Archives for October 2016

TCF Capital Funding Expands Team

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TCF Capital Funding has hired Mason Valadez as Senior Associate and LeeAnn Racevice as a Collateral Analyst.

“By bringing on high quality hires like Mason and LeeAnn and expanding our TCF Capital Funding team, we are further prepared to meet the growing needs of our expanding national client base.  We are thrilled that they elected to join us,” said Joe Gaffigan, TCF Capital Funding’s President.

Mr. Valadez will be involved in all aspects of screening, due diligence, underwriting and monitoring of leveraged loans to support lower middle market private equity and entrepreneur–owned buyouts, recaps and refinancings. Prior to joining TCF, he was an Associate at The Private Bank and prior to that a Credit Analyst at First Bank & Trust.  Mr. Valadez received his BBA in Finance, Investment and Banking from the University of Wisconsin.

Ms. Racevice joins the operations team as a Collateral Analyst and will act as a liaison between the customer and relationship managers to provide monitoring and operational support related to collateral, loan advances and pay downs, deposit accounts, covenant tracking and loan closing and funding.  Prior to joining TCF, she was a Credit Administrator with GE Capital and prior to that held positions with CIT Business Credit and Freemont Financial.

TCF provides cash flow and asset-based lending to lower middle-market businesses.  National in scope, this senior leveraged lending group focuses on providing private equity sponsor-backed cash flow loans and asset-based loans to companies with less than $100 million in revenue and between $2 million and $10 million in EBITDA.  The firm is based just outside of Chicago in Burr Ridge, IL (www.tcfcapitalfunding.com).

© 2016 Private Equity Professional • 10-28-16

CenterOak Keeps Adding to Team

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CenterOak Partners, a Dallas-based middle market private equity firm, has hired three new professionals. Joining the firm are Ben Adams, Vice President; Carrie Calhoun, Senior Associate of Business Development and Investor Relations; and Josh Weaver, Associate.

“Ben, Carrie and Josh each bring valuable experience and an impressive track record, whether working in an investment capacity, business development, investor relations or developing expertise in a particular industry or sector,” said CenterOak Managing Partner Randall Fojtasek. “We’re looking forward to working with them and believe they will each make a considerable contribution to our team.”

With these three hires, the staff at CenterOak now totals 22 individuals, including 13 members of the investment team and three operating partners. CenterOak was launched in September 2014 by Mr. Fojtasek, former Co-Founder and Co-Chief Executive Officer of Brazos Private Equity Partners.  He leads the firm alongside former Brazos senior executives Michael Salim, Lucas Cutler, Jason Sutherland and William Henry.

Mr. Adams and Mr. Weaver will be active in supporting the firm’s investment and monitoring activities. Prior to joining CenterOak, Mr. Adams held positions at Intuit, Lindsay Goldberg, TPG Capital, and Morgan Stanley. Mr. Weaver served as an Analyst at Wells Fargo Securities. Ms. Calhoun will support the firm’s investment sourcing activities and relationships with its limited partners. Prior to joining CenterOak, Ms. Calhoun held positions at NGP Energy Capital Management and Credit Suisse.

CenterOak makes equity investments of $20 million to $90 million in companies with enterprise values of $50 million to $200 million. Sectors of interest include: distribution; outsourced industrial services; building products; specialty coatings, chemicals and adhesives; active, outdoor and lifestyle apparel and accessories; food and restaurants; specialty retail; health and personal care; pet products and services; technology-enabled services; information services; and marketing and professional services.  The firm invests in companies across the US but has a specific focus on the Southwest and South.  CenterOak is based in Dallas (www.centeroakpartners.com).

These staff additions follow the August 2016 close of CenterOak Equity Fund I, LP with total commitments at the hard cap of $420 million. The significantly oversubscribed fund had an initial target of $350 million.

© 2016 Private Equity Professional • 10-27-16

Generation Growth Sells Atlantic Precision

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Generation Growth Capital (GGC) has sold Atlantic Precision, an aerospace machining company, to Precision Castparts.

Atlantic Precision (API) uses 3D metal printing and additive manufacturing technologies to provide prototyping and low volume production parts that are used in the aerospace industry. GGC invested in API in October 2014 to help the company execute on a growth and development strategy in additive manufacturing.  API is based in Port St. Lucie, FL (www.atlanticprecision.com).

“When GGC was first introduced to the team at API, we recognized their initial efforts in additive manufacturing could be a real game changer for prototyping and manufacturing in the aerospace markets,” said John Reinke, Managing Director of GGC. “We are proud to have had the chance to work with the team to support their growth and we look forward to watching their continued success as a part of Precision Castparts.”

Precision Castparts (NYSE: PCP) is an industrial goods and metal fabrication company that manufactures investment castings, forged components, and airfoil castings for use in the aerospace, industrial gas turbine, and defense industries. The company is headquartered in Portland, OR (www.precast.com).

“API represented a model investment for GGC. We were able to provide capital and a business support system that helped the company execute on an aggressive investment and growth strategy,” said Cory Nettles, a Managing Director of GGC.

GGC invests from $1 million to $10 million in manufacturing, service, and distribution businesses that have enterprise values of less than $30 million and sales ranging from $5 million to $50 million. Investments are primarily structured as equity but subordinated debt and warrant structures are also considered. The firm is headquartered in Milwaukee and has an additional office in Chicago (www.generationgrowth.com).

Imperial Capital (www.imperialcapital.com) was the financial advisor to API on the transaction.

© 2016 Private Equity Professional • 10-26-16

Kohlberg & Company Acquires MarketCast

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Kohlberg & Company has agreed to acquire the ownership interest of RLJ Equity Partners and State Street Global Advisors in MarketCast, a provider of information and data analytics to marketers and researchers in the entertainment industry. RLJ and State Street acquired MarketCast in December 2014 from Shamrock Capital Advisors.

MarketCast works with marketers and researchers at major motion picture studio and production companies to develop and execute marketing strategies.  The company’s services are available worldwide and include materials testing (trailers, TV spots, print ads, etc.), concept and positioning studies, exit polls, recruited audience screenings, tracking studies, and focus groups. Other services include brand and franchise studies, title tests, post-release studies, and attitudes and usage studies.

In August 2015, under RLJ and State Street ownership, MarketCast completed the acquisition of Insight Strategy Group, a New York-based research and strategy agency with practices in lifestyle, consumer goods, retail, and services businesses (www.insightstrategygroup.com).

MarketCast was founded in Boston in the late 1980s by three sociology professors – Joseph Helfgot, Frank Romo, and Michael Schwartz.  Today, the company is headquartered in Los Angeles with offices in New York, Boston and London (www.mcast.com).

Kohlberg & Company invests in companies in the industrial manufacturing; consumer products; business services; healthcare services; and financial services sectors. The firm concentrates on companies with EBITDAs between $20 million and $100 million where it can invest between $50 million and $200 million of equity. Kohlberg & Company was founded in 1987 and is based north of New York City in Mt. Kisco, NY (www.kohlberg.com).

“The MarketCast management team is highly enthusiastic about this new chapter for the company,” said Henry Shapiro, CEO of MarketCast. “Kohlberg has a 30-year track record of investing in service-based businesses with a focus toward long-term growth. The firm represents a strongly capitalized partner that will enable MarketCast to invest in new products and services, and expand into new and emerging forms of entertainment content, distribution, and marketing.”

“Through its suite of innovative, data-driven products and services, scalable, worldwide infrastructure, and dedication to exceeding customer expectations, MarketCast is positioned to serve the growing demands of the global entertainment marketplace,” said Ahmed Wahla, a Kohlberg Partner. “We see tremendous growth opportunities for MarketCast, both organically and through acquisitions, and look forward to partnering with management in the next phase of the company’s development.”

RLJ Equity Partners invests from $15 million to $30 million in companies valued between $50 million and $250 million. Target companies will have operating profits greater than $7 million and operating margins greater than 10%.  Sectors of interest include aerospace & defense; auto & transportation; business services; consumer retail; general industrial; and media & telecom.  RLJ Equity Partners was founded in 2006 by Robert Johnson in partnership with The Carlyle Group. The firm is headquartered in Bethesda, MD (www.rljequitypartners.com).

The buy of MarketCast by Kohlberg is expected to close by the end of November. “We feel fortunate to have had the opportunity to work with the MarketCast team, and assist the company through a period of rapid expansion and success. We are confident that the company will continue its growth trajectory in partnership with Kohlberg,” said Jerry Johnson, a Managing Director at RLJ.

Ropes & Gray (www.ropesgray.com) represented Kohlberg & Company on this transaction with a team led by private equity partner Christopher Rile that included finance partner Steven Rutkovsky, benefits partner Loretta Richard, tax partner Eric Elfman, intellectual property transactions partner David McIntosh, and business & securities litigation partner Peter Welsh.

Lazard Middle Market (www.lazard.com) was the financial advisor to MarketCast.

© 2016 Private Equity Professional • 10-26-16

Endowments and Foundations Increasing PE Exposure

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NEPC, one of the larger investment consulting firms to endowments and foundations, has published its Q3 2016 NEPC Endowment and Foundation Poll that measures endowment and foundation views on the economy, investing, and market trends. As with the Q3 Polls in 2014 and 2015, this survey focused on how endowments and foundations invest in and view private equity.

According to the survey, 43% of respondents are increasing their allocation to private equity and 53% are maintaining current exposure, with only 4% decreasing. As for which strategies are generating the most interest, investors are most attracted to Growth Equity (47%), Venture Capital (44%), and Buyouts (39%). This newfound attention is interesting because for the past two years, very few endowments and foundations expected private equity to generate higher returns (2014, 10%; 2015, 15%).

“After a year of strong performance, we’re not surprised to see endowments and foundations refocus their interest in private equity,” said Kristin Reynolds, Partner in NEPC’s Endowment & Foundation Practice Group. “We expect private equity will continue to attract assets as long as macroeconomic trends continue to drive lower expected returns in other classes. Given increased investor interest, it will be even more important to identify, vet, and select strong private equity managers.”

As for their outlook on private debt strategies, more than half of respondents (56%) are considering or have already invested in opportunistic credit, while 49% expressed the same view of distressed credit, and 39% for direct lending.

Click here for an infographic that highlights the survey’s primary findings

Valuations continue to be a top concern for private equity investors, however, with 56% of respondents citing it as their top concern, down slightly from the Q3 2015 survey (58%). Nearly a quarter (24%) think private equity generally is overvalued and 60% said current valuations will impact their future commitments. Investors’ second biggest concern with private equity was fund terms and fees (42%).

Other top findings include:

  • 67% are maintaining their exposure to fixed income; no respondents are increasing exposure.
  • US economic confidence is rising; 87% say the economy is in the same place or a better place than this time last year. This is a dramatic increase from Q2 2016 (50%).
  • Most see a slowdown in global growth as the greatest threat to near-term performance (63%).

The Q3 2016 NEPC survey was conducted online by the Endowment & Foundation Practice Group in September/October 2016.

NEPC has offices in Atlanta, Boston, Charlotte, Chicago, Detroit, Las Vegas and San Francisco, and services 118 endowment and foundation retainer relationships, representing assets of $57 billion as of June 30, 2016 (www.nepc.com).

© 2016 Private Equity Professional • 10-25-16

Rotunda Staffs Up

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Rotunda Capital Partners has added two professionals to its team with the hiring of Justin Potter and Rohit Dhake as Senior Associates. Mr. Potter will work out of the firm’s Washington, DC office and Mr. Dhake will work out of the firm’s Chicago office.

“We are excited to welcome Justin and Rohit to Rotunda Capital,” said John Fruehwirth, Managing Partner.  “Their addition will allow us to proactively source more deals within our core investment focus areas – value added distribution, specialty finance, asset-light logistics and business services.  In addition, they will provide additional operational assistance to our existing portfolio companies.”

Prior to joining Rotunda, Mr. Potter was a Senior Consultant at Ernst & Young where he provided strategic advice to financial services companies. His experience includes operating model assessment, systems integration, growth and profitability analysis, finance transformation, and project management. Mr. Potter earned his MBA from the University of Virginia and he has his undergraduate degree in Applied Economics from Cornell University.

Prior to joining Rotunda, Mr. Dhake worked at Prudential Capital Group where he focused on senior debt, subordinated debt, and private equity investment opportunities across a range of industries. He has his MBA from the University of Chicago and a BS degree in Finance and Accountancy from the University of Illinois.

Rotunda Capital invests in businesses with enterprise values of $15 million to $100 million. Sectors of interest include logistics, value-added distribution, specialty finance, and business services. Since founding in 2008, Rotunda has completed nine platform investments and realized three exits. The firm is headquartered in Bethesda, MD with an office in Northbrook, IL (www.rotundacapital.com).

“Rotunda is focused on building the pre-eminent independent sponsor in the lower middle market.  We need to continue to add top investment and operations talent to support all aspects of our business and ensure that we are well positioned to continue our success,” added Mr. Fruehwirth.

© 2016 Private Equity Professional • 10-25-16