led by Sailing Capital Overseas Investment Fund along with a financing commitment from GE Capital, has been selected as the winning bidder for Brookstone for a final purchase price of $135.7 million, net of cash and assumed liabilities.  Under Sailing Innovation, Brookstone will continue to operate as a stand-alone company and brand.  The sale is subject to bankruptcy court approval and is expected to close by early July, 2014.

“This is a very exciting day for Brookstone. We were looking for a strong strategic partner who shares our vision and passion for Brookstone’s next phase of growth. We have found these qualities in Sailing and are thrilled about the opportunity to begin leveraging the resources of their global partners, including Sanpower Group in China. We will emerge from Chapter 11 as a healthy company with a bright future, and look forward to servicing our customers for years to come,” said Jim Speltz, President and Chief Executive Officer of Brookstone.

Brookstone is a product development company and multichannel lifestyle retailer. The company operates approximately 240 stores in the United States and Puerto Rico. Typically located in high-traffic regional shopping malls and airports, the stores feature unique and innovative consumer products. Brookstone also operates an e-commerce business that includes the Brookstone catalog and Brookstone.com. The company was founded in 1965 and is based in Merrimack, NH (www.brookstone.com).

Sailing Innovation (US) is an investment vehicle led by Sailing Capital Overseas Investment Fund, the first large cross-border RMB private equity fund launched in China. The fund, established by Shanghai International Group, engages in direct private equity investments and can participate throughout the capital structure — equity, structured finance, mezzanine and/or debt — for buy-out, control or significant minority positions. The firm is based in Hong Kong (www.sailing-capital.com.hk).

“Brookstone is an icon of American innovation. Sailing is keen to retain and build upon the strong brand equity of Brookstone to reignite its historical roots in delighting and exciting customers with unique and innovative products. We are committed to strengthen Brookstone’s operations in the US,” said James Liu, President and CEO of Sailing Capital Advisors.  “To this end, we will work with Brookstone’s management and team to enhance R&D capabilities, blaze new trails with cutting-edge products, rejuvenate its stores and motivate the sales team.”

“There remains a great thirst all around the world for what Brookstone can offer,” said Mr. Liu, “we will also expand Brookstone’s footprint beyond the US. As part of this strategy, our partner, Sanpower Group, will assist Brookstone in penetrating the fast-growing China market as well as establishing a presence in the UK. We believe the opportunities ahead for Brookstone are simply immense.”

Sanpower Group, founded in 1993 and based in Nanjing, China, is a business conglomerate which owns two of China’s leading retail assets – Hiteker and Cenbest. Hiteker is ranked 15th out of the top 100 retailers in China by the China Chain Store and Franchise Association. Focused on IT products and services, it has over 350 retail outlets across 13 provinces in China. Cenbest, located in Xinjiekou, Nanjing, is one of the top 10 department stores in China (en.sanpowergroup.com).

Brookstone’s legal advisor for the restructuring is K&L Gates and its financial advisor is Deloitte CRG.  Jefferies is the company’s investment banker, and has provided advice on the restructuring and sale of the company. The legal advisor to Sailing is Gibson Dunn & Crutcher and the financial advisor is Houlihan Lokey.

2014 PEPD • Private Equity’s Leading News Magazine • 6-4-14

Argonne and Fortress Acquire On The Border

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Argonne Capital Group has completed its previously announced acquisition of On The Border Mexican Grill & Cantina from Golden Gate Capital.  Argonne Capital partnered with Fortress Investment Group on the transaction.

On The Border is a full-service, casual dining Mexican restaurant which operates 121 units across the US and also franchises 36 units across the US, Puerto Rico, Saudi Arabia and South Korea. On The Border was founded in 1982 and is based in Dallas (www.ontheborder.com).

“We are excited to have closed this transaction in such a swift manner and are eager to begin our partnership with the company’s strong management team,” said Michael Klump, President and Founder of Argonne Capital.  “The acquisition of On The Border fits squarely within Argonne’s investment mandate and offers a tremendous opportunity to leverage our track record of delivering operational excellence and executing a best-in-class real estate and development strategy.  We look forward to positioning this concept for long-term success.”

Argonne Capital Group makes investments of $25 million to $75 million in the multi-unit restaurant, retail and service industries.  Argonne also has a presence in multi-tenant retail real estate through its RCG Ventures platform.  In aggregate, Argonne and its affiliates have over $700 million of equity under management. The firm was founded by Michael Klump in 2003 and is based in Atlanta (www.argonnecapital.com).

With the completion of this acquisition, Argonne Capital has increased its restaurant portfolio to over 925 locations covering brands such as IHOP, Applebee’s, Krystal, On The Border and Stevi B’s Pizza.  Today, Argonne’s portfolio of companies employs over 25,000 people and generates in excess of $1.5 billion in annual system-wide sales.

Fortress Investment Group, Argonne’s partner on this transaction, is a global investment firm with over $53 billion in assets under management. Fortress manages assets on behalf of over 1,400 institutional clients and private investors worldwide across a range of investment strategies — private equity, credit, liquid hedge funds and traditional fixed income. The firm was founded in 1998 and is based in New York (www.fortress.com).

Financing for the transaction was led by GE Capital.  King & Spalding and McGuireWoods advised Argonne Capital on the transaction.

2014 PEPD • Private Equity’s Leading News Magazine • 6-4-14

American Capital Acquires Premier Food Services

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SMG Holdings, a venue management company and a portfolio company of American Capital, has acquired Premier Food Services, a provider of outsourced food and beverage services.

“As a global venue management company, SMG manages a large and broad portfolio of venues with exceptional diversity across event type, end market, attendee population demographic and geography,” said Brian Graff, Senior Managing Director.  “Its acquisition of Premier provides SMG with an attractive opportunity to expand its food service offering outside of its core portfolio of arenas, stadiums and convention centers into business dining, schools and colleges, fairgrounds and off-premise catering.”

Premier Food Services is a provider of outsourced food and beverage services at entertainment venues, dining clubs, universities and businesses.  Its customers range from the State of California to higher education clients and aerospace and technology firms.  Premier’s services include dining center and restaurant management, alcoholic beverage and food concessions, meeting facility management and special events management. The company was founded in 1985 and is based in San Diego (www.premierfoodservices.com).

SMG, acquired by American Capital in June 2007, is a venue management company providing private management services to owners of public assembly facilities.  SMG provides construction and design consulting, pre-opening services, venue management, sales, marketing, event booking and programming.  SMG currently manages over 230 venues, including arenas, stadiums, convention centers, exhibition halls, science centers, trade centers, theaters and performing arts centers. SMG’s facilities include stadiums such as the Mercedes-Benz Superdome, home of the New Orleans Saints, and Soldier Field, home of the Chicago Bears; convention centers McCormick Place in Chicago and Moscone Center in San Francisco; and the UK based Manchester Arena, the world’s third largest arena.  SMG also offers food and beverage operations through its concessions, catering and special events division, SAVOR.  The company was founded in 1977 and is based in the Philadelphia suburb of West Conshohocken (www.smgworld.com).

“Premier is a perfect fit for our California SAVOR food business which includes the Long Beach Convention Center, The Aquarium of the Pacific, the Long Beach Grand Prix, the Moscone Center, the Ontario Convention Center and Fresno State University.  This acquisition will also provide a base of business to further expand SMG’s SAVOR brand nationally,” said Wes Westley, SMG President and CEO.

American Securities invests in businesses with $500 million to $2 billion of revenues. Investments are undertaken with conservative financial structures that typically include only equity and senior debt. The firm aims to invest $150 million to $500 million of equity capital in each portfolio company. Sectors of interest include industrial manufacturing, specialty chemicals, aerospace and defense, energy, business services, healthcare, media, restaurants, and consumer products. The firm has more than $10 billion of capital under management and is currently investing from its sixth fund. American Securities has offices in New York and Shanghai (www.american-securities.com).

2014 PEPD • Private Equity’s Leading News Magazine • 6-4-14

Prairie Capital Invests in DRB Systems

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Prairie Capital has made an investment in DRB Systems, a provider of software systems to the car wash industry.

DRB provides turnkey systems including point of sale (POS) software, loyalty promotion modules, control solutions, and related products designed for the conveyorized car wash industry.  Over the course of the company’s thirty-year history, its products have been installed in all 50 states, Puerto Rico, and Canada and users of its technology solutions have cared for over three billion cars.  The company was founded in 1984 and based in Akron (www.drbsystems.com).

“DRB is the unquestioned software leader for the conveyorized car wash industry, with a thirty-year history of strongly supporting their customers with their solutions,” said Tony Danielak, Prairie Capital Vice President. “We look forward to helping them build upon this success.”

Prairie Capital invests in lower middle market companies and corporate carve-outs. Typical investments will have annual revenues of $20 million to $100 million and cash flows of $4 million to $12 million.  Sectors of interest include niche manufacturing, business and financial services, and education.  Prairie Capital was founded in 1997 and is currently investing out of its $300 million fifth fund.  The firm is based in Chicago (www.prairie-capital.com).

Investment bank Corum Group (www.corumgroup.com) advised DRB Systems on this transaction.  “I greatly appreciated the very deep and thorough process we went through with Corum,” said DRB President Dale Brott. “Because of that process, we had a number of options, which means I’m confident that we have selected the right partner.”

2014 PEPD • Private Equity’s Leading News Magazine • 6-4-14

Golub Backs Whitney Buy of C.J. Foods

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Golub Capital has provided financing as Sole Bookrunner and Administrative Agent to support the recent acquisition of C.J. Foods by J.H. Whitney Capital Partners.

C.J. Foods is a custom manufacturer of super-premium dry pet foods for dogs, cats, and other household pets.  The company offers services that include product consulting and development, materials management, customized production and packaging, quality control, and managed inventory. C.J. Foods was founded in 1985 and is headquartered in Bern, KS (www.extrudedpetfood.com).

“As a result of its strong market reputation and value proposition, C.J. Foods has developed long term relationships with the largest super-premium pet food marketers in North America, firmly establishing itself as the premier manufacturer in the industry,” said Golub Capital Managing Director Charlie Riceman.  “We are excited to partner with J.H. Whitney and management to continue the company’s growth.”

Golub offers buy-and-hold products ranging from $10 million to $75 million and includes one-loan financings, senior, 2nd lien and subordinated debt, preferred stock and co-investment equity. The firm underwrites and syndicates first lien loans up to $300 million. Golub Capital will hold up to $200 million per transaction. Industries of interest include consumer products, business and consumer services, defense, manufacturing, value-added distribution, media, healthcare services and restaurants. Golub has offices in New York and Chicago (www.golubcapital.com).

“We selected Golub Capital for this transaction due to their speed of execution and their ability to structure a financing solution that enables us to execute on our growth plans for C.J. Foods,” said Micah Meisel, a Principal at J.H. Whitney.

J.H. Whitney invests in small and middle market companies that are active in the consumer, healthcare, specialty manufacturing, and business services sectors. The firm is investing out of its seventh private equity fund. J.H. Whitney was founded in 1946 and is based in New Canaan, CT (www.whitney.com).

2014 PEPD • Private Equity’s Leading News Magazine • 6-4-14