Archives for October 29, 2014

Palladium Exits Teasdale Foods

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Palladium Equity Partners has completed the sale of Teasdale Foods, a producer and marketer of bean and hominy products, to Snow Phipps Group.

Teasdale represents the third sale of a portfolio company by Palladium this year.  Earlier this year, Palladium sold its portfolio companies ABRA Auto Body & Glass – a national provider of vehicle damage repair services – to Hellman & Friedman, and Sahale Snacks – a manufacturer and marketer of premium, branded nut and fruit snacks – to The J. M. Smucker Company.

Teasdale Quality Foods is the largest producer and marketer of canned hominy and beans in the Western United States, primarily serving the Hispanic market under its Teasdale brand and other branded products such as Aunt Penny’s and Emilio’s. The company sells its products through the retail, foodservice, government and industrial channels, including grocery chains, distributors, club stores, dollar stores, restaurant chains, commissaries, Hispanic food manufacturers and the U.S government. Teasdale owns and operates manufacturing facilities in Atwater, CA (headquarters), Hoopeston, IL and Greeley, CO.  The company was founded in 1930 (www.teasdale.net).

Palladium acquired Teasdale in September 2011.  During the course of ownership, the company completed three add-on acquisitions (Zateca Foods, Greeley Trading Company and Hoopeston Foods), deepened relationships with existing customers, and began to service new customers in a variety of channels, including retail, foodservice, government, and industrial.

“We are very pleased with the outcome we have achieved for Teasdale,” said Luis Zaldivar, a Managing Director of Palladium. “Backed by an excellent management team, Teasdale over the course of our investment integrated three regional businesses, focused on the attractive store brand and organic categories, and became a national Hispanic food platform with significant growth momentum.”

Alberto Bandera, CEO of Teasdale, added, “We are extremely thankful for the support we received from our partners at Palladium over the last three years. They helped us execute on an ambitious growth plan by providing sound advice and access to the human and capital resources we needed.”

Palladium Equity Partners targets investments in business services companies as well as in financial services, consumer/retail, food/restaurants, healthcare, industrial, and media businesses. Palladium has a focus on companies that operate in the US Hispanic market. In April 2014, Palladium announced the final closing of Palladium Equity Partners IV, LP with $1.1 billion of capital, significantly above the firm’s target.  Since its founding in 1997, Palladium has invested over $1 billion of capital in more than 20 platform investments and over 50 add-on acquisitions. The firm is based in New York (www.palladiumequity.com).

Snow Phipps, the buyer of Teasdale Foods, makes control investments in companies primarily located in North America with enterprise values ranging from $100 million to $500 million that require equity investments ranging between $40 million and $100 million. The firm has $1.5 billion of assets under management and was co-founded by Ian Snow and Ogden Phipps in April 2005. Snow Phipps is headquartered in New York (www.snowphipps.com).

2014 PEPD • Private Equity’s Leading News Magazine • 10-29-14

Tonka Bay Exits AeroSystems Engineering

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Tonka Bay Equity Partners has completed the sale of AeroSystems Engineering, a provider of testing and engineering services, to Gen Cap America.

AeroSystems Engineering is a global provider of testing and engineering services to the aerospace, energy, and military markets.  The company is based in St. Paul (www.aseholdings.com).

Tonka Bay acquired AeroSystems Engineering in 2006 and during the course of its ownership the firm worked with the senior management team of the company to develop a key account strategy to increase the company’s customer base and opened new markets in the energy and military sectors.

“Given AeroSystems’ reputation and technical expertise, we saw a very attractive opportunity to take advantage of the growth and changes in the aerospace industry,” said Peter Kooman, a Managing Principal at Tonka Bay and AeroSystems’ Chairman of the Board.  “It has been a pleasure working with the AeroSystems team.  I have no doubt that the foundation they have built is equipped to handle the anticipated growth for years to come.”

Tonka Bay Equity Partners invests in highly-engineered manufacturing, value-added distribution and business services companies with EBITDA greater than $2 million. The firm is based in the Minneapolis suburb of Minnetonka (www.tonkabayequity.com).

AeroSystems Engineering is led by Tom Moll, the company’s CEO.  “I’ve enjoyed our partnership with Tonka Bay, said Mr. Moll.  “Not only have they proven to be a patient and supportive capital partner but also a great sounding board which allowed me to more effectively lead the business.  Through the partnership with Tonka Bay and the dedication of my team, we are well positioned to capitalize on the global market opportunity within our aerospace and energy end markets.  ”

Gen Cap America, the buyer of AeroSystems Engineering, invests in companies with revenue between $5 million and $100 million that are active in the manufacturing, distribution or service sectors.  The firm is actively investing Southwest Fund VI, a $165 million fund which began making investments in May 2010. Gen Cap was founded in 1985 and is based in Nashville (www.gencapamerica.com).

2014 PEPD • Private Equity’s Leading News Magazine • 10-29-14

Comvest Acquires Old Time Pottery

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Comvest Partners has completed the acquisition of Old Time Pottery, a discount retailer of home décor products.  The investment in Old Time Pottery was made through Comvest Investment Partners Fund IV.

Old Time Pottery is a discount retailer of home décor products including home accents, house & kitchenware, seasonal products, linens, and crafts. The company operates 33 store locations in 11 states throughout the Southeast and Midwest.  Old Time Pottery was founded in 1986 by the Peterson family and is headquartered in Murfreesboro, TN (www.OldTimePottery.com).

“Old Time Pottery is a brand that resonates with the value-focused home décor customer.  Management has built a unique concept, which offers an expansive array of home décor products at an attractive price point. We look forward to working with management to continue the company’s success,” said Tom Clark, Managing Director at Comvest Partners.

Comvest Partners provides debt and equity to middle-market companies. For debt investments the firm will invest from $2 million to $20 million per transaction in companies with $10 million to $200 million of revenue that have positive or negative EBITDA. For equity investments the firm will invest from $10 million to $50 million per transaction in companies with $15 million to $500 million of revenue that have positive or negative EBITDA. Since 2000, Comvest has invested more than $1.9 billion of capital in over 130 public and private companies. The firm is based in West Palm Beach (www.comvest.com).

“I am excited to partner with Comvest. The firm brings a depth of retail expertise and a growth-oriented perspective to assist Old Time Pottery in pursuing its full potential,” said Robert Sharp, President and CFO of Old Time Pottery.

Debt financing was provided by PNC Bank.  Old Time Pottery was advised on the transaction by Harris Williams & Co. and Comvest was advised by Lazard Middle Market.

2014 PEPD • Private Equity’s Leading News Magazine • 10-29-14

Gauge Closes Debut Fund Above Target and at Max Cap

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Gauge Capital has held a final closing of the firm’s debut fund, Gauge Fund LP, at $250 million.  Gauge began fundraising in April 2014 with a target of $175 million, and in September held an oversubscribedfinal closing at its self-imposed limit of $250 million in commitments.

Gauge Capital invests from $10 million to $50 million in North American based companies that have $5 million to $50 million of EBITDA. Sectors of interest include business and consumer services, healthcare services and food services. The firm will consider both majority and minority investments.

Gauge Capital was co-founded in 2013 by Managing Partners Drew Johnson and Tom McKelvey, who each have over 20 years of experience as investors, operators, board members, and advisors, primarily in the middle market.  Gauge Capital is based near Dallas in Southlake, TX (www.gaugecapital.com).

The new fund will make equity investments in eight to ten companies over the next several years.  Gauge has already closed on its first portfolio company with a $43 million investment in Origami Owl, a custom jewelry company that uses a direct sales business model (www.origamiowl.com).

Mr. Johnson and his partners at Gauge, through the fund’s general partner, are collectively the largest investor in the new fund.  Limited partners include many institutional investors including endowments, foundations, family offices, and asset managers.  “We are pleased with the reception we received from the institutional investment community,” said Partner Whitney Bowman “and are especially thankful for the numerous operating executives in our targeted sectors who have chosen to invest with us.”

Gauge Capital used Harken Capital Securities as its exclusive placement agent and Ropes & Gray provided the firm with legal counsel.

2014 PEPD • Private Equity’s Leading News Magazine • 10-29-14

MVC Recruits Fifth Third Mezzanine Team

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MVC Capital has added four new debt professionals to its team with the hiring’s of David Williams, Harrison Mullin, David Gardner and Scott Foote. All four were previously employed by Fifth Third Bancorp’s Mezzanine Finance Group which Mr. Williams co-founded in 1999.  The new team members will join Tokarz Group Advisers, the external manager of MVC Capital, and will be based in Cincinnati.

“We are delighted to welcome David and his team of talented investment professionals,” said Michael Tokarz, Chairman & Portfolio Manager of MVC Capital.  “As seasoned debt investors through decades of investment cycles, the team brings to MVC sourcing and lending expertise to supplement our already strong investment group. Their expertise will enhance MVC’s efforts to grow our mezzanine lending business and provide creative capital solutions for the middle market.”

All four team members, while at Fifth Third, completed 176 transactions, representing over $800 million of invested mezzanine capital.  As part of the Tokarz Group, the team will continue to focus on middle market lending opportunities sourced from senior lenders, corporate executives and private equity sponsors.

As mentioned earlier, David Williams co-founded Fifth Third’s Mezzanine Finance Group in 1999.  As a senior investment professional with over 30 years of investment experience, he has led or co-led transactions, representing over $2 billion of invested capital.  Prior to his time at Fifth Third, Mr. Williams worked at First Interstate Bank, The Bank of California, Union Bank of California and PNC. He has a BBA degree from Wittenberg University.

Mr. Williams expects that the new team will have an immediate impact on the results of MVC.  “We are excited about joining MVC and look forward to immediately impacting MVC’s yield strategy. We look forward to building upon MVC’s successful investment platform and driving strong returns for MVC’s shareholders.

As part of Fifth Third, Mr. Williams and his team were based in Cincinnati and they will continue to base their operations from the Queen City.  “We are thrilled to remain in Cincinnati, an important strategic location that allows us continued access to investment opportunities from our long-term relationships in the financial community,” said Mr. Williams.

MVC Capital invests from $3 million to $25 million in middle market companies that have revenues of $10 million to $150 million and EBITDAs of $3 million to $25 million. Sectors of interest include consumer products; industrial manufacturing and services; food and food services; financial services; value-added distribution; and specialty chemicals. The firm is traded on the NYSE under the symbol MVC and is headquartered near White Plains in Purchase, NY (www.mvccapital.com).

2014 PEPD • Private Equity’s Leading News Magazine • 10-29-14