Archives for November 17, 2015

Blackstone Acquires Diamonds Direct

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Blackstone has acquired jewelry retailer Diamonds Direct through its Blackstone Tactical Opportunities fund.

Diamonds Direct is a multi-channel jewelry retailer with five stores located in Charlotte, NC; Raleigh, NC; Birmingham, AL; Richmond, VA; and Austin, TX. The company is scheduled to open two new stores in Oklahoma City, OK, and Charleston, SC, in early December. Each store sells loose and mounted diamonds, engagement ring mountings, diamond and gemstone fashion jewelry, wedding bands, and pearls.  The company’s physical locations are complimented by an online ecommerce store. Diamonds Direct was founded by Alon Arabov, a diamond manufacturer based out of Tel Aviv, and is led by its CEO Itay Berger. The company is headquartered in Charlotte, NC (www.diamondsdirect.com).

In the last seven years, Diamonds Direct will have grown from one location in Charlotte to seven stores by the end of 2015. “Blackstone is excited to partner with Itay and the existing management team to accelerate the company’s growth,” said Jasvinder Khaira, Managing Director of Blackstone Tactical Opportunities. “Providing capital to entrepreneurs is a hallmark of Blackstone’s growth investments and we look forward to working with the Diamonds Direct team on their continued success and growth.”

Blackstone is one of the world’s largest investment and advisory firms. The firm’s alternative asset management businesses include the management of private equity funds, real estate funds, hedge fund solutions, credit-focused funds and closed-end funds. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Blackstone is headquartered in New York (www.blackstone.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-17-15

Wafra Exits Freedom Scientific

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Wafra Partners has sold Freedom Scientific, a provider of accessibility software and hardware products that are used by people with visual impairments, to Vector Capital.

Freedom Scientific’s products include screen reading software for the blind, magnification software for those with low-vision, and other products for accessible scanning and reading, as well as Braille displays and note-takers.  Freedom’s customers include multi-national corporations, governments, educational institutions and individual end-users in more than 70 countries. Freedom Scientific also provides video magnification products to the industrial inspection market. The company is headquartered in St. Petersburg, FL (www.freedomscientific.com).

Freedom Scientific has a long private equity history. The company was first acquired by Summit Partners in 2000 and was sold by Summit to Wafra Partners in 2007.

“We were thrilled to have had the opportunity to work closely with the management of Freedom Scientific during its expansion from the world’s leading provider of blindness products to its current position, as a full-line provider of products and services for the blindness, low-vision and inspection markets,” said Eric Norfleet, a Managing Director at Wafra.  “We enjoyed working with CEO John Blake and his management team and wish them well with their new partners.”

Wafra invests up to $30 million of equity per transaction in middle market companies based in North America that have enterprise values between $20 million and $150 million. Typical investments have revenue of $20 million or more and EBITDA of $4 million or more. Sectors of interest include consumer products, consumer-driven services, outsourced business services and niche manufacturing. The firm is based in New York (www.wafrapartners.com).

“Working with Wafra Partners has been a great experience. They provided management with the financial and strategic support necessary to help us achieve our goals,” said Mr. Blake. “We are now in a position to further accelerate growth with the help and resources of our new partners.”

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-17-15

Bregal Sagemount Invests in Keg Logistics

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Bregal Sagemount has made a growth equity investment in Keg Logistics to support the company’s continued expansion.  Keg Logistics has experienced accelerating annual growth for several years and will be using the invested capital to scale its services and expand its market reach.

Keg Logistics is a provider of keg leases to craft breweries and wineries. According to Bregal Sagemount the craft brewing market is expected to double over the next five years with a concurrent increase in the need for kegs. The company is led by its CEO and founder Chris Sapyta and is headquartered in Denver (www.keglogistics.com).

“Keg Logistics is the only keg financing business focused on making the brewer successful,” said Gene Yoon, Managing Partner at Bregal Sagemount. “We have the top management team offering a transformative product to the rapidly growing craft brew market. We intend to invest heavily to enable Keg Logistics to disrupt the market and help craft breweries and wineries around the world thrive.”

“When I launched the keg finance and management space 19 years ago, the craft brewery segment was still in its infancy,” said Mr. Sapyta. “Today the sector has expanded to the point where geographic density makes our “rent to own” model the best long term solution for brewers and wineries of all sizes. Kegs last over 30 years, it just doesn’t make sense for someone to pay “per-fill fees” or rent forever.”

Bregal Sagemount makes control and non-control investments of $15 million to $150 million in companies active in the following sectors: software, digital infrastructure, healthcare IT and services, business and consumer services, financial technology and specialty finance. The firm makes both equity and junior debt investments and has $650 million in committed capital.  Bregal Sagemount is based in New York (www.sagemount.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-17-15

Soundcore Acquires Alloy Wheel Repair Specialists

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Soundcore Capital Partners has completed the acquisition of Alloy Wheel Repair Specialists, a full-service alloy wheel repair and replacement company. This marks the first platform investment for Soundcore since its launch in April, 2015.

Alloy Wheel Repair Specialists (Alloy) provides on-site repair of cosmetic damage to alloy wheel cores, off-site remanufacturing of structurally damaged wheels, and OEM replacement parts through the company’s retail network. Alloy and its franchisees currently operate in 47 US states and 15 countries, servicing more than 8,000 auto dealerships, collision shops, tire store accounts, rental car agencies, auctions and automotive centers, and retail consumers. Alloy was founded in 2001 and is headquartered in Norcross, GA (www.awrswheelrepair.com).

At closing of the transaction, Alloy Founder Tom Morris stepped down from his leadership role and Rob Wheeley, one of the company’s franchisees, was appointed CEO. Mr. Morris retains a minority stake in the business and will be a member of the Board of Directors.

“We are very excited to announce Alloy Wheel Repair Specialists as Soundcore’s first-ever platform investment,” said Jarrett Turner, Managing Partner of Soundcore. “Alloy is perfectly aligned with our focus on founder- and family-owned businesses in fragmented industries, with stable, recurring revenue, where we can drive growth through accretive add-on acquisitions and operational improvements. Tom has built a market-leading company and we look forward to accelerating Alloy’s growth.”

Also at closing, Soundcore named Ken Walker and Bill Lasky as additional Alloy board members. Mr. Walker was formerly the CEO of Meineke Car Care Centers; Driven Brands; Parts, Inc.; and Cardis Corp., and is a past Vice Chairman of AAA and past Chairman of the International Franchise Association. Mr. Lasky, a Soundcore Operating Partner, has been appointed Chairman of Alloy. He has more than 40 years of experience in the auto industry including senior executive or board positions at Stoneridge, Accuride Corporation and Affinia Group.

According to Soundcore, wheel repair is among the fastest-growing sub-sectors within the auto-reconditioning market, accounting for more than $750 million in annual revenues in the US alone.

“I am very fortunate to be stepping into a great situation at Alloy,” said Mr. Wheeley. “There is a tremendous opportunity for Alloy to grow organically and through strategic acquisitions. With Soundcore’s resources and the experience that Ken Walker and Bill Lasky bring, we have a huge advantage to make investments in the business that really matter, enhance our operational execution, and really outpace the competition.”

Soundcore Capital Partners invests from $4 million to $30 million of control equity in lower middle market companies that are headquartered in the US or Canada. Typical targets will have from $3 million to $15 million in EBITDA. Sectors of interest include automotive, building products, business services, chemicals, consumer products, distribution, energy services & products, food & beverage, general manufacturing, healthcare services, industrial machinery & services, packaging, plastics, and transportation. Soundcore was founded in 2015 and is based in New York (www.soundcorecap.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-17-15

Blackstone Exits GCA Services Group

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Blackstone has agreed to sell GCA Services Group to Goldman Sachs and Thomas H. Lee Partners. Blackstone acquired GCA Services Group from Nautic Partners in November 2012.

GCA Services Group is a provider of facility services including janitorial and custodial services; contamination control for cleanroom manufacturing; facilities operations and maintenance services; grounds and athletic field management services; and staffing.  GCA has more than 900 customers that operate in the following sectors: K-12 schools, higher education, manufacturing, corporate office buildings, high-tech, bio-pharmaceutical, nuclear power, defense, and rental car. The company is led by its CEO Bob Norton and has approximately 37,000 employees throughout the United States and Puerto Rico. GCA Services was founded in 2003 and is headquartered in Cleveland (www.gcaservices.com).

“We are extremely proud of the significant growth and value creation at GCA during our ownership. It has been a privilege to partner with Bob Norton and the outstanding GCA management team in their efforts to expand a best-in-class national provider of janitorial and facility management services,” said Peter Wallace, a Senior Managing Director at Blackstone who led the transaction.

Blackstone’s alternative asset management businesses include the management of private equity funds, real estate funds, hedge funds, credit-focused funds and closed-end funds. Blackstone also provides financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory, and fund placement services. Blackstone is headquartered in New York (www.blackstone.com).

Harris Williams & Co. (www.harriswilliams.com) was the financial advisor to Blackstone and GCA. The transaction is expected to close in the first quarter of 2016.

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-17-15

Audax Closes Fund 5 at Hard Cap

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Audax Group has held a final close of Audax Private Equity Fund V at its hard cap of $2.25 billion. The new fund was oversubscribed and beats its fundraising target of $1.75 billion.

Since its founding in 1999, Audax has raised a total of $12 billion of capital. The new fund has as institutional limited partners the typical mix of public and corporate pension funds, insurance companies, endowments and foundations and high net worth families.

“We appreciate the support from our existing and new investors and thank them for their commitment to Audax,” said Co-Chief Executive Officers, Geoffrey Rehnert and Marc Wolpow in a released statement. “The significant demand for our fifth private equity fund underscores the capability of our team and our differentiated strategy, as well as our investors’ confidence in our consistent track record of delivering attractive returns. We look forward to leveraging our deep industry experience to pursue and capitalize on exciting investment opportunities across the lower-middle market.”

The Audax Group makes control investments of $10 million to $100 million in middle market companies with transaction values of $25 million to $500 million. Sectors of interest include industrial manufacturing; energy; outsourced industrial services; consumer products; healthcare devices and services; non-asset based logistics; technology; aerospace & defense; business services; and direct marketing.

Audax has over $6 billion in assets under management in its private equity, mezzanine, and senior debt businesses. The firm has offices in Boston, New York, and Menlo Park (www.audaxgroup.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-17-15