Archives for November 2016

Pamlico Raises New Fund

by

Pamlico Capital has held a first and final close of Pamlico Capital IV at the fund’s hard cap of $910 million. The new fund was oversubscribed and exceeded the original $750 million target.

From start to finish, fundraising was completed in only four months. Limited partners included fund of funds, insurance companies, corporate and foreign pension funds, endowments, foundations and family offices.

“We are very pleased and honored to have received such a high level of support from our current investors and are excited to partner with a few new investors in this fund and beyond,” said Pamlico Partner Art Roselle.

Like its earlier funds, Pamlico Capital will invests from $20 million to $100 million in companies with total enterprise values of between $50 million and $250 million.  Sectors of interest include business and technology services, communications, and healthcare. Pamlico was founded in 1988 and is based in Charlotte (www.pamlicocapital.com).

“PC IV will build on our existing strategy of providing transformational capital to help accelerate the growth of businesses with untapped potential, often as a company’s first institutional investor,” added Mr. Roselle. “As we invest PC IV, we will leverage our industry expertise to pursue and capitalize on exciting investment opportunities in the lower middle market to drive value creation and improve operational performance.”

“The significant interest in our fourth fund underscores the team’s experience, capability and strategy, as well as our investors’ confidence in our consistent track record of delivering strong returns,” said Pamlico Partner Eric Eubank. “Our hands-on approach to sourcing, monitoring and guiding investments has helped us deliver consistently strong returns for over 25 years.”

UBS Securities was the placement agent for Pamlico and Robinson, Bradshaw & Hinson provided legal services.

© 2016 Private Equity Professional

November 30, 2016

Wellspring’s Closes Hoffmaster

by

Wellspring Capital Management has completed its buy of Hoffmaster Group, a maker of disposable tableware, from Metalmark Capital. This transaction was announced on October 20, 2016.

Hoffmaster’s products – which include napkins, plates, placemats, and table covers – are sold to foodservice distributors, retail, grocery, mass merchants and club-store customers. The company was founded in February 1947 by B.T. Hoffmaster as a maker of paper napkin products. Hoffmaster is headquartered in Oshkosh, WI (www.hoffmaster.com). The current management team of Hoffmaster – led by CEO Rory Leyden – will continue with the company under Wellspring ownership.

Hoffmaster has a private equity lineage. In October 2007, New York-based Kohlberg & Company acquired two companies – Hoffmaster Company from Solo Cup and Converting, Inc. from Mason Wells – and merged the two companies under the new name of Hoffmaster Group. Under its ownership, Kohlberg completed a number of add-ons including the September 2008 buy of lace and linen paper products makers Brooklace and Smith-Lee (they shared common ownership); and paper plate and napkin maker InnoWare Paper in April 2011. In December 2011, Kohlberg sold Hoffmaster Group to Metalmark Capital.

“We would like to thank the Metalmark team for its dedicated support over the past five years,” said Rory Leyden, Chief Executive Officer of Hoffmaster. “Metalmark’s expertise and strategic counsel have been integral to our success as a market-leading North American designer, manufacturer and supplier of decorated, premium disposable tableware.”

Metalmark Capital was established by the principals of Morgan Stanley Capital Partners (MSCP) to manage the Metalmark Capital and MSCP funds. Since 1986, the Metalmark Capital and MSCP funds have invested $7 billion of equity capital in over 100 companies. Sectors of interest include healthcare, energy and industrials.  Metalmark is currently investing through its latest fund that has $2.5 billion of committed capital. The firm is based in New York (www.metalmarkcapital.com).

“We thank Rory and his management team for their outstanding performance and achievements,” said Leigh Abramson, a Partner of Metalmark. “Working with them has been very rewarding and we are proud of the company’s growth over the past few years. Given Wellspring’s expertise and Rory’s excellent leadership, we are confident that Hoffmaster will continue to succeed.”

Wellspring is a middle-market private equity firm that manages more than $3 billion of private equity capital. The firm was founded in 1995 and is based in New York (www.wellspringcapital.com).

Robert W. Baird & Co. was the financial advisor to Hoffmaster on this transaction.

© 2016 Private Equity Professional

November 30, 2016

Tenex Invests in Pugh

by

Tenex Capital Management has made an investment in Pugh Lubricants, a distributor of nationally branded and private label lubricants.

Pugh was founded in 1947 as an Esso service station in 1947 by John Q. Pugh, Jr. Today, with the closing of the transaction with Tenex, the company will continue to be managed by the third and fourth generations of the company founder.

Pugh’s products – which include lubricants and antifreeze – are sold throughout the Carolinas, Virginia, Tennessee, and portions of Georgia, Alabama, Mississippi, and Arkansas.  The company’s customers are active in the automotive (car dealership, quick lube, tire stores, car washes), commercial (heavy equipment owners and operators), industrial, and aviation markets. Brand name products distributed by Pugh include Valvoline, Castrol, Kendall, Phillips 66, Compass, Nevastane, Eco Power, Anderol and Royco.

Pugh is headquartered in Asheboro, NC and has additional facilities in Richmond, VA; Charleston, SC; and Nashville, TN (www.pughlubricants.com).

“We are very excited about this opportunity to work with Tenex and leverage their financial and operating capabilities,” said Mike Pugh, President of Pugh. “This relationship further strengthens our position in the market and creates a foundation for future growth while allowing us to maintain our reputation for quality service earned over nearly 70 years in business.”

“We are pleased to partner with the Pugh family to support accelerated growth and expand the reach of the Pugh brand while preserving the company’s focus on best-in-class customer service,” said Mike Green, CEO of Tenex Capital Management. “We believe our teams bring highly complementary skills and share a common vision that will serve all customers, employees and shareholders well.”

Tenex Capital Management invests up to $100 million in middle-market companies in the industrial, manufacturing, and health and business services sectors. The firm has $452 million of committed capital and is based in New York (www.tenexcm.com).

Stephens Inc. (www.stephens.com) was the financial advisor to Pugh.

© 2016 Private Equity Professional

November 30, 2016

Norwest Sells Stanton Carpet

by

Norwest Equity Partners (NEP) has sold Stanton Carpet Corporation to Quad-C Management. This transaction closed on November 21, 2016.

Stanton Carpet is a value-added distributor of carpet and custom rugs and runners under the Stanton, Antrim, Royal Dutch, Atelier, Rosecore and Crescent brands. The company sells its products through approximately 4,000 retail partners, including independent retail floor showrooms, trade showrooms and home furnishing retailers. Stanton has 100 employees and is based on Long Island in Syosset, NY with a distribution center in Calhoun, GA (www.stantoncarpet.com).

During NEP’s ownership, the company acquired Crescent Carpet (July 2016), and expanded the company’s sales force, international supply partners, and showroom and retail partners. “NEP has been a true partner to the Stanton team, sharing their family business and distribution industry experience, while also helping to align our company with the right resources to help us grow and outperform expectations. We have thoroughly appreciated NEP’s guidance and partnership over the last four years,” said Sy Cohen, Stanton Founder and Chairman. NEP acquired Stanton Carpet in 2012 from Mr. Cohen, who founded the company in 1980.

NEP makes equity investments of $30 million to $250 million in companies that have more than $10 million in EBITDA. Sectors of interest include agriculture, business services, consumer, distribution, diversified industrials, energy, and healthcare. In April 2015, NEP closed Norwest Equity Partners X, LP, a $1.6 billion fund and Norwest Mezzanine Partners IV, LP, an $800 million fund formed by NEP’s affiliated mezzanine investment firm, Norwest Mezzanine Partners. Norwest Equity Partners is headquartered in Minneapolis (www.nep.com).

Quad-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).

BB&T Capital Markets served as financial advisor to Norwest Equity Partners. Winston & Strawn served as legal advisor to Stanton.

© 2016 Private Equity Professional

November 30, 2016

Arrowhead Buys Stens

by

Arrowhead Electrical Products, a portfolio company of The Riverside Company and Investcorp, has agreed to acquire Stens, a distributor of aftermarket replacement parts, from Ariens Company. The transaction, which includes the acquisition of both the Stens and JThomas brands, is expected to close by year-end.

Stens distributes aftermarket replacement parts to the outdoor power equipment, golf, and industrial end markets. The company’s products include non-discretionary, high-wear parts, including engine components, blades, chains, belts, and electrical components that are used in mowers, chainsaws, and snow blowers. Stens has more than 14,000 SKU’s and sells to more than 50,000 customers via eight national distribution centers in Pennsylvania, Michigan, Florida, California, Texas, South Carolina, Indiana and Brantford (Canada). The company is headquartered in the southern Indiana city of Jasper (www.stens.com).

Arrowhead Electrical Products (AEP) has approximately 75,000 SKUs including starters, clutches, driveline components, alternators, generators, suspension parts, gasket kits, and other components.  The company serves more than 6,000 customers across a number of different end markets, including powersports, agricultural & industrial, outdoor power equipment, marine, and automotive & heavy duty. AEP has 200 full-time employees and is headquartered north of Minneapolis in Blaine, MN (www.arrowheadep.com).

This is the second add-on completed by Arrowhead since Riverside acquired it from Pfingsten Partners in September 2015. “Stens is a highly complementary addition for Arrowhead,” said Riverside Principal Brad Roberts. “It gives Arrowhead a leadership position in the outdoor power equipment aftermarket, while diversifying and expanding Arrowhead’s capabilities.” In April 2016 Arrowhead acquired the C&E companies, an Urbandale IA-based maker and distributor of aftermarket and OEM engine components, primarily for the power sports industry.

Working with Mr. Roberts on the buy of Stens were Operating Partner Steve Stubitz, Vice President Drew Flanigan, Senior Associate Laura Swearingen and Associate Mark Barron. Riverside Partner Anne Hayes helped secure financing for the deal.

The Riverside Company is a global private equity firm focused on investing in and acquiring growing businesses valued at up to $400 million. Since its founding in 1988, Riverside has invested in more than 440 transactions. The firm’s international portfolio includes more than 80 companies. The firm is headquartered in New York with additional offices in Atlanta, Chicago, Cleveland, Dallas, Los Angeles, San Francisco, and London (www.riversidecompany.com).

Investcorp invests in mid-size companies operating in an array of industry sectors that have total enterprise values of between $200 million and $1 billion and are located in North America or Western Europe. As of June 30, 2016, Investcorp had about $10.8 billion in total assets under management. Investcorp has offices in New York, London, Bahrain and Saudi Arabia (www.investcorp.com).

Ariens is a family-owned manufacturer of outdoor power equipment for both commercial & consumer markets. The company is based south of Green Bay in Brillion, WI (www.ariens.com).

© 2016 Private Equity Professional

November 30, 2016

Align Invests in Testing Services

by

Align Capital Partners has acquired Alliance Source Testing (AST), an outsourced provider of emission testing services to industrial facilities.

AST provides its emissions testing services to industrial facilities for permitting and compliance in accordance with air-quality mandates from local, state and federal regulatory bodies. The company services customers’ facilities on a repeated basis, with the frequency determined by regulations for each industry.

AST’s customers are active in a range of industries including asphalt production; automotive manufacturing; cement production; chemical manufacturing; fiberglass; food & beverage; iron & steel foundry; mineral processing; energy; power generation; metals; printing; pulp & paper production; and wood products. The company, led by CEO Chris LeMay, has operations centers in Decatur, AL (headquarters); Little Rock, AR; Pittsburgh, PA; West Chester, PA; and Tyler, TX (www.stacktest.com).

“We are excited to partner with AST’s management team to build upon the success the company has achieved to date through consistently providing responsive customer service, accurate testing, and timely reporting,” said Robert Langley, Managing Partner at Align Capital Partners. “AST is a great fit with Align Capital Partners’ experience and operating resources, which help grow and professionalize founder-owned businesses.”

Align Capital Partners (ACP) makes control investments in companies that have from $3 million to $10 million of EBITDA. Sectors of interest include specialty manufacturing, distribution and business services. The firm was founded in 2016 by managing partners Steve Dyke, Robert Langley, and Chris Jones – all formerly of The Riverside Company – and has offices in Cleveland and Dallas (www.aligncp.com).

In September 2016, ACP held a first and final close of its inaugural private equity investment fund, Align Capital Partners Fund I, LP, and Align Capital Partners Fund I-A, LP. Align began fundraising in June 2016 with an initial target of $250 million and closed at its hard cap of $325 million.

Managing Partner Chris Jones and Vice President Jack Parks worked alongside Mr. Langley on the AST transaction.

Madison Capital Funding (www.mcfllc.com) provided financing for the transaction.

© 2016 Private Equity Professional

November 29, 2016