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Archives for July 29, 2014

TA Associates Makes Majority Investment in Tectum

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THI nf1TA Associates has completed a majority investment in Tectum Holdings (THI), a manufacturer of pickup truck accessories and a portfolio company of Kinderhook Industries.  Kinderhook will maintain a significant minority interest in THI and will continue to participate on the company’s board of directors.

Tectum is a manufacturer of branded light duty truck tonneau covers, bedliners and accessories.  Designed for security and cargo protection, the covers are available in a variety of soft and rigid materials such as vinyl, plastic and metal, and numerous styles, including retractable, folding, roll-up and snap-on units. The company also manufactures cushioned and carpeted protective liners for truck beds. THI products are sold through independent retailers such as truck accessory stores, new and used vehicle dealerships and e-commerce websites.  THI’s brands include Extang (www.extang.com), Truxedo (www.truxedo.com), Undercover Advantage (www.undercoverinfo.com), Retrax (www.retrax.com), BedRug (www.bedrug.com) and BAK Industries (bakindustries.com).  THI operates manufacturing facilities in California, Michigan, Missouri, North Dakota, South Dakota and Tennessee.  The company is headquartered near Detroit in Ann Arbor, MI (www.thicorp.com).

berk nf2“THI is a leading provider in the US tonneau cover market,” said Michael Berk, a Managing Director at TA Associates who will join THI’s Board of Directors. “The company has completed a number of strategic acquisitions over the past several years that have complemented its organic growth and helped solidify its market position. We are pleased to complete our investment in this dynamic company and will focus on helping THI continue and accelerate its strong financial performance.”

TA Associates makes buyouts and minority recapitalizations of profitable growth companies in the technology, financial services, business services, healthcare and consumer industries. Since founding in 1968, TA has invested in over 431 companies globally and has raised more than $18 billion in capital. The firm has offices in Boston, Menlo Park, London, Mumbai and Hong Kong (www.ta.com).

“We welcome TA Associates as an investor and THI Board member,” said Bill Reminder, CEO of THI. “With their impressive history of building additional value in successful businesses, TA is an ideal partner for THI. Our growth strategy will focus on product innovation and new product introductions, as well as possible additional product categories, and we will work closely with TA in these endeavors.”

Financing for this transaction was provided by the Senior Secured Loan Program which is jointly managed by Ares Capital Corporation and GE Capital.  Robert W. Baird & Co. served as financial adviser to Kinderhook and THI.

barber nf2“THI has been growing organically much faster than the overall market, with impressive profitability,” said Jeffrey Barber, a Managing Director at TA Associates who will also join THI’s Board of Directors. “Among the industry’s growth drivers are new truck sales and a high penetration rate of tonneau cover sales for new and used vehicles, driven in part by product innovation. We anticipate that THI’s addressable market will provide for steady growth in the years ahead.”

2014 PEPD • Private Equity’s Leading News Magazine • 7-29-14

Warburg Pincus Acquires Z-Safety Systems

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z safety nf1Total Safety, a provider of safety and compliance services and a portfolio company of Warburg Pincus, has acquired Z-Safety Systems (DBA Z-Monitoring) from Z-Group.  Warburg Pincus acquired Total Safety in 2011.

Z-Monitoring is the designer and engineer of the Z-Monitoring Centralized Confined Space Monitoring System – a safety system that monitors and communicates with confined space personnel. The Z-Monitoring system operates in real-time and continuously identifies workers within a confined space, maintains visual contact and a clear line of communication, monitors the atmosphere for toxic or dangerous gases, and sounds appropriate alarms if an incident occurs.

This is Total Safety’s second acquisition of a business from Z-Group. The first acquisition was of Z-Safety Services in 2011.  The remaining product lines of the Z-Group: Z-Staffing, Z-Matic, and Z-Tracker operations, are unaffected by this transaction.

Total Safety is a provider of safety and compliance services and the products necessary to support them, including gas detection, respiratory protection, safety training, fire protection, compliance and inspection, comprehensive flare services, industrial hygiene, onsite emergency medical treatment/paramedics, communications systems, engineered systems design, and materials management. The company operates from 148 locations in 20 countries and is headquartered in Houston (www.totalsafety.com).

“The Z-Monitoring system, field-tested more than 100 times during major facility maintenance turnarounds in Europe and the United States, has been an excellent addition to our integrated safety solutions portfolio,” said Total Safety Chief Executive Officer Troy Thacker. “We are pleased to incorporate the system and patent portfolio into our worldwide operations and, with their outstanding engineers on the Total Safety team, plan to continue our investment in innovative and comprehensive solutions that enhance safety for our customers’ workforces around the world.”

Warburg Pincus has more than $35 billion in assets under management and has raised 13 private equity funds which have invested more than $48 billion in approximately 700 companies in 35 countries. The firm was founded in 1966 and is headquartered in New York with offices in Amsterdam, Beijing, Frankfurt, Hong Kong, London, Luxembourg, Port Louis, Mumbai, San Francisco, Sao Paulo and Shanghai (www.warburgpincus.com).

2014 PEPD • Private Equity’s Leading News Magazine • 7-29-14

Graham Partners Acquires HemaSource

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hema source nf2Graham Partners has acquired HemaSource Holdings, a disposable medical products distributor.

HemaSource is a distributor of disposable medical products and other medical items used in the blood therapies markets. The company is headquartered in Salt Lake City and serves all 50 states, Puerto Rico, and Canada through its network of distribution centers located in the US (www.hemasource.com).

According to Graham Partners, HemaSource is positioned for growth as a result of increased global demand for plasma-derived products, a recurring revenue stream, and longstanding customer relationships. Additionally, the plasma and plasma-based products industry, which HemaSource serves, is $17 billion in size and has grown 8% per annum over the last four years.

wilson nf1“Graham was attracted to HemaSource’s underlying growth potential driven by an increasing demand for plasma protein therapeutics,” said Josh Wilson, Managing Principal at Graham Partners. “HemaSource has achieved high customer satisfaction due to its compelling software offering and its ongoing effort to co-develop niche products with its largest customers. We look forward to partnering with the company’s strong management team and deploying our operational resources in order to accelerate growth and further drive best practices across all functional areas of the company.”

Graham Partners seeks to acquire companies with EBITDA between $5 million and $50 million, and will invest in smaller companies as add-on acquisitions to existing portfolio companies. The firm is sponsored by the Graham Group, an industrial and investment concern with interests in plastics, packaging, machinery, building products and outsourced manufacturing. Graham Partners was founded in 1988 and is headquartered in Philadelphia (www.grahampartners.net).

“The knowledge and resources Graham Partners brought to the table during the transaction process convinced us they are the right fit as a partner to support HemaSource’s future growth potential,” said Todd Tracey, CEO of HemaSource.

2014 PEPD • Private Equity’s Leading News Magazine • 7-29-14

Kinderhook Hits 23x on Sale of Tectum

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kinderhook nf1Kinderhook Industries has sold a majority stake in Tectum Holdings (THI), a manufacturer of pickup truck accessories, to TA Associates.  Kinderhook will maintain a significant minority interest in THI and will continue to participate on the company’s board of directors.

THI has been a portfolio company of Kinderhook’s since 2007 and the sale, including prior distributions and Kinderhook’s minority interest, equates to an aggregate return in excess of $300 million for Kinderhook Capital Fund II, LP which represents approximately 23x Kinderhook’s invested capital.

tectum coverTectum is a manufacturer of branded light duty truck tonneau covers, bedliners and accessories.  Designed for security and cargo protection, the covers are available in a variety of soft and rigid materials such as vinyl, plastic and metal, and numerous styles, including retractable, folding, roll-up and snap-on units. The company also manufactures cushioned and carpeted protective liners for truck beds. THI products are sold through independent retailers such as truck accessory stores, new and used vehicle dealerships and e-commerce websites.  Company owned brands include Extang (www.extang.com), Truxedo (www.truxedo.com), Undercover Advantage (www.undercoverinfo.com), Retrax (www.retrax.com), BedRug (www.bedrug.com) and BAK Industries (bakindustries.com).  THI operates manufacturing facilities in California, Michigan, Missouri, North Dakota, South Dakota and Tennessee.  The company is headquartered near Detroit in Ann Arbor, MI (www.thicorp.com).

tuttle nf2“We are appreciative of the partnership we have had with CEO Bill Reminder, COO Kelly Kniefl and the entire THI family,” said Tom Tuttle, Managing Director at Kinderhook. “Bill and his team have done an amazing job over the past seven years executing on our original strategy of investing in new products, implementing continuous improvement in operations to enhance margins and acquiring complementary brands.  To that end, since partnering with Kinderhook, THI has grown revenue by over 600%, completed seven acquisitions and more than doubled EBITDA margins. THI exemplifies Kinderhook’s investment strategy of partnering with strong management teams and executing a buy-and-build strategy to build dominant market share leaders.”

Kinderhook Industries makes control investments in companies with transaction values of $25 million to $150 million in which the firm can achieve financial, operational and growth improvements. The firm pursues private equity investments in non-core divisions of public companies, management buyouts of entrepreneurial-owned businesses, troubled situations and existing small capitalization companies lacking institutional support. Kinderhook was founded in 2003 and has $770 million of committed capital. The firm is based in New York (www.kinderhook.com).

cifelli nf2“THI is a prime example of how manufacturing in America can thrive with the right leadership, strategic vision and capital investment. Kinderhook and THI set out with a clear vision that focused on an aggressive organic and acquisition growth strategy which management has executed upon to become the market leader in the truck accessories industry,” said Paul Cifelli, Managing Director at Kinderhook.  “THI is an exceptional company with strong brand equity and tremendous opportunities for growth. Kinderhook is very excited to maintain a significant minority investment in THI and expects the company to continue to flourish under the control of TA Associates.”

Financing for this transaction was provided by the Senior Secured Loan Program which is jointly managed by Ares Capital Corporation and GE Capital.  Robert W. Baird & Co. served as financial adviser to Kinderhook and THI.

“Kinderhook has been an outstanding partner over the last seven years. Through our partnership with Kinderhook, we were able to create enormous value as we collaborated on strategy, growth and vision,” said Bill Reminder, CEO of THI.  “With Kinderhook’s strategic guidance and support, we successfully completed and integrated seven acquisitions as well as introduced over a dozen new products.  Kinderhook’s continued involvement paired with our new ownership group, our strong competitive position and our operational capabilities will continue to enhance our growth prospects and provide for an exciting future for THI, our employees, our customers and our suppliers.”

2014 PEPD • Private Equity’s Leading News Magazine • 7-29-14

American Capital Has Big First Half of 2014

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acas nf2American Capital has had a busy first half of 2014.  For the first six months of this year the firm, along with its affiliate European Capital, has invested over $225 million in seven new portfolio companies.

The seven new investments were led by American Capital and European Capital offices in the United States and Europe and were made in support of private equity firms’ company buyouts, add-on acquisitions and dividend recapitalizations.

brauns nf“During the first half of 2014, we partnered with top private equity firms to invest in leading middle market companies with dynamic growth opportunities,” said Ryan Brauns, American Capital Managing Director and Head of Sponsor Finance.  “With our seasoned investment professionals in the United States and Europe, flexible capital, wide-ranging financing capabilities and streamlined underwriting process, we are able to move quickly and execute on commitments.  We are looking forward to an active remainder of the year investing in attractive acquisitions, capital structure refinancings and corporate growth initiatives with our partners as well as building new relationships within the sponsor community.”

Here is a summary of the seven investments made by American Capital in the first half of 2014.

Wencor:  In June, American Capital invested $25 million in a second lien facility to support the acquisition of Wencor by Warburg Pincus.  Wencor is a manufacturer and distributor of aftermarket aerospace components for the commercial aerospace, business, military and general aviation markets. The company is headquartered near Provo in Springville, UT (www.wencor.com).

Groupe Poult:  In June, European Capital invested €13 million in mezzanine bonds to support the acquisition of Groupe Poult by Qualium Investissement.  Poult is a French private label manufacturer of sweet biscuits.  Poult customers include large mass retail and hard discount chains in France. The company was founded in 1883 and is headquartered in Toulouse, France (www.groupe-poult.com).

Luminator Technology Group:  In April, American Capital committed $71 million in a second lien term loan, committed delayed draw facility and common equity to support the acquisition of Luminator Technology Group by Audax Group.  Luminator is a designer and manufacturer of display, lighting and passenger communication systems for the global mass transportation market.  Luminator serves OEMs and operators in the city bus, rail and aerospace markets worldwide. Luminator is based in Plano, TX and has affiliated operations in Brazil, Denmark, Sweden, Germany, and Australia (www.luminatortechnologygroup.com).

Tectum Holdings:  In March, American Capital invested $25 million in a second lien facility to support an add-on acquisition and dividend recapitalization of Tectum by Kinderhook Industries.  Tectum is a manufacturer of branded light duty truck tonneau covers, bedliners and accessories.  THI’s brands include Extang (www.extang.com), Truxedo (www.truxedo.com), Undercover Advantage (www.undercoverinfo.com), Retrax (www.retrax.com), BedRug (www.bedrug.com) and BAK Industries (bakindustries.com).  The company is headquartered in Ann Arbor, MI (www.thicorp.com).

LANDesk Software:  In February, American Capital invested $9 million in a second lien facility to support the dividend recapitalization of LANDesk Software by Thoma Bravo.  LANDesk is a provider of software for IT departments and systems management and serves a base of over 12,000 customers, including Fortune 500 and small and medium businesses.  LANDesk is headquartered near Salt Lake City in South Jordan, UT with additional offices in Europe, Latin America, Asia and the Middle East (www.landesk.com).

Inmar:  In January, American Capital invested $20 million in a second lien facility to support the acquisition of Inmar by ABRY Partners.  Inmar is a provider of logistics management services to companies in the consumer goods and healthcare markets.  Customers include retailers, grocers, consumer packaged goods companies and manufacturers. The company was founded in 1980 and is based in Winston-Salem, NC (www.inmar.com).

Asmodee: In January, European Capital invested €42.5 million in unitranche bonds and an equity co-investment to support the acquisition of Asmodee by Eurazeo Capital.  Asmodee is a publisher and distributor of games and trading cards in Europe with its main operations in France, the UK, Belgium, the US, Germany and Spain. Asmodee pioneered the development of modern social games and captured most of the bestselling board and card games in France over the last 15 years, including Dobble, Jungle Speed and Time’s Up (us.asmodee.com)

American Capital (NASDAQ: ACAS) is a publicly traded private equity firm and asset manager that originates, underwrites and manages investments of $10 million to $750 million in lower and middle market private equity, leveraged finance, real estate, energy & infrastructure and structured products.  From its eight offices in the US and Europe, American Capital and its affiliate, European Capital, will consider investment opportunities from $10 million to $750 million.  American Capital was founded in 1986 and has $84 billion in total assets under management. The firm is headquartered in Bethesda (www.AmericanCapital.com).

European Capital, wholly-owned by American Capital, makes equity, mezzanine and senior debt investments from 10 million to 400 million in either Euros or Sterling.  European Capital, with €800 million in assets under management, has offices in London and Paris with 55 employees (www.europeancapital.com).

2014 PEPD • Private Equity’s Leading News Magazine • 7-29-14

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