Archives for June 2014

Alcoa’s To Acquire Firth Rixson from Oak Hill

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Alco, a leader in aerospace jet engine components, will purchase Firth Rixson from Oak Hill Capital Partners, for $2.85 billion in cash and stock and an additional $150 million potential earn-out.  The buy of Firth Rixson increases Alcoa’s 2013 pro forma aerospace revenue by 20 percent to $4.8 billion and expands product suite in growing jet engine segment and is expected to contribute incremental $1.6 billion revenues and $350 million EBITDA in 2016.

“The acquisition of Firth Rixson is a major milestone in Alcoa’s transformation,” said Klaus Kleinfeld, Alcoa Chairman and Chief Executive Officer. “This transaction will bring together some of the greatest innovators in jet engine component technology; it will significantly expand our market leadership and growth potential. Firth Rixson increases the earnings power and broadens the market reach of our high-value aerospace portfolio and will deliver compelling and sustainable value for customers and shareholders.”

Firth Rixson provides rings, forgings and metal products to the aerospace sector and other industries requiring highly engineered material applications. It is the world’s largest supplier of seamless rings for aero-engines and leads the way in conventionally and isothermally forged engine disc technology. The company’s integrated extrusion and closed die forging operation serves the jet engine, landing gear system, mining and oilfield component markets, and its specialized cast and wrought superalloy material operation supplies a multitude of high technology markets.  Approximately 75 percent of Firth Rixson’s revenues in 2013 were from the aerospace industry, with the balance split between other markets such as industrial gas turbine, commercial transportation and oil and gas, complementing Alcoa’s growth markets.  The company has 13 operating facilities in the US, UK, Europe and Asia.  Firth Rixson is based in Sheffield, UK (firthrixson.com).

The acquisition strengthens Alcoa’s robust aerospace business. It positions the company to capture additional aerospace growth with a broader range of high-growth, value-add jet engine components. The acquisition is strategically aligned with the company’s objective to continue to build its value-add businesses.

“We at Oak Hill Capital have worked closely with the Firth Rixson team, led by CEO David Mortimer, to create long-term strategic value,” said Denis Nayden, Managing Partner of Oak Hill Capital. “By investing in new capabilities and technology in partnership with the leading aerospace engine customers, we strengthened Firth Rixson’s global leadership and built a business with strong growth, a large backlog of booked business and significant further potential. We are excited about the equity we are receiving in Alcoa and confident that the combination of Alcoa and Firth Rixson will achieve great success as a strategic supplier to the world’s best aerospace companies.”

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).

Alcoa is a leader in lightweight metals engineering and manufacturing.  The company’s products are used in automotive and commercial transport to air and space travel, and improve industrial and consumer electronics products. Products are made of titanium, nickel and aluminum, and best-in-class bauxite, alumina and primary aluminum products.  The company was founded over 125 years ago, and today, employs 60,000 people in 30 countries. The company is based in New York (www.alcoa.com).

The transaction, which has been approved by the Boards of Directors of both companies, remains subject to customary conditions and receipt of regulatory approvals. Alcoa expects to obtain all required regulatory clearances and close the transaction by the end of 2014.

The acquisition will be supported by a fully committed bridge facility from Morgan Stanley. Alcoa will subsequently issue a combination of debt and equity-content securities and remains committed to maintaining its investment grade rating.

Greenhill and Morgan Stanley acted as financial advisors to Alcoa and Wachtell, Lipton, Rosen & Katz acted as legal advisor. Citigroup and Lazard acted as financial advisors to Firth Rixson and Paul, Weiss, Rifkind, Wharton & Garrison acted as legal advisor.

© 2024 PEPD • Private Equity’s Leading News Magazine • 6-26-14

Silver Oak Recaps Construction Labor Contractors

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Silver Oak has recapped Construction Labor Contractors, a provider of temporary staffing of skilled tradesmen for the commercial construction market.

The company has 15 sales offices throughout the Midwest, Mid-Atlantic and Southwest that service clients in all 50 states.  CLC provides a variety of skilled trades to construction sites, including electricians, plumbers, carpenters and HVAC technicians. The company was founded in 1997 and is based in south of Cleveland in Richfield, OH (www.constructionlabor.com).

 “This transaction enables CLC to focus on the next phase of the company’s development with a value-added partner and the capital resources necessary to grow our company through organic investments in new offices and improved sales, marketing and recruiting execution” said CLC president George Cook, who will continue to lead the Company as CEO.

“We are excited to partner with the founder of CLC, Timothy Cherotti, and with the current CEO, George Cook, as well as the rest of the CLC management team.  The company has a successful track record of growth and a strong reputation among construction contractors across the country.  We look forward to leveraging the company’s existing strengths, while further investing in both new and existing markets,” said Greg Barr, Managing Partner of Silver Oak.

Silver Oak makes control investments of $10 million to $30 million in companies with revenues from $15 million to $150 million and EBITDAs from $3 million to $20 million. Sectors of interest include business services, healthcare services, and consumer services.  Silver Oak is based in the Chicago suburb of Evanston (www.silveroaksp.com).

CLC is actively looking for add-on acquisition opportunities. Please contact Greg Barr or David Friedman of Silver Oak for additional information.

© 2024 PEPD • Private Equity’s Leading News Magazine • 6-26-14

LaSalle Capital Acquires Avtex from Marquette

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LaSalle Capital and Marquette Companies today announced that LaSalle Capital has purchased Avtex Solutions from Marquette Companies, a part of the Pohlad Companies. The acquisition closed yesterday, June 24. Avtex was acquired by Marquette Companies in 2006.

“The sale of Avtex is a logical outcome of our strategic focus on financial services, commercial real estate, automotive sales, and sports and entertainment,” said Bert Colianni, CEO of Marquette Companies. Avtex has been a good performer with a great team, and we believe the transaction will benefit Avtex in its growth goals. We wish them the best in the future,”

Avtex provides professional communications services and strategic consulting services. Services include design, application development, unified communications, contact centers, portals, business intelligence, and customer relationship management.  Avtex is a Microsoft Gold Certified and Managed Partner and a platinum-elite reseller of Interactive Intelligence communications software. The company serves more than 500 customers in the U.S., and has more than 160 employees in 17 states.  Avtex is based in Minneapolis (www.avtex.com).

“George Demou and his team have built a reputation for delivering exceptional customer experiences and customized, technology-enabled solutions,” said Nick Christopher, partner at LaSalle Capital.  They are a quality organization and are nationally recognized as a leading provider of Microsoft and Interactive Intelligence solutions. We are impressed by the Avtex business model, their strategic plan and the experienced team of seasoned professionals within the organization.”

LaSalle Capital Group operated as a fund-less sponsor from 1984-2004, making over thirty equity investments. In 2004 the firm raised its first fund with $125 million in capital commitments. LaSalle is currently managing two committed funds totaling over $330 million in capital raised from financial institutions and high net worth individuals. The firm is currently investing its second fund which will seeks to make control investments in companies with revenues of $10 million to $100 million that have EBITDAs of at least $2 million. Typical enterprise valuations will be from $5 million to $50 million. Sectors of interest include food & beverage, outsourced business services and value-added distribution/manufacturing.  LaSalle Capital Group is based in Chicago, IL (www.lasallecapitalgroup.com).

LaSalle Capital was advised by Sidley Austin. Advisors to Marquette Companies were Cherry Tree & Associates and Briggs and Morgan.

Marquette Companies is part of the Pohlad Companies, a group of more than 25 companies owned by the Pohlad family. Founded by Carl Pohlad in the 1950s and now managed by his three sons Jim, Bob and Bill, the Pohlad Companies operate in financial services/banking; commercial real estate; automotive sales; sports and entertainment, including the Minnesota Twins, a Major League Baseball franchise; and investments in privately held companies. The company is based in Minneapolis (http://www.marquettecompanies.com).

© 2024 PEPD • Private Equity’s Leading News Magazine • 6-26-14

Investment Banking Community Divided on IPO Forecast for Second Half of 2014

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According to a new study by BDO USA capital markets executives at leading investment banks are closely divided when asked to forecast the market for initial public offerings in the US during the remainder of 2014.

More than one-third (38%) anticipate the pace of US IPO activity will increase further in the second half of 2014, while a similar proportion (35%) believe activity will be flat with the first half of the year. Just over a quarter (27%) of the bankers are predicting a decrease in deals. Overall, capital market executives are predicting a one percent increase in the number of US IPOs during the second half of the year.

“The US IPO market has had a very strong first half to the year, with both the number of offerings and total proceeds up significantly from a strong 2013 performance,” said Wendy Hambleton, a Partner in the Capital Markets Practice at BDO USA. “Although there is no definitive forecast for further growth, based on our survey, a majority (73%) of those in the capital markets community believe the US IPO market will at least maintain the current pace of offerings during the second half of 2014. This alone would make 2014 the best year for IPOs – both in offerings and proceeds – since 2000.”

When asked to identify the main impetus behind the increase in U.S. IPO activity during the first half of 2014, the investment bankers were evenly divided among four key drivers – private equity (PE) and venture capital (VC) firms needing to cash in profits (27%), positive IPO performance encouraging more businesses to move forward with offerings (26%), low interest rates increasing investor demand for higher yielding assets (24%) and increased confidence in the U.S. economy (23%).

IPO Threats
In reflecting upon the greatest threat to a healthy US IPO market during the remainder of 2014, almost one-third (31%) of the I-bankers cite the Federal Reserve paring back monetary stimulus, while more than one-quarter (27%) identify global political and financial instability. Other threats cited were the high number of IPOs leading to a decline in performance (22%), the threat of tax increases (15%), and high unemployment levels (3%).

Industry Forecast
For six of the past eight years the technology industry has led all sectors in bringing offerings to market. During that time, many would argue that the health of the IPO market was tightly linked to the offerings coming from the technology sector. However, in 2013 and thus far in 2014, the healthcare sector has led all industries in the number of US IPOs.

Moving forward, investment bankers predict more healthcare offerings (62%) during the second half of the year and an even greater proportion forecast an increase in IPOs from the technology (71%) and energy (66%) sectors. Biotech (54%) is the only other vertical where a majority anticipate an increase in deals during the remainder of the year (see full chart below).

These are just a few of the findings of The 2014 BDO IPO Halftime Report survey which examines the opinions of 100 capital markets executives at leading investment banks regarding the market for initial public offerings in the United States during the second half of the year. The survey was conducted in June of 2014.

Other major findings of The 2014 BDO IPO Halftime Report:

  • Global IPO Market Share. Through the first six months of 2014, US exchanges have led all countries in proceeds from initial public offerings. When asked to identify the main reason for the US leadership position in global IPO proceeds, large proportions of the bankers emphasized US exchanges benefitting from private equity and VC backed offerings (43%), the improving U.S. macro-economy (25%) and increased investor cash flowing into stock-focused mutual funds (23%). Sluggish IPO activity in China (6%) was cited by a small minority.
  • Only one-third (34%) of investment bankers anticipate US exchanges increasing their current share of the global IPO pie during the second half of the year. Approximately half (49%) predict the US will maintain its current share of global proceeds during the remainder of the year, while 16 percent believe the U.S. share will decline in the second half of 2014.
  • The Source of IPOs? When asked what will be the greatest source of IPOs in the second half of the year, most capital market executives cite either private equity (44%) or venture capital (26%) portfolios. Owner-managed, privately-held businesses (20%) and spinoffs and divestitures (10%) are the other sources identified by the bankers.
  • Smaller Deals. Although US IPO activity is up significantly in 2014, the size of the average IPO on U.S. exchanges has actually decreased from 2013. Many of the bankers attribute the smaller deal sizes to the absence of a mega-deal, such as Facebook or Visa, to lift the average (43%), valuation pressures forcing offering businesses to cut prices (25%) and optimism about the economy making smaller deals more attractive (19%). Smaller numbers of bankers attribute the decreased size to the JOBS Act encouraging smaller businesses to go public (9%). Moving forward, the capital markets executives believe the size of the average IPO in the second half of the year will be $243 million.

The BDO IPO Halftime Report is a national telephone survey conducted by Market Measurement, Inc., an independent market research consulting firm, on behalf of BDO USA. Executive interviewers spoke directly to capital markets executives, using a telephone survey conducted within a scientifically-developed, pure random sample of the nation’s leading investment banks.

© 2024 PEPD • Private Equity’s Leading News Magazine • 6-26-14

Investment Professional, Alex Hurst, Joins Atlantic-Pacific Capital

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Atlantic-Pacific Capital has added Alex Hurst to it teams of investment bankers. Mr. Hurst joins the firm’s London office as a Vice President to focus on project management, deal execution and client servicing.

“We are pleased to welcome Alex to the Atlantic-Pacific team. His wealth of experience in evaluating and investing in private equity and real estate managers will provide significant value to our clients, said Richard Awbery, Partner at Atlantic-Pacific.

Prior to joining Atlantic-Pacific, Mr. Hurst worked as a senior professional on the investment team at Partners Group in London and Switzerland. During that time, he focused on underwriting investments and deploying capital into private equity funds and direct transactions within the European real estate market. Before Partners Group, Mr. Hurst worked at Lord North Street Limited, a private investment office, where he predominantly focused on evaluating and executing private equity and real estate investments. Mr. Hurst began his career in the financial services sector in the listed markets with a graduate position sponsored by the Vodafone Group Foundation.

Founded in 1995, Atlantic-Pacific Capital has raised over $60 billion for alternative asset managers seeking private capital. Typical projects include private equity, real estate, and infrastructure fund placements, as well as private placement financings in support of acquisitions, buyouts, and growth capital transactions. The firm has relationship managers and advisors in New York, Greenwich, Chicago, San Francisco, London, and Hong Kong (www.apcap.com).

© 2024 PEPD • Private Equity’s Leading News Magazine • 6-26-14

Balance Point Invests in HALO Innovations

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Balance Point Capital Partners has made an investment in HALO Innovations.  Balance Point Capital Partners provided $5 million of senior subordinated notes and $2 million of redeemable preferred stock in connection with HALO Innovations’ recapitalization of its balance sheet.

HALO Innovations designs, markets, distributes and sells products used in promoting the health, safety and well-being of infants.  Products include  SleepSack® line of wearable blankets and swaddles, used by millions of parents and over 1,400 hospital nurseries nationwide, ComfortLuxe® Sleepwear for babies with sensitive skin, Healthy Hips® diaper cover promoting healthy hip positioning and award-winning Bassinest™ Swivel Sleeper. The company was founded in 1994 and is headquartered in the Minneapolis suburb of Minnetonka (www.halosleep.com).

“Balance Point is very proud to partner with HALO Innovations,” said Rob Gibson, a Senior Vice President at Balance Point.  “We welcome the opportunity to work with a leader in infant health and safety products and look forward assisting HALO in advancing its core mission of helping babies sleep safely.”

Balance Point Capital Partners invests from $5 million to $20 million of mezzanine and equity in lower middle market companies that have revenues of $10 million to $150 million and EBITDAs between $2 million and $25 million. Sectors of interest include business services, niche manufacturing, consumer & industrial, branded products, aerospace & defense, healthcare, and technology. Balance Point Capital Partners was founded in 1988 and is based in Westport, CT (www.balancepointcapital.com).

“We are excited to enter the next stage of growth for HALO,” said Chuck Dorsey, President and Chief Executive Officer of HALO Innovations.  “At HALO, we are committed to the vision of every baby sleeping safely every night, and this financing helps us continue our mission and develop new, innovative safe sleep and health and wellness products.”

© 2024 PEPD • Private Equity’s Leading News Magazine • 6-25-14