Archives for October 2016

Gridiron Closes Third Fund at Hard Cap

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Gridiron Capital has held a final closing of the firm’s third fund, Gridiron Capital Fund III, LP, at the hard cap of $850 million. Gridiron’s earlier fund, appropriately named Gridiron Capital Fund II, LP, closed with $425 million of capital commitments in August 2012.

Investors in Fund III include a cross section of limited partners, including endowments and foundations, insurance companies, public and private pension funds, fund of funds and high net worth individuals, from North America, Europe, and Asia.

The investment strategy for Fund III will continue the strategy the firm has used since its founding in January 2005: investing in niche manufacturing, service and specialty consumer companies that have EBITDAs from $8 million to $50 million, EBITDA margins of at least 10%, and that are located in the United States and Canada.

“We are excited about the broad and significant support from both our investors in prior funds and new investors coming into Fund III,” said Tom Burger, a co-founder and Managing Partner of the firm. “We are fortunate to have such a high quality group of limited partners and great people to be partners with. We are humbled by the trust they’ve placed in us and we will work diligently and intensely every day to continue to earn their trust and deliver the best returns possible for each of them.”

Gridiron, which is based in New Canaan, CT, raised its first fund in 2007 with $300 million of capital commitments (www.gridironcapital.com).

Partners Debra Lussier and Paul Van Houten of Ropes & Gray (www.ropesgray.com) were the legal advisors to Gridiron on this fundraise.

© 2016 Private Equity Professional • 10-28-16

Serent Capital Invests in Apex Payroll Software

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Serent Capital has made an investment in Apex Payroll Software, a provider of software that is used by payroll service bureaus to serve the human resources needs of small and medium sized businesses.

Apex’s suite of products and services allows service bureaus to process payroll, ensure tax compliance, provide workforce management, and manage human resources functions on behalf of their clients. Over 220 payroll service firms nationally use Apex’s software. The company is based north of Atlanta in Roswell, GA (www.apexpayroll.com).

Serent will be partnering with founders Stephen Gregg, Cathy Gregg, and Marty Hamby in the next stage of Apex’s growth. “Apex weighed the decision to partner with Serent very carefully and placed a high degree of importance on finding a firm that shared our values,” said Stephen Gregg, Founder and CEO of Apex. “We were impressed with Serent’s knowledge of our industry, and their experience working with fast-growing software businesses to help them thrive and scale. With Serent’s partnership, we will be able to invest more into our product and services so that we can provide an even better customer experience.”

“Investing in human resource technology providers continues to be a focus area for us, and we are thrilled that Steve and his team selected Serent as Apex’s strategic capital partner,” said Kevin Frick, Partner and Co-Founder at Serent Capital. “Apex has built a great business, with a strong and loyal customer base. We are excited about the opportunity to work with the executive team to build on the remarkable success that they have had, with the goal of providing an ever-better experience to our existing and future customers.”

Serent’s investment in Apex represents its fifth investment in the human resources technology space in the last two years; Avionté (2014), ICon Professional Services (2015), Synergy Services (2015, combined with ICon to form TalentWave), and Humanis (2016, combined with Avionte).

Serent Capital invests from $10 million to $50 million in service businesses with revenues of $10 million to $100 million and EBITDAs up to $15 million.  Transaction types include buyouts, recapitalizations and growth capital. The firm is based in San Francisco (www.serentcapital.com).

© 2016 Private Equity Professional • 10-28-16

Linden Promotes Two

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Linden Capital Partners has promoted Michael Farah to Partner and Kam Shah to Principal. The firm has also hired Michael Bernard and Max Gaby as new Vice Presidents.

Linden is focused exclusively on leveraged buyouts in the healthcare and life science industries. The firm’s strategy is based upon three elements: healthcare and life science industry specialization; integrated financial and operating expertise; and strategic relationships with large corporations.

“Our team has prevailed in partnering with premier businesses by following our disciplined approach of focusing on key healthcare sectors and integrating the expertise of operating executives and investment professionals,” said Linden President and Managing Partner Tony Davis. “On behalf of the partnership, we are thrilled to recognize the performance of the team and welcome our newest teammates as we successfully execute the Linden strategy.”

Mr. Farah, who joined Linden in 2014, has been active on the pharmaceutical services and contract manufacturing sector teams, which led to investments in Flexan Corporation and ProPharma Group. He started his career in the healthcare investment banking group at UBS, spent three years as a private equity associate with Summit Partners, followed by six years at Metalmark Capital focused on healthcare investing. Mr. Farah has a BS in Business Administration from Carnegie Mellon and an MBA from Harvard.

Mr. Shah joined Linden in 2009 as an associate and returned as a vice president in 2013 after completing business school. Prior to Linden, he was a private equity associate at Sun Capital Partners. He began his career as an investment banking analyst at Goldman Sachs, where he focused on M&A advisory, capital raising, and leveraged buyout transactions. Mr. Shah has a BS in Finance from the University of Illinois and an MBA from Stanford.

Mr. Bernard has been involved in principal investing and investment banking since 2007. He joins Linden from 3i Group where he spent the last two years focused on healthcare investing. He started his career at Morgan Stanley in the leveraged loan investment group before joining the healthcare investment banking group. Mr. Bernard has a BA in Economics from Brown University and an MBA in Health Enterprise Management from Northwestern University.

Mr. Gaby has been involved in principal investing and investment banking since 2010. Prior to Linden, Mr. Gaby served as a private equity associate with GTCR and began his career as an investment banking analyst at Bank of America Merrill Lynch. Mr. Gaby has a BS in Finance and International Studies from Georgetown University and an MBA from The University of Chicago.

This has been a very busy year for Linden. In 2016, the firm has closed on three platform investments, three portfolio add-on acquisitions, sold Corpak MedSystems to Halyard Health, and completed dividend recapitalizations at Young Innovations and Spear Education.

Linden Capital Partners is based in Chicago (www.lindenllc.com).

© 2016 Private Equity Professional • 10-28-16

TorQuest Partners Invests in McKeil Marine

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TorQuest Partners has made an investment in McKeil Marine, a Canadian provider of marine transportation and project services.

McKeil provides its transportation and project services to a range of customers and industry sectors across the Great Lakes, St. Lawrence Seaway, East Coast and the Canadian Arctic. The company is based near Toronto in Hamilton, ON (www.mckeil.com).

At closing of the transaction, Steve Fletcher, President, who has been with McKeil for 17 years, has been appointed President and Chief Executive Officer and Blair McKeil, previously Chief Executive Officer and Chairman, has assumed the role of Vice Chairman.

“This milestone event is a testament to our skilled and dedicated crew, our valued customers, service providers and industry partners,” said Mr. McKeil. “Enhancing our ability to sustain and accelerate our growth is a fantastic way to celebrate the company’s 60th anniversary. I am excited to remain an owner of the business and look forward to helping guide McKeil as it navigates its way to a stronger, better future. I believe the best is yet to come.”

“This is the eighth platform investment for TorQuest Partners Fund III and continues our strategy of partnering with exceptional management teams to build industry-leading businesses, while supporting their continued growth,” said Brent Belzberg, Senior Managing Partner at TorQuest.

“McKeil has earned a long-standing reputation as an entrepreneurial business, a skilled and safe operator and a reliable business partner for its customers” said Michael Hollend, a Partner at TorQuest. TorQuest looks forward to supporting McKeil’s growth initiatives as its people continue to do what they do best – operate a preeminent Canadian marine service provider.”

TorQuest was founded in 2002 and has over $2 billion of equity capital under management. In July 2016 the firm held an above target final closing of TorQuest Partners Fund IV at the fund’s hard cap of $925 million. The initial targeted amount was $750 million. TorQuest is headquartered in Toronto (www.torquest.com).

© 2016 Private Equity Professional • 10-28-16

Taylor Fish Joins Tonka Bay

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Tonka Bay Equity Partners has hired Taylor Fish as a new Associate.  Mr. Fish will assist in the execution of the firm’s investment and management activities.

“Tonka Bay’s reputation and consistent success are a testament to the great people and strong culture the firm has developed,” said Mr. Fish. “I’m excited to join the investment team and look forward to continuing to grow the platform over the years to come.”

Prior to joining Tonka Bay, Mr. Fish was with investment bank Greene Holcomb Fisher. During his time there he advised clients on various sell-side and buy-side M&A transactions, capital raises and financial and strategic advisories.  Mr. Fish has experience in the industrial, energy, healthcare, technology and consumer sectors.  He began his career within the audit practice at Deloitte & Touche.

Tonka Bay invests in manufacturing, value-added distribution and business services companies that have EBITDAs greater than $2 million. The firm is based in the Minneapolis suburb of Minnetonka (www.tonkabayequity.com).

“Taylor’s experience in investment banking and public accounting will make him a valuable contributor to the firm” said Steve Soderling, a Partner at Tonka Bay. “We are excited to have Taylor join the Tonka Bay team.”

Mr. Fish has a BA in Public Accounting from the Gustavus Adolphus College.  He is also a Certified Public Accountant.

© 2016 Private Equity Professional • 10-28-16

Ironwood Invests in SAFE Security

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Ironwood Capital has made an investment in SAFE Security, a provider of alarm monitoring services. OFS Capital Corporation was a co-investor in this transaction alongside Ironwood Capital.

SAFE provides alarm monitoring and related services to over 100,000 customers in all 50 states, Puerto Rico and Canada. The company – led by Chief Executive Officer Paul Sargenti – was founded in 1988 and is headquartered near San Francisco in San Ramon, CA (www.safesecurity.com). The company consistently ranks among the top 25 largest security alarm companies in the United States.

“Our extensive experience in the security alarm industry, combined with the quality of management, makes SAFE a good fit for us,” said Carolyn Galiette, President and Chief Investment Officer at Ironwood Capital.

Ironwood Capital provides non-control growth capital to middle market companies. Investments take the form of subordinated debt and preferred stock in amounts ranging from $5 million to $20 million to support business owners and financial sponsors in growth financings, full and partial recapitalizations, generational transitions and buyouts. Ironwood Capital has more than 20 professionals and is headquartered in Avon, CT (www.ironwoodcap.com).

“SAFE’s established customer base, organic growth engine, growing dealer program and strong relationships with independent dealers is impressive. We like the team, we like their growth plan and we like the business trajectory,” said Roger Roche, Ironwood Capital Senior Managing Director.

OFS Capital (NASDAQ: OFS) is a business development company that invests from $3 million to $20 million of debt and minority equity in middle-market companies that have EBITDA of at least $3 million. Sectors of interest includes transportation & logistics; value-added distribution; business services; industrial & niche manufacturing; specialty chemicals; health care services; consumer products & services; aerospace & defense; franchising; and food & beverage. OFS has offices in Chicago, Los Angeles and New York (www.ofscapital.com).

Peter Flynn of specialty consulting firm SPP Advisors (www.sppadvisors.com) represented SAFE in the transaction.

© 2016 Private Equity Professional • 10-28-16