Archives for June 16, 2014

KPS Adds-on to A&E with Buy of Gütermann

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American & Efird Global, a portfolio company of KPS Capital Partners, will acquire substantially all of the industrial and consumer thread business of Gütermann Holdings.  Completion of the transaction is expected on June 30, 2014.

American & Efird Global (A&E) is the largest US manufacturer and the world’s second-largest manufacturer and distributor of industrial and consumer sewing thread, embroidery thread and technical textiles.  A&E thread is used by producers of apparel, automotive components, home furnishings, medical supplies, footwear and certain industrial products.  A&E owns or operates 22 manufacturing facilities and employs over 9,000 associates around the world directly or in partnership with joint venture partners.  KPS acquired A&E from Harris Teeter Supermarkets (now a subsidiary of The Kroger Co. (NYSE:KR)) in November 2011.  A&E is headquartered northwest of Charlotte in Mt. Holly, NC (www.amefird.com).

“The transformation of A&E under KPS’ ownership is remarkable.  A&E has exceeded all of our expectations for growth on a global scale by successfully expanding into adjacent geographies, products and end-markets,” said Michael Psaros, a Managing Partner of KPS.  “The strategic and industrial logic of A&E acquiring Gütermann is extraordinarily compelling as it will even further advance A&E’s industry-leading quality, customer service and innovation, delivered through an integrated and truly global manufacturing footprint.  A&E’s conservative capital structure, absence of large unfunded pensions and other legacy obligations, coupled with its access to KPS’ material capital resources, positions the company to grow aggressively organically and through acquisition.”

Gütermann is a manufacturer and distributor of sewing thread products for consumer and industrial applications.  The company’s products serve a variety of end-markets, including apparel, shoes, leather goods, work wear, home textiles and automotive end markets.  Gütermann has a highly regarded brand name globally and a strong reputation among European apparel and non-apparel brands.  Gütermann owns and operates four manufacturing facilities located in Germany, Spain, Mexico and India, and employs approximately 1,000 associates around the world. The company was founded in 1864 and is headquartered in Gutach, Germany (www.guetermann.com).

“The acquisition of Gütermann is a critical strategic step in the growth of A&E.  We are very impressed with Gütermann’s diverse product portfolio, customer base, premium quality and technical capabilities.  Gütermann’s strong market position in Europe coupled with A&E’s worldwide manufacturing and distribution footprint and strong brand recognition in North America and Asia is an ideal combination.  This acquisition furthers our commitment to support our customers globally with high-quality localized supply, technical resources, customer service support, and the highest environmental and social responsibility.  A&E has made tremendous progress under KPS ownership and, with the strategic addition of Gütermann, I believe our future is even brighter,” said Fred Jackson, Chief Executive Officer of A&E.

KPS Capital Partners is the manager of the KPS Special Situations Funds, a group of private equity funds with $6 billion of committed capital focused on investing in restructurings, turnarounds and other special situations. The KPS investment strategy targets manufacturing and industrial companies with strong market positions that are going through a period of transition or experiencing operating or financial difficulties. The firm’s portfolio companies have aggregate annual revenues of approximately $7.6 billion, operate 99 manufacturing plants in 26 countries, and employ over 47,000 associates worldwide. KPS Capital Partners is headquartered in New York (www.kpsfund.com).

Financing for the transaction will be provided by a syndicate of banks led by Merrill Lynch along with Wells Fargo Securities, and PNC Capital Markets acting as Joint Lead Arrangers.

2014 PEPD • Private Equity’s Leading News Magazine • 6-16-14

Oak Hill to Acquire Pulsant

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Pulsant, a provider of managed, hosted data center and IT infrastructure services to the mid-market, has entered into an agreement to be acquired by Oak Hill Capital Partners.  Pulsant is a portfolio company of Bridgepoint Development Capital.

Pulsant was formed in October 2010 when Bridgepoint Development Capital acquired Lumison, a provider of connectivity, hosting and managed IT services. Subsequently, Pulsant (as the business was re-branded) made three further acquisitions: Blue Square Data, a colocation provider, acquired in February 2011; Dedipower, a managed hosting and cloud services provider, acquired in September 2011; and Scolocate, a provider of colocation, managed hosting and cloud services in Scotland, acquired in December 2012. Pulsant currently provides its services from a network of 10 company operated datacenters across the UK, connected via the company’s own fiber network. Pulsant is headquartered in Reading, UK (www.pulsant.com).

“We are pleased to be investing in Pulsant and to be supporting Mark Howling and the rest of the Pulsant management team as the company continues its strong growth trajectory,” said David Scott, Principal at Oak Hill.  “With this transaction, Oak Hill builds upon a decade of significant data centre expertise, where Oak Hill has a demonstrated track record. We believe Pulsant is well positioned to grow in the data centre services market with clear and sustained demand for its services.  We look forward to further building the Pulsant franchise.”

Oak Hill is an experienced investor in the data centre services market. Its current IT services investments include ViaWest, a provider of colocation and hybrid cloud services to medium-sized enterprises in regional US markets, and Intermedia.net, a provider of cloud-based, hosted services to small- and medium-sized businesses. In 2005, Oak Hill co-led the consolidation of the European colocation industry by acquiring Telecity Group and executing on a number of subsequent strategic acquisitions.

“We expect continued significant consolidation amongst suppliers in this dynamic market, and we believe Pulsant is well-positioned to expand its leadership position by executing on targeted acquisitions, bringing additional capabilities to benefit Pulsant and its customers,” said Mark Howling, CEO of Pulsant.  “As we considered our strategic options for the business, there was a lot of interest, but Oak Hill emerged as the preferred partner, having a strong understanding of the market and of businesses like Pulsant. Oak Hill will be an active partner and we are very much looking forward to working with them.”

Oak Hill Capital Partners has $8 billion of committed capital and invests in the following six sectors: basic industries; business and financial services; consumer, retail & distribution; healthcare; media & telecom; and technology. Over the past 25 years, the professionals at Oak Hill and its predecessors have invested in more than 70 private equity transactions. The firm is located in Stamford, CT (www.oakhillcapital.com).

“With Mark Howling and the team, we achieved what we set out to do: for Pulsant to become the trusted partner to medium-sized businesses looking for a provider to meet all of their IT and networking needs,” said Alan Payne, Partner at Bridgepoint Development Capital.

Bridgepoint Development Capital provides funding to businesses headquartered in France, the Nordic region and the UK, typically buyouts valued up to €150 million. BDC has a team of 19 investment professionals wholly dedicated to its investment activity and operating from offices in London, Paris and Stockholm. It is part of Bridgepoint, the international private equity group, which invests in businesses valued between €200 million and €1 billion across Europe (http://www.bridgepoint.eu/en/).

Advisers involved in this transaction for Bridgepoint included:  Jefferies (Corporate Finance), Travers Smith (Legal),  Deloitte (Financial and Tax), Boston Consulting Group (Commercial), ERM (Environment), Marsh (Insurance), and MEIT (Technical). Advisors to Oak Hill included Torch Partners (Corporate Finance), Macfarlanes and Paul Weiss (Legal) and EY (Financial and Tax).

2014 PEPD • Private Equity’s Leading News Magazine • 6-16-14

Lone Star Funds Acquires DFC Global

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DFC Global, a provider of financial services to unbanked and under-banked consumers, has been acquired by Lone Star Funds.

DFC Global is an international non-bank provider of alternative financial services, principally unsecured short-term consumer loans, secured pawn loans, check cashing, gold buying, money transfers and reloadable prepaid debit cards, serving primarily unbanked and under-banked consumers through its approximately 1,500 current retail storefront locations and its multiple Internet platforms in ten countries across Europe and North America: the United Kingdom, Canada, the United States, Sweden, Finland, Poland, Spain, Romania, the Czech Republic and the Republic of Ireland. DFC Global is headquartered near Philadelphia in Berwyn, PA (www.dfcglobalcorp.com).

Lone Star invests in real estate, equity, credit, and other financial assets. Since the establishment of its first fund in 1995, Lone Star has organized twelve private equity funds with aggregate capital commitments totaling over $45 billion. The firm is based in Dallas (www.lonestarfunds.com).

2014 PEPD • Private Equity’s Leading News Magazine • 6-16-14

First Reserve Closes Fund 2 at Hard Cap of $2.5 Billion

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First Reserve has closed its second energy infrastructure fund, First Reserve Energy Infrastructure Fund II, LP.  The new fund was launched just eight months ago and was oversubscribed beyond its initial target of $2 billion and closed at its $2.5 billion hard cap.  First Reserve now has over $4 billion dedicated to investing in energy infrastructure opportunities.

“First Reserve initially launched an energy infrastructure investment program to enable our team to offer broader and more strategic solutions to both our wide network of corporate partners and our investors. We are thrilled at how the strategy has played out, meeting our expectations of delivering long-term contracted revenues,” said William Macaulay, Chairman and Chief Executive Officer of First Reserve.  “The success of this most recent fundraise is a testament to our investors’ belief in our investment model and the strong execution of our infrastructure investment team.”

Fund 2 will continue to focus on energy infrastructure investments including (1) contracted midstream, such as pipelines, storage and LNG facilities; (2) contracted power, which includes both renewable and conventional generations; (3) regulated transmission and distribution; and (4) contracted energy assets including floating storage facilities and other essential large-scale energy infrastructure assets.  The new fund, like the first, will continue to emphasize strategic joint ventures.  To date, First Reserve Energy Infrastructure Fund I, LP has formed partnerships on nearly all its portfolio investments.

“With a fully dedicated infrastructure investment team that has deepened substantially since the first fund, we believe we remain well-positioned to continue generating attractive, proprietary opportunities,” said Mark Florian, Managing Director and Head of Infrastructure.  “By drawing on the vast base of experience in both the infrastructure team and the larger First Reserve platform, we feel we have distinguished ourselves as a value-add strategic partner. We are both honored and excited to be able to continue prosecuting these kinds of opportunities on behalf of our limited partners in both funds.”

First Reserve is a private equity firm with a focus on the energy industry.  First Reserve has completed more than 475 transactions (including platform investments and add-on acquisitions) on six continents. Its portfolio companies operate in approximately 50 countries and span the energy spectrum from upstream oil and gas to midstream and downstream, including resources, equipment and services and infrastructure. The firm was founded in 1983 and has offices in Houston, TX; Greenwich, CT; London, UK and Hong Kong (www.firstreserve.com).

2014 PEPD • Private Equity’s Leading News Magazine • 6-16-14

Empire State Manufacturing Survey Looking Good

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The June 2014 Empire State Manufacturing Survey indicates that business conditions improved significantly for a second consecutive month for New York manufacturers. A free copy of the  second quarter report from the New York Federal Reserve Bank is available at the end of this article.

The general business conditions index was 19.3, a reading nearly identical to last month’s multiyear high. The new orders index climbed eight points to 18.4, its highest level in four years, and the shipments index inched down to 14.2. The unfilled orders index held steady at a level close to zero. The indexes for both prices paid and prices received were slightly lower, indicating a slowing in the pace of price increases. Labor market conditions continued to improve, with indexes pointing to a modest increase in employment levels and hours worked. Indexes for the six-month outlook remained highly optimistic, with the future new orders and shipments indexes recording notable gains.

BUSINESS ACTIVITY EXPANDS AT A SOLID CLIP
Business conditions improved significantly for a second consecutive month for New York manufacturers, according to the June 2014 survey. After climbing to a multiyear high last month, the general business conditions index held steady at 19.3. Forty percent of respondents reported that conditions had improved over the month, while 21 percent reported that conditions had worsened. The new orders index advanced eight points to 18.4, its highest level in four years. The shipments index fell three points but, at 14.2, still pointed to a significant expansion in shipments over the month. The unfilled orders index remained at -1.1, indicating that the level of unfilled orders was largely stable. The delivery time index rose two points to 1.1. The inventories index rose seven points to 9.7, indicating that inventory levels were somewhat higher in June.

PRICE INCREASES SLOW FOR A SECOND MONTH
For a second consecutive month, both price indexes inched lower, suggesting that price increases were somewhat slower over the month. The prices paid index fell three points to 17.2, and the prices received index fell two points to 4.3. After surging last month, the index for number of employees fell back to 10.8, suggesting that employment levels continued to climb, though at a more modest pace than last month. The average workweek index moved up seven points to 9.7, pointing to an increase in hours worked.

SIX-MONTH OUTLOOK REMAINS OPTIMISTIC
As in May, indexes for the six-month outlook conveyed a strong degree of optimism about future business conditions. The index for future general business conditions fell four points, but remained high at 39.8. The future new orders index climbed to 44.5, and the index for expected shipments rose eleven points to 45.2. Indexes for expected prices were somewhat higher, with the future prices paid index rising five points to 36.6 and the index for future prices received climbing two points to 16.1. The index for expected number of employees rose to 20.4, and the future average workweek index rose to zero. The capital expenditures index fell for a second consecutive month, dropping to 11.8—a sign that while capital spending plans were generally positive, spending growth was expected to slow. The technology spending index was little changed at 3.2, suggesting only a slight increase in technology spending.

For a PDF copy of the second quarter report from the New York Federal Reserve Bank click HERE.

 2014 PEPD • Private Equity’s Leading News Magazine • 6-16-14