March 24, 2016
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Archives for March 24, 2016

Frazier Healthcare Closes Latest Fund at Hard Cap

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frazier nf1Frazier Healthcare Partners has closed Frazier Healthcare Growth Buyout Fund VIII, LP at the hard cap of $525 million. The new fund will invest in profitable healthcare companies in the lower middle market. Investors in Fund VIII include both existing and new limited partners such as endowments, public and private pension funds and financial institutions.

Frazier Healthcare invests from $20 million to $50 million in buyouts, recapitalizations or corporate carve-outs of healthcare services and biopharma companies that have between $5 million and $40 million of EBITDA. Target acquisitions can be located anywhere in the United States, Canada and Europe. With the new closing, the firm now has over $2.9 billion of capital under management across eight funds. Frazier Healthcare has offices in Seattle and Menlo Park (www.frazierhealthcare.com).

Nader Naini nf1“We are appreciative of the continued support from our existing limited partners and pleased to selectively add a few new blue chip investors,” said Nader Naini, managing general partner at Frazier Healthcare Partners. “The team is particularly gratified that this world-class investor group recognized our rich, 25-year history of developing category-leading healthcare companies in the lower middle market.”

The investment and portfolio management activities of Fund VIII will be run out of the firm’s Seattle office. As an aside, Frazier’s life sciences team, based in Menlo Park, recently closed on an early-stage therapeutics focused fund with $262 million in capital commitments.

Since its founding in 1991, Frazier has made investments in more than 170 companies ranging from early-stage venture investments to growth buyouts of profitable lower middle market companies.

© 2016 Private Equity Professional • Private Equity’s Leading News Magazine • 3-24-16

Mid-market Looks Confidently Ahead

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business pulse nf3The annual issue of the Business Pulse Survey has been published by SunTrust Banks and it looks as if there has been a shift in the growth strategies of small and mid-sized businesses as they look to grow over the next five years.

According to SunTrust, of the 508 small and mid-size businesses that participated in the survey, thirty-six percent of companies with annual revenue of $10 million to $150 million are actively exploring mergers and acquisitions, an increase from 25 percent in 2015; while 41 percent of small businesses with annual revenue of $2 million to $10 million plan to introduce a new product or service, up from 31 percent. In a further shift, 29 percent of middle market companies are now looking to expand into international markets, while 32 percent of small businesses are looking to domestic markets to grow their business.

Beau Cummins nf1So are mid-size businesses looking to buy growth? “Business leaders are optimistic, with more than 80 percent saying their businesses are strong and they are confident about their company’s finances,” said Beau Cummins, commercial and business banking executive at SunTrust. “Along with the belief that capital is accessible, this is changing the way companies are approaching growth over the next five years. We see interest in mergers and acquisitions on the upswing for middle market companies and plans to grow organically significantly decreasing. We also found that growth through bank or private equity funding is anticipated by both sectors.”

Other findings of the Business Pulse Survey include the following top business goals: Growing profitability (27 percent); growing revenue (25 percent); increasing customer satisfaction (21 percent); and investing for future growth and expansion (19 percent). Optimism abounds with 80 percent of business leaders confident that their business goals will be achieved.

What keeps small business leaders up at night?  According to SunTrust, most are concerned about uncertainty in the economy (68 percent), changes in the healthcare laws (68 percent), cash flow stability (66 percent) and employee morale (65 percent). Mid-market business leaders’ concerns also include fraud protection and cyber security (72 percent).

SunTrust provides deposit, credit, trust, investment, mortgage, asset management, securities brokerage, and capital market services. As of December 31, 2015, SunTrust had total assets of $191 billion. The bank is headquartered in Atlanta (www.suntrust.com).

For a copy of the 2016 Business Pulse Survey click HERE.

© 2016 Private Equity Professional • Private Equity’s Leading News Magazine • 3-24-16

Black Diamond Buys Mini-Mills from ArcelorMittal

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ArcelorMittal nf1Black Diamond Capital Management has signed an agreement with ArcelorMittal to acquire three steelmaking and finishing operations that produce and sell long carbon steel products. The acquisition is expected to close in early April.

black diamond f4Long carbon steel products are used in a range of industrial sectors, particularly in the construction and engineering industries. The three facilities that ArcelorMittal is selling to Black Diamond are located in LaPlace, LA; Harriman, TN; and Vinton, TX.  The combined operations of the three facilities have approximately 950 employees and can produce 830,000 metric tons of crude steel and 725,000 metric tons of finished products.

The LaPlace operations collectively include a mini-mill located outside of New Orleans, a rolling mill in Harriman, TN (near Knoxville) ArcelorMittal nf3and three barge-based product depots in Tulsa, Chicago, and Pittsburgh. These facilities are producers of light structural steel shapes and
merchant bar products. Merchant bars are commodity metal shapes such as angles, channels, flats, rounds, squares, and strips which re-converters use for shaping into different products. The LaPlace mini-mill and Harriman rolling mill were acquired in 2008 when ArcelorMittal purchased Bayou Steel.

The Vinton facility is a mini-mill located alongside the Rio Grande River near El Paso and produces rebar for the construction industry and grinding media for the mining industry. The Vinton plant was built in 1962 by Border Steel Rolling Mill Company and was acquired by ArcelorMittal in 2007.

Black Diamond has a history of investing in the metals sector and views the facilities as a strong platform for growth in the steelmaking industry. “These facilities operated as a part of independent companies in the past and we look forward to coupling that entrepreneurial background with Black Diamond’s prior experience to expand the customer and product base,” said Stephen Deckoff, Founder and Managing Principal of Black Diamond.

In October 2015, Black Diamond held a final close of its latest fund – BDCM Opportunity Fund IV, LP – at the hard cap of $1.5 billion. Black Diamond invests in performing and distressed markets and target companies can be active in a range of industries. The firm was founded in 1995 and has offices in Greenwich, CT; Lake Forest, IL; and London, UK (www.bdcm.com).

Specialty investment bank Calibre Group (www.calibregroupllc.com) provided union related advisory services in connection with this acquisition and Jones Walker (www.joneswalker.com) provided legal counsel.

ArcelorMittal is the world’s largest steel and mining company. In 2015, ArcelorMittal had sales of $64 billion, steel shipments of 93 million net tons and crude steel production of 102 million net tons.  The company has approximately 222,000 employees and steelmaking operations in 19 countries on four continents (www.arcelormittal.com).

© 2016 Private Equity Professional • Private Equity’s Leading News Magazine • 3-24-16

Bregal Buys Ramcat

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ramcat nf1Arcus Hunting, a portfolio company of Bregal Partners, has acquired Ramcat Broadheads, a maker of bow hunting equipment. The buy of Ramcat is the fourth add-on acquisition by Arcus and is a continuation of Bregal’s strategy to build a leading company in the archery space, with a particular focus on specific categories that enhance hunters’ performance in the field.

ramcat nf12Ramcat designs, markets, and sells broadheads – a flat pointed steel arrowhead having sharp edges – that are used with compound bows, crossbows, and traditional bows. The company also makes replacement blades (part of the broadhead assembly), quivers, and other accessories. The company was founded by the husband and wife team of Brett and Chris Fulton in 2010 and is headquartered southeast of Pittsburgh in North Huntingdon, PA (www.RamcatBroadheads.com). The Fultons will continue as part of Arcus Hunting following the acquisition.

Scott Perekslis nf1“Ramcat has developed best-in-class broadheads with its patented deep lobe airfoil design that enables an unrivaled combination of accuracy and penetration among its peers in the broadhead marketplace,” said Scott Perekslis, Managing Partner and co-founder of Bregal Partners. “The company is growing very rapidly, and we are proud to be partnering with Brett and Chris to give both Ramcat and its customers the added resources that the Arcus platform can bring to bear.”

Bregal formed Arcus in November 2014 as a platform in the bowhunting and archery accessories category when it acquired Dead Down Wind, a scent control brand that masks a hunter’s scent while in the field, based in the Kansas City suburb of Pleasant Valley (www.deaddownwind.com). In January 2015, Arcus acquired Tinks, a maker of deer lures and attractants, based near Atlanta in Covington, GA (www.tinks.com) and in April 2015, Arctus acquired Obsession Archery, a designer, marketer, and manufacturer of vertical bows (compared to a crossbow which is a horizontal bow), based near Macon in Jeffersonville, GA (www.obsessionbows.com).

As a result of these acquisitions, the Arcus platform now markets and manufactures deer lures, attractants, scent control products, bows, broadheads, replacement blades, quivers, and other archery accessories. The company is headquartered in Covington, GA (www.arcushunting.com).

“Ramcat gives us a strong presence and a very high quality brand in the large and growing broadhead category,” said Phil Robinson, President of Arcus Hunting. “Now we have yet another premium product in the Arcus portfolio to offer our retail and distribution partners and hunters in the field.”

bregal nf11Bregal Partners invests from $25 million to $90 million of equity in companies operating in the branded consumer products, food, energy services, and healthcare sectors. Target investments typically have from $15 million to $75 million of EBITDA. The firm has $600 million of committed capital funded by a sixth-generation family foundation. Bregal Partners is based in New York (www.bregalpartners.com).

Sidley Austin (www.sidley.com) and Hovey Williams (www.hoveywilliams.com) served as legal advisors to Bregal Partners and Arcus Hunting on this transaction. Blumling & Gusky (www.blumlinggusky.com) were the legal advisors to Ramcat.

© 2016 Private Equity Professional • Private Equity’s Leading News Magazine • 3-24-16

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