Archives for November 3, 2016

Kainos Closes Second Fund at Hard Cap

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Kainos Capital has closed Kainos Capital Partners II, LP with total equity commitments of $895 million. The new fund was oversubscribed and closed at its hard cap. The firm’s earlier fund closed in 2013 with $475 million of committed capital.

“We are very proud of the enthusiastic response to our second fund and the confidence placed in us by our limited partners,” said Andrew Rosen, Managing Partner of Kainos Capital. “This new fund will enable us to broaden the size of transactions that we pursue and give us even more resources to drive growth and profitability in companies through organizational development, customer and channel expansion, new product innovation, effective marketing programs, and operational improvement.”

Kainos Capital invests from $50 million to $150 million of equity in manufacturers and marketers of food products, as well as other consumer products in the household and personal care industries, and over-the-counter health and nutritional products sectors. The firm was founded in January 2012 and is based in Dallas (www.kainoscapital.com).

“We are extremely fortunate to have tremendous continuity in our investor base with overwhelming support from our Fund I investors,” said Sarah Bradley, a Partner of Kainos Capital. “Fund II has also selectively added some of the world’s largest pension plans, financial institutions, endowments, foundations, and family offices to what was already a distinguished group of investors.”

The Kainos team has extensive investment and operating experience in the food and consumer industry, having invested more than $2 billion of equity in more than 55 transactions with a total transaction value in excess of $8 billion.

Lazard (www.lazard.com) served as the placement agent for Fund II and Weil, Gotshal & Manges (www.weil.com) and Sidley Austin (www.sidley.com) served as legal counsel.

© 2016 Private Equity Professional • 11-3-16

Avante Backs Shoreview’s Buy of Spring USA

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Avante Mezzanine Partners provided a unitranche debt and an equity co-investment to support the acquisition of Spring USA Corporation by ShoreView Industries. ShoreView acquired Spring USA in a corporate carve-out from Fiskars Corporation in September 2016.

Spring USA is a designer and provider of foodservice equipment used in the hospitality sector. Spring’s products – sold through major institutional foodservice distributors – include buffet systems, induction cooking systems, mobile cooking stations, tableware, and cookware. Spring USA is headquartered in the Chicago suburb of Naperville (www.springusa.com).

“We are excited to partner with Avante in this transaction,” said Adam Reeves, Principal of ShoreView.  “We were impressed with their team and with Avante’s ability to provide a flexible capital solution that will foster growth.  We look forward to working with them on Spring USA and future transactions.”

Avante Mezzanine provides unitranche/one-stop debt, mezzanine, and minority equity investments of $5 million to $25 million to sponsored and non-sponsored companies with EBITDAs from $3 million to $15 million. Sectors of interest include aerospace and defense; business services; consumer products; distribution; education; healthcare and life sciences; industrial manufacturing; security products and services; software and IT services; and specialty chemicals and coatings.  Avante has offices in Los Angeles and Boston (www.avantemezzanine.com).

“We are excited to support Spring USA,” said Jeri Harman, Managing Partner and CEO of Avante.  “The company is a market leader in foodservice equipment with a long history of innovation and strong commitment to customer service.  We are also pleased to complete our first transaction with ShoreView, a firm with an experienced team and strong track record in industrial and industrial-related businesses.”

ShoreView Industries makes control and minority investments in US-based middle market companies that have revenues from $20 million to $300 million and operating profits from $5 million to $40 million. Sectors of interest include manufacturing, distribution and service providers.  The firm currently has $900 million of capital under management and is based in Minneapolis (www.shoreviewindustries.com).

© 2016 Private Equity Professional • 11-3-16

Freeport Financial Closes Fund III

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Middle market lender Freeport Financial Partners has held a final close of Freeport First Lien Loan Fund III, LP with equity commitments of $518 million. With targeted fund leverage, the new fund gives Freeport approximately $960 million of investible capital.

Limited partners in Fund III include public and private pension plans, insurance companies as well as endowments and foundations across North America and Europe. “We are pleased with the response to our most recent fund from both our existing and new investors to achieve a diversified base of limited partners,” said Josh Howie, Managing Director at Freeport.

As with earlier funds, Fund III will invest in directly originated and independently underwritten senior-secured first lien, floating rate loans to private equity-owned US middle market companies that have revenues between $25 million and $100 million and EBITDA between $3 million and $25 million. Over the past year, Fund III has already invested approximately 35% of its capital.

Freeport Financial was assisted on this fundraise by placement agent FIRSTavenue. “We would like to congratulate Freeport on a successful fundraise. We look forward to continuing our relationship with the team and we wish them continued success,” said Paul Buckley, Founder and Managing Partner of FIRSTavenue (www.firstavenue.com).

Freeport Financial, headquartered in Chicago, was acquired by investment bank and asset manager Moelis & Company in October 2012.

© 2016 Private Equity Professional • 11-3-16

Webster Hires and Promotes

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Webster Capital has hired Daniel Schultz as Vice President of Business Development and promoted Alicia Alexander to Vice President within the firm’s consumer group.

In his new position, Mr. Schultz will be responsible for Webster’s deal origination efforts, including building the firm’s relationships with company senior executives, investment bankers and other intermediaries.

Most recently, Mr. Schultz was the Director of Business Development at Capstone Partners where he oversaw Capstone’s national business development and industry coverage activities. Prior to Capstone, he was an analyst at Headwaters MB where he worked with business services clients on mergers and acquisitions, and he also worked at Ernst & Young as a professional in its assurance and advisory business services practice. Mr. Schultz has a degree in biomedical engineering from Vanderbilt University and an MBA from the University of Denver.

“I am very excited to be joining Webster Capital,” said Mr. Schultz. “I believe they are uniquely positioned to enjoy continued success as a private equity investor in the healthcare services and branded consumer sectors. I look forward to helping them build upon their efforts and remain one of the most active firms in these spaces.”

Ms. Alexander joined Webster in September 2014 from LaSalle Capital Group where she focused on buyout investments primarily in the food and beverage, outsourced business services, and value-added manufacturing sectors. At Webster she is responsible for evaluating new transactions and works on current consumer portfolio companies including Dover Saddlery, RIO Brands, Margaritaville Lifestyle Brands and Mondetta Performance Gear. Ms. Alexander is a graduate of the University of Notre Dame and Harvard Business School.

Webster Capital invests in branded consumer, business-to-business, and healthcare services companies with EBITDAs from $3 million to $15 million and transaction values from $20 million to $100 million. At present, Webster has $600 million under management and is currently investing its third fund which closed in 2014 with $400 million in capital commitments.  The firm was founded in 2003 and is based in the Boston suburb of Waltham (www.webstercapital.com).

© 2016 Private Equity Professional • 11-3-16

PNC Riverarch Invests in Five Star Food Service

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PNC Riverarch Capital has acquired Five Star Food Service from Navigation Capital Partners. HarbourVest Partners, Five Points Capital and the management team of Five Star were equity co-investors alongside PNC Riverarch.

Five Star is a provider of on-site food and beverage services to employers and other commercial, institutional, and educational locations across the southeastern United States. The company is a franchisee of Canteen Vending Services – the largest vending company in the US – and has more than 5,500 customers that operate in the vending, micro market (in-house self serve vending), office coffee, and dining industries. Five Star has 12 branches and employs over 700 people that staff 300 vending routes, serve 200 micro-markets, and operate 36 cafeterias. The company, led by CEO Al Recher, was founded in 1993 and is headquartered in Chattanooga, TN (www.fivestar-food.com).

Five Star also operates a culinary center in Lafayette, GA where the company processes and packages more than 5 million food items a year including sandwiches, wraps, hamburgers, hot dogs, salads, and desserts. These food items are sold through the company’s vending network as well as to other food vending operators.

The transaction for PNC Riverarch Capital was led by Michael Hand, Managing Director; Robert Dolan, Director; Patrick Sturm, Senior Associate; and Zachary Mittelmark, Associate. “In evaluating this transaction, we were particularly attracted to the company’s management team, market leadership position, and customer relationships,” said Mr. Hand. “We are immediately pursuing multiple add-on acquisition targets and have a healthy appetite for additional opportunities.”

PNC Riverarch invests from $10 million to $50 million in privately-held companies headquartered throughout North America. Sectors of interest include consumer products, outsourced services, specialized manufacturing and value-added distribution. PNC Riverarch is a division of PNC Capital Finance which in turn is a subsidiary of The PNC Financial Services Group (NYSE: PNC). PNC Riverarch is based in Pittsburgh (www.pncriverarch.com).

HarbourVest invests in venture capital, buyout, mezzanine debt, credit, and real estate through primary fund investments, secondary purchases, and direct co-investments. The firm has offices in Boston, London, Hong Kong, Tokyo, Bogotá, Beijing, and now Toronto (www.harbourvest.com).

Five Points Capital invests in equity and subordinated debt in lower middle market buyout, acquisition, growth and recapitalization transactions as a control investor on a standalone basis or as a co-investor with other financial sponsors.  Sectors of interest include business, healthcare and industrial services, niche manufacturing, value-added distribution and education and training. The firm is headquartered in Winston-Salem, NC (www.fivepointscapital.com).

Navigation Capital Partners (NCP), the seller of Five Star, invests in companies that have enterprise values below $75 million and revenues of under $150 million. Sectors of interest include specialty finance and payments; digital/media; industrial services; transportation and logistics; and value-added distribution. NCP is headquartered in Atlanta (www.navigationcapital.com).

The managers of NCP formerly founded and managed Mellon Ventures, the private equity investment partnership of Mellon Financial Corporation. With the backing of Goldman Sachs, NCP acquired the private equity portfolio of Mellon Ventures in December 2006. Mellon Ventures first invested in Five Star in 1996 and NCP recapitalized the company in 2009.

Senior debt financing for the transaction was provided by Twin Brook Capital Partners (www.twincp.com), NXT Capital (www.nxtcapital.com) and MidCap Financial Services (www.midcapfinancial.com).

© 2016 Private Equity Professional • 11-3-16

Insight Invests in Genstar’s Ministry Brands

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Ministry Brands, a provider of cloud-based technology for faith-based organizations and educational institutions, has signed an agreement for an investment by Insight Venture Partners. Ministry Brands is currently a portfolio company of Genstar Capital and Providence Equity. Upon closing of this transaction, Genstar will retain a minority investment in the company and Providence Equity will exit.

Ministry Brands is one of the largest providers of cloud-based services to churches, parachurch ministries and other faith-based organizations with more than 45,000 customers. Parachurch organizations are Christian faith-based organizations (businesses, non-profit corporations, or private associations) that work outside and across denominations to engage in social welfare and evangelism, usually independent of church oversight. Ministry Brands’ products include background checks, church management software, financial accounting software, messaging, coaching programs, giving and payment processing, and website development software. Ministry Brands was founded in 2012 and is based in Knoxville, TN (www.ministrybrands.com).

“Insight Venture Partners has a strong track record of building successful software companies, and we’re pleased to partner with them as we embark on our next stage of our growth,” said Ross Croley, Chief Executive Officer of Ministry Brands. “With the benefit of Insight’s knowledge and domain expertise, Ministry Brands will be able to further expand our solutions to support our customers and the ministries they serve.”

A unique part of the Ministry Brands’ investment agreement with Insight is that the two firms have agreed to form a foundation that devotes a portion of Ministry Brands’ profits to the work of its church and ministry partners.

“Ministry Brands has created a best-in-class business that delivers great value to faith-based organizations and educational institutions,” said Deven Parekh, Managing Director at Insight Venture Partners. “We look forward to working with the team to serve its loyal customer base and to invest in product innovation.”

Insight Venture Partners makes expansion and late stage investments in software, e-Commerce, internet and data-services businesses. Founded in 1995, Insight has raised more than $13 billion and made more than 250 investments. The firm is headquartered in New York (www.insightpartners.com).

Genstar, which had a final close in August 2015 of its seventh fund with $2 billion in commitments, invests from $50 million to $400 million in middle-market companies that have enterprise values from $50 million to $1 billion and EBITDAs greater than $15 million.  Genstar targets investments in the financial services, software, industrial technology, and healthcare industries.  The firm was founded in 1988 and is based in San Francisco (www.gencap.com).

Providence Equity Partners invests in the media, entertainment, communications and information industries and has approximately $40 billion of capital under management. The firm was founded in 1989 and is based in Providence, RI with additional offices in New York, London, New Delhi, Hong Kong, and Singapore (www.provequity.com).

© 2016 Private Equity Professional • 11-3-16

Salt Creek Buys Extranomical Adventures

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Salt Creek Capital has acquired Extranomical Adventures, a provider of sightseeing and touring services.

Extranomical’s services span Northern California and include tours of San Francisco, Alcatraz Island, Sausalito, Muir Woods, the Wine Country, Yosemite National Park, Monterey as well as a variety of combination packages that feature multiple destinations. The company was founded in 2002 by Rodrigo Enriquez and is headquartered in San Francisco (www.extranomical.com). Extranomical Tours is considered to be on the of the largest tour providers in Northern California.

Upon closing of the acquisition, Gary Lillian, a Salt Creek Capital Executive Partner, has been named as the new chief executive officer of the company.

“Extranomical is an exceptional company with a well-earned reputation for delivering distinctive tours to independent travelers visiting San Francisco from around the world,” said Mr. Lillian. “Rodrigo was the company’s first tour guide and to this day its tours reflect his passion for travel and a desire to provide experiences that are like traveling with friends. I look forward to working with the Extranomical team as we build upon this mission.”

Mr. Lillian joined Salt Creek Capital as an Executive Partner in 2015. Prior to joining Salt Creek, he was president of Javo Beverage Company, a start-up he grew to a profitable $35 million revenue company over a 10-year span. Previously, he held senior positions at Ford Motor Company, Jiffy Lube, Pizza Hut, Frito-Lay and The Clorox Company. Mr. Lillian has both a BA in economics and an MBA from Northwestern University.

Salt Creek invests in executive-led buyouts of companies with up to $100 million in revenue and EBITDA from $750,000 to $5 million. Sectors of interest are varied making the firm nearly industry agnostic but areas of specific interest include manufacturing, business and consumer services, distribution, and franchisors. The firm is based in Menlo Park (www.saltcreekcap.com).

© 2016 Private Equity Professional • 11-3-16