Archives for August 5, 2015

L Squared Invests in Virtium

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L Squared Capital Partners has made a growth capital investment in Virtium, a provider of industrial memory and embedded solid-state drive storage products.

Virtium is a supplier of industrial-grade memory and storage products used by OEMs in networking, communications, industrial, in-flight entertainment, transportation, gaming and mobile monitoring system applications. Customers include Alcatel-Lucent, Boeing, DRS Technologies, Emerson, Freescale, General Dynamics, General Electric, IBM, Intel and Radisys. Virtium has experienced significant revenue growth over the past few years as a result of increasing demand for highly customized memory and storage products.  The company was founded in 1997 and is headquartered near Los Angeles in Rancho Santa Margarita, CA (www.virtium.com).

“This investment, from a highly experienced investor in the industrial technology sector, will be used to enhance Virtium’s product portfolio and strengthen our application engineering and solid-state drive firmware development teams,” said Phu Hoang, CEO and co-founder of Virtium. “L Squared’s partners are highly regarded for their sound investment strategies and proven approach to value creation. Their approach aligns perfectly with Virtium’s performance-oriented culture.”

L Squared Capital Partners invests from $15 million to $75 million of equity in technology-enabled services, industrial technology, and education companies.  Targeted investments will have revenue of $10 million to $100 million and EBITDA of $3 million to $20 million.  The firm was founded in 2014 and has offices in Newport Beach and Chicago (www.lsquaredcap.com).

On the debt side of this transaction, Monroe Capital (www.monroecap.com) was the sole lead arranger and administrative agent on a $36 million unitranche credit facility to support the acquisition.

© 2015 PEPD • Private Equity’s Leading News Magazine • 8-5-15

Southfield Capital Exits Hallcon

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Southfield Capital has completed the sale of Hallcon Corporation, a provider of services to the rail transportation industry, to Montreal-based private equity firm NOVACAP.

Hallcon is a provider of specialty outsourced services to freight and passenger railways as well as to the oil and gas, mining, and airline industries.  Services include crew and employee transportation; passenger rail coach, bus and train station cleaning and maintenance; and providing uniformed attendants at transit station platforms. The company has offices in Toronto and Lenexa, KS (www.hallconcorp.com).

Southfield Capital acquired Hallcon in 2011.  During the course of its ownership Hallcon’s EBITDA increased by a factor of four.  This growth was driven through geographic expansion into the US, the introduction of additional services, and strategic acquisitions.  While no numbers were provided by Southfield Capital, the firm did characterize the transaction as a very successful exit.

“Working with the Hallcon team over the past four years has been a real pleasure.  Because of the strong leadership and commitment to growth at Hallcon, we were able to execute on the highly ambitious goal of taking a business that was primarily hauling rail crew members in Canada, and expanding it to become a provider of outsourced employee transportation throughout North America,” said Heb James, a Partner with Southfield Capital.

Southfield Capital provides capital for majority recapitalizations and management-led buyouts of lower middle-market businesses. The firm makes control investments of $10 million to $40 million of equity in transactions with $20 million to $100 million of enterprise value. Typical target companies will have from $4 million to $12 million of EBITDA.  Sectors of interest include: business services; consumer products & services; distribution & fulfillment; energy; healthcare; media & entertainment; niche manufacturing; power & infrastructure; specialty finance; and specialty retail.  Southfield Capital was founded in 2005 as the successor company to the private investment firm Levison & Company and is headquartered in Greenwich, CT (www.southfieldcapital.com).

Novacap, with $750 million in assets under management, invests in middle market companies within traditional industries and in companies in the information and communication technologies sector.  The firm was founded in 1981 and is based in Quebec (www.novacap.ca).

“We see this transaction as a growth platform and a step forward for Hallcon, said Domenic Mancini, Senior Partner at NOVACAP.  “This company has a steady growth history, and the whole category still shows a lot of potential for expansion. As we have done numerous times in the past, we intend to invest the necessary resources in order to take Hallcon to the next level.”

“This new capitalization by NOVACAP and its partners allows us to consolidate our position in the market and move forward with the development of new markets, as we did with the acquisition of Loop Transportation, which was announced last week but was made possible through our discussions with NOVACAP”, said Tony Plut, President and CEO of Hallcon.

Capital for the transaction was provided by NOVACAP Industries IV Fund, Hallcon’s senior management team, Export Development Canada, and BMO Capital Partners.

Lazard was the lead financial advisor and BB&T Capital Markets acted as co-financial advisor to Hallcon.

© 2015 PEPD • Private Equity’s Leading News Magazine • 8-5-15

BelHealth Acquires Geritrex

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BelHealth Investment Partners has acquired the business and assets of Geritrex, a maker of generic over-the-counter products and pharmaceuticals.

Geritrex is a manufacturer and distributor of topical generic over-the-counter products and pharmaceuticals to patients in institutional healthcare settings. The company has more than 5,000 customers including the Veterans Administration, Columbia Presbyterian Hospital, Albert Einstein Hospital, St. Jude Hospital, Mayo Clinic and Duke University Hospital.  Geritrex was founded in 1978 by Anthony Madaio and is headquartered in Mt. Vernon, NY (www.geritrex.com).

“Given BelHealth’s experience in generic over-the-counter products and pharmaceuticals, we have actively pursued investments in this segment and are excited to partner with Geritrex and build upon the success that the company has achieved over the past thirty years,” said Nathan Kronforst, BelHealth Managing Director.  “Geritrex’s product mix and customer base of over 5,000 hospitals and nursing homes positions it perfectly to take advantage of the aging demographic trends. We look forward to growing Geritrex into a national platform in this fragmented and growing industry segment.”

BelHealth’s plan for Geritrex includes building its executive management team; adding new products, acquiring add-on businesses; and driving organic growth through the addition of sales associates.  “Geritrex is BelHealth’s first platform company in Fund II and a great fit given our expertise in the generics industry. Generic products and pharmaceuticals is a segment we know extremely well and Geritrex is the ideal base from which to drive substantial growth both organically and through add-on acquisitions,” said Harold Blue, a BelHealth Managing Partner.

BelHealth Investment Partners is a lower middle-market healthcare focused private equity firm.  The firm invests from $20 million to $40 million in companies in three healthcare segments: services, products, and distribution.  BelHealth is based in New York (www.belhealth.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 8-5-15

Silver Oak Acquires Butler Burgher

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Silver Oak Services Partners has led the recapitalization of Butler Burgher Group in partnership with founder and CEO Diane Butler and other members of the company’s senior management team.

Butler Burgher Group (BBG) is a national provider of commercial real estate appraisals, appraisal management services, environmental and property assessments. Customers of BBG are typically real estate owners and financing institutions.  BBG operates from 21 office locations and has the ability to provide its services in all fifty states.  The company was founded in 1992 and is headquartered in Dallas (www.bbgres.com).

Silver Oak believes commercial real estate appraisal services is an attractive sector, with similar market dynamics to other fee-based financial services sectors in which the firm has previously invested.  “We are very excited to partner with Diane Butler and the rest of the team at BBG.  The company has a successful track record and a strong reputation in the market,” said Greg Barr, Managing Partner at Silver Oak.  “We believe BBG is poised for significant growth following several new office openings and a recent acquisition, each expanding the company’s geographic presence and capabilities.”

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).

“We are excited about our partnership with Silver Oak, which provides the additional capital resources and expertise we need to continue building the leading, independent appraisal services firm in the market,” said Ms. Butler.

Deloitte Corporate Finance was the financial advisor to BBG.

© 2015 PEPD • Private Equity’s Leading News Magazine • 8-5-15

CIT Backs Altamont Buy of Douglas Products

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CIT Group has provided a senior secured credit facility to back the July 2015 acquisition of Douglas Products by Altamont Capital Partners.  As part of this transaction, Douglas Products simultaneously acquired the assets of the Vikane and ProFume gas fumigant business from Dow AgroSciences.  The owners of Douglas Products – CEO Bill Fuller and CFO and COO Wes Long – have retained significant equity stakes in the combined company.

Douglas Products is a manufacturer and distributor of specialty chemical products for pest management, thermal fluids, and sanitary sewer applications. The Vikane and ProFume businesses expands Douglas’ presence in both the structural pest control and post-harvest commodity fumigation markets.  The company was founded in 1916 and is headquartered northeast of Kansas City in Liberty, MO (www.douglasproducts.com).

“This acquisition financing highlights Altamont’s commitment to growing its portfolio of companies as Douglas’ experienced management team looks to capitalize on the opportunity to build a leading specialty chemicals platform,” said Jeff Kilrea, Group Head and Managing Director of CIT Sponsor Finance.

CIT Corporate Finance provides lending, leasing and other financial and advisory services to the small business and middle market sectors with a focus on specific industries, including: chemicals, commercial real estate, communications, energy, entertainment, gaming, healthcare, industrials, information services & technology, restaurants, retail, and sports & media (www.cit.com/corporatefinance). The corporate finance group is part of CIT, a bank holding company with more than $65 billion in assets. CIT was founded in 1908 and is based in New York (www.cit.com).

“Douglas has built an impressive business and we believe Vikane and ProFume are great additions. We are excited to partner with their management team to consummate this transaction, and continue to develop Douglas into a leading specialty chemicals platform. CIT was a strong financial partner for us in this transaction,” said Randall Eason, Managing Director of Altamont.

Altamont Capital Partners invests in middle-market businesses with specific interest in the financial services, government services, consumer/retail, industrials and healthcare sectors. Altamont was formed in 2010 by Jesse Rogers, Randall Eason and Keoni Schwartz who previously worked together at Golden Gate Capital and Bain & Company. The firm has over $1 billion of capital under management and is based in Palo Alto (www.altamontcapital.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 8-5-15

BB&T Capital Partners Rebrands as Five Points

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BB&T Capital Partners has changed its name to Five Points Capital to better reflect the firm’s investment platform and investor base.

Five Points Capital has been the investment advisor and manager of the BB&T Capital Partners funds since 1997.  Five Points will continue investing from BB&T Capital Partners III, a $229 million fund raised in 2013, and will manage the portfolio of BB&T Capital Partners II, a $152 million fund raised in 2007. Five Points will also be investing out of its Five Points Mezzanine fund, and the Five Points Small Buyout Strategies fund-of-funds.

Five Points invests in equity and subordinated debt in lower middle market buyout, acquisition, growth and recapitalization transactions as a control investor on a standalone basis or as a co-investor with other financial sponsors.  Sectors of interest include business, healthcare and industrial services, niche manufacturing, value-added distribution and education and training.  Five Points is led by its four managing partners David Townsend, Martin Gilmore, Christopher Jones, and Thomas Westbrook.  The firm is headquartered in Winston-Salem, NC (www.fivepointscapital.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 8-5-15