July 13, 2016
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Archives for July 13, 2016

Spire Sells Rainbow to Quad-C

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rainbow nf1Spire Capital Partners has sold Rainbow Early Education, a provider of early education services, to Quad-C Management. Spire acquired Rainbow Early Education in 2010 in partnership with Patrick Fenton, Rainbow’s Founder & CEO.

rainbow nf88During the six-year term of its ownership Rainbow expanded geographically by building new schools and also acquired other early education schools in contiguous regions. The company opened or acquired 91 schools during this period, more than tripling the school count while growing revenue by over 400%. “Spire Capital has been an exceptional partner providing invaluable insight working alongside our team to further our business development, marketing, and technology initiatives during our rapid growth,” said Mr. Fenton. Today, Rainbow serves over 10,500 students and operates 121 schools across twelve states. The company is headquartered in the Detroit suburb of Troy, MI (www.rainbowccc.com).

spire nf2Spire invests from $15 million to $40 million in companies with revenues of at least $10 million and EBITDAs of $5 million. Sectors of interest include business services, information services, media, education and communications. Spire is investing out of its third fund and has managed over $700 million in private equity commitments since its founding in 2000. The firm is led by partners Andy Armstrong, Bruce Hernandez, David Schaible and Sean White and is based in New York (www.spirecapital.com).

David Schaible nf1“Patrick Fenton, management and all of the Rainbow team exhibited exceptional operating skills and built a unique curriculum and company culture to educate young children today,” said Mr. Schaible. “The identification and execution of this buy and build investment theme created significant value for all stakeholders, and the company continues to be well positioned to continue its expansion as a premier provider in the sector.”

The acquisition of Rainbow Early Education is the latest transaction for Quad-C in the education and training sector. In August 2014 the firm acquired Colibri (formerly McKissock) – an online provider of continuing education programs to professionals in the real estate, health care and personal care markets.

“Pat Fenton and his management team have done an excellent job building out the Rainbow platform in recent years, and we’re looking forward to supporting the company’s organic and acquisition-driven growth strategies going forward,” said Tim Billings, a Partner at Quad-C.

quad nf3Quad-C invests from $35 million to $125 million of equity in companies with enterprise values of $75 million to $400 million. The firm was founded in 1989 and is headquartered in Charlottesville (www.quadcmanagement.com).

Robert W. Baird & Company (www.rwbaird.com) was the financial advisor to Spire Capital and Rainbow, while Dentons US (www.dentons.com) served as legal counsel.

© 2016 Private Equity Professional • 7-13-16

Bravo Sports Carves Out Sector 9

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sector 9 nf1Bravo Sports, a portfolio company of Transom Capital and St. Cloud Capital, has acquired skateboard maker Sector 9 from Billabong International, a portfolio company of Oaktree Capital Management and Centerbridge Partners.

sectro nine nf44Sector 9’s products include boards, wheels, apparel and protective gear under the Sector 9 label and trucks under the Gullwing brand. Additionally, Sector 9 sells performance/racing wheels under the RAD (Rider Approved Designs) brand. Sector 9 was started in La Jolla in 1993 by co-founders Steve Lake, Dave Klimkiewicz, Dennis Telfer, and Tal O’Farrell. Billabong International acquired Sector 9 in 2008. Today the company is based in San Diego (www.sector9.com).

“Sector 9 is one of the most recognizable and innovative skateboard brands on the market today,” said Leonardo Pais, CEO of Bravo Sports. “We are proud to add the company to Bravo Sports’ growing specialty division.”

Bravo Sports products include scooters, skateboards, skates, helmets, gloves, graphics, racewear for motocross and mountain bike riders, as well as sun shades and canopies. The company’s products are sold through the mass merchant, sporting goods and big box retail channels.  Transom Capital acquired Bravo Sports in June 2015 when it merged the company with its existing portfolio company  One Industries – a motocross and mountain bike products company – which it had acquired in July 2013. Bravo Sports was founded in 1965 and is headquartered near Los Angeles in Santa Fe Springs, CA (www.bravosportscorp.com).

James Oh nf1“Sector 9 is the perfect fit in our strategy of creating an action sports lifestyle division,” said James Oh, principal of Transom Capital. “We are pleased to have worked with Billabong International to successfully carve-out the Sector 9 business.”

transom nf2Transom invests in buyouts and turnarounds of companies with EBITDAs from $0 (turnaround situations) to $20 million. Sectors of interest include consumer products, media & entertainment, and industrial. Transom is headquartered in Los Angeles with an additional office in Seattle (www.transomcapital.com).

st cloud nf2St. Cloud Capital, which invested in Bravo Sports in June 2015, makes both control and non-control investments in lower middle-market companies that have annual revenues between $10 million and $150 million.  The firm typically invests from $5 million to $15 million per transaction in senior secured debt, subordinated debt, and preferred and common stock. St. Cloud Capital is based in Los Angeles (www.stcloudcapital.com).

Billabong International is a wholesaler and retailer of hard and soft goods in the board sports sector.  The company distributes its products through board sports retailers and through its branded retail outlets. Oaktree Capital Management and Centerbridge Partners acquired a large equity interest in Billabong during a restructuring of the company in January 2014. Billabong (ASX: BBG) is headquartered south of Brisbane in Burleigh Heads, Australia (www.billabong.com).

© 2016 Private Equity Professional • 7-13-16

New Mountain Invests in Topix

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topix nf1New Mountain Capital has made an investment in Topix Pharmaceuticals, a provider of therapeutic and cosmetic skin care products.

topix nf22Topix develops, manufactures and markets topical skin care products under both branded and private labels. The company’s products include antioxidants, cleansers, exfoliators, moisturizers, peels, retinols, sunscreens and toners that are sold under the brand names Replenix, Citrix, Glycolix, and ReBrightalyze. Topix is headquartered in Amityville, NY (www.topixpharm.com).

New Mountain identified Topix through a proactive search for an investment opportunity in the life sciences and aesthetics industries. The firm will provide Topix with financial and strategic resources to support both new product development and acquisitions.

Andre Moura nf1“Topix is the high quality leader in its space, and we are excited to partner with the Topix team to support the company’s next phase of growth,” said Andre Moura, a Managing Director at New Mountain. “We look forward to working with management to help the company realize its full growth potential by investing in new products, new channel strategies, new technologies and acquisitions, while maintaining the high level of quality and customer service which have always been the hallmarks of Topix’s success.”

new mountain nf33New Mountain currently manages over $15 billion of private and public equity funds. The firm is an industry generalist but has specific expertise in education, health care, software, business services, logistics, specialty chemicals, federal services, media, consumer products, financial services and insurance, environmental services, infrastructure and energy.  New Mountain was founded in 1999 and is headquartered in New York (www.newmountaincapital.com).

“New Mountain is the perfect partner to help Topix execute on its growth plans,” said Burt Shaffer, President and CEO of Topix. “New Mountain is known for its focus on business building, and Topix will have deep resources at its disposal to help us achieve our strategic growth objectives.”

© 2016 Private Equity Professional • 7-13-16

AE Acquires Moeller Aerospace

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moeller aero nf1AE Industrial Partners (AEI) has acquired Moeller Aerospace. The buy of Moeller Aerospace is AEI’s fourth platform investment for its first fund, AE Industrials Partners Fund I, which closed in April 2016 with $680 million in commitments.

moeller nf33Moeller Aerospace specializes in the machining of complex hot- and cold-section turbine hardware that are used in major aerospace engine programs. Products include small items such as bladelocks, brackets, blades, vanes, housings and manifolds. The company specializes in the machining of titanium-aluminide (an inter-metallic compound that is lightweight and resistance to oxidation and corrosion at high operating temperatures). Moeller Aerospace has approximately 600 employees and 215,000 sq. ft. of manufacturing capacity in three facilities – two near Detroit in Wixom, MI and the other in the northern Michigan city of Harbor Springs. The company was founded in 1953 and is headquartered in Wixom, MI (www.moeller-aerospace.com).

“AEI has an extensive, successful track record in our key target markets of aerospace, power generation and specialty manufacturing,” said Kevin Atkinson, President of Moeller Aerospace. “There’s no doubt that with the infusion of AEI’s expertise, connections and capital, our company will have significant new business potential to develop and realize.”

ae industrial nf4AEI invests in the aerospace, power generation and specialty industrial sectors with a specific focus on technical manufacturing, distribution and supply chain management, MRO (maintenance, repair and overhaul) and industrial service-based businesses.  Typical company targets will have from $50 million to $500 million of revenue. AEI is headquartered in Boca Raton (www.aeroequity.com).

Michael Greene nf2“Moeller Aerospace is virtually unique in its products, technology, and reputation,” said Michael Greene, Managing Partner of AEI. “The company is a proven innovator in developing new products and processes that support the development and production of turbine engines for their key OEM customers, and has the potential to expand this expertise across its target markets.”

Kirkland & Ellis (www.kirkland.com) was the legal advisor to AEI and PricewaterhouseCoopers (www.pwc.com) was the firm’s financial advisor.

Honigman Miller Schwartz and Cohn (www.honigman.com) was the legal advisor to Moeller Aerospace and P&M Corporate Finance (www.pmcf.com) was the company’s financial advisor.

© 2016 Private Equity Professional • 7-13-16

Brookwood Builds BW Gas & Convenience

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yesway nf1BW Gas & Convenience, a portfolio company of Brookwood Financial Partners, will acquire 21 convenience stores from Kum & Go. The acquired stores are all based in Iowa. The first three stores, located in Mason City, are being acquired this week, with the remaining 18 stores to be closed on by the end of August.

Thomas Nicolas Trkla nf1With this acquisition, BW Gas & Convenience will own and operate 31 stores in Iowa – it acquired ten western Iowa-based stores from Country Store in 2015 – and has announced that it will brand all of its properties under the name Yesway with corporate headquarters in Des Moines (www.yesway.com). “The launch of Yesway marks the beginning of an exciting new branding venture for BW Gas & Convenience,” said Thomas Nicolas Trkla, Chairman and Chief Executive Officer of Brookwood Financial.

Yesway plans to spend approximately $6.7 million to completely upgrade and remodel its entire portfolio of stores. “The new exterior and interior store design will enhance the overall appeal of the stores and enable us to offer a fresh experience for consumers in the Iowa region,” said Brian Trout, senior vice president of operations for BW Gas & Convenience. “Customers will enjoy redesigned stores that are true to our brand tenets, which are to be user-friendly, inviting and efficient.”

Brookwood Financial formed BW Gas & Convenience to build a portfolio of 300 to 600 gas stations and convenience stores in different regions of the United States. The strategy involves building several regional portfolios of gas stations and convenience stores, each of which will be seeded through the acquisition of an existing portfolio – generally between 10 and 20 stores – that has operational and technological infrastructures already in place. Each portfolio will then be grown over a three-year period through follow-on acquisitions of individual stores or small groups of stores until each region is comprised of approximately 50-100 stations.

brookwood financial nf22Brookwood Financial specializes in acquiring and managing value-add commercial real estate and related operating businesses on behalf of a group of institutional investors, family offices and high net worth individuals. The firm was founded in 1993 and is headquartered north of Boston in Beverly, MA (www.brookwoodfinancial.com).

© 2016 Private Equity Professional • 7-13-16

Audax Closes Fourth Mezz Fund

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audax nf44Audax Group has held a final close of Audax Mezzanine Fund IV at the hard cap of $1.2 billion. The new fund was oversubscribed and exceeded its target of $1 billion. Audax’s earlier mezzanine fund, appropriately named Audax Mezzanine Fund III, closed with $1 billion of capital commitments in 2011. The firm’s second mezzanine fund closed in 2005 at $700 million.

Fund IV raised its capital from the usual mix of institutional investors – public and corporate pension funds, insurance companies, endowments and foundations, and high net worth families – in addition to a significant commitment from Audax’ senior professionals.

As with earlier Audax mezzanine funds, the firm will invest the proceeds in junior debt securities and equity co-investments, with a focus on direct lending to US middle market companies as part of private equity-sponsored buyouts, recapitalizations, financings, and acquisitions.

Geoffrey Rehnert nf55“We appreciate the support from our existing and new investors and thank them for their commitment to Audax,” said Co-Chief Executive Officer, Geoffrey Rehnert. “The significant demand for our fourth mezzanine 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.”

Audax operates through two groups; Private Debt and Private Equity. Audax Mezzanine is part of Audax Private Debt and is based in New York. Audax Private Equity operates out of New York, Boston and Menlo Park.

Kevin Magid nf1“We are pleased to once again receive broad investor support in Fund IV,” said Kevin Magid, Managing Director and the head of Audax’ Private Debt business. “We look forward to continuing to provide financing to, and partner with, our private equity clients. We have completed 90 mezzanine debt investments with 50 different private equity firms. The capital base of Fund IV will allow us to further enhance our capabilities.”

Audax makes 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. The firm was founded in 1999 (www.audaxgroup.com).

© 2016 Private Equity Professional • 7-13-16

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