Archives for November 9, 2016

Plexus Hits Target with Fund IV

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Plexus Capital has held a final closing of Plexus Fund IV at the targeted amount of $400 million. The firm began fundraising in June and had a first close in August.

Fund IV has about 150 limited partners, 89 of which were also investors in earlier funds. Banks and institutions make up about 65% of the new fund’s limited partners with the balance composed of high net worth individuals and family offices.

“The strong support from our existing and new investors is a reflection of the quality of our team, our differentiated strategy and consistent track record through volatile economic cycles,” said Plexus Managing Partner Michael Painter. “We look forward to leveraging our now more than two decades of experience as a team to continue supporting the growth of lower-middle market companies across the United States.”

Plexus invests from $1 million to $20 million of subordinated debt and equity in companies that have revenues of at least $15 million and cash flows of at least $2 million. Sectors of interest include business services; consumer services; healthcare; manufacturing; value-add distribution and other general industry.

Deal flow for Plexus has been very strong this year and annually the firm reviews about 1400 opportunities and closes about 10. The firm has eight term sheets in the market and two transactions signed up and proceeding to close.  Partner Mike Becker leads the five-member business origination team.

Since its founding in 2005, Plexus has invested $562 million in 77 companies across its four funds.  Plexus Fund I, an $80 million 2005 vintage fund, has a realized a 10.5% net annualized returns to investors.  Plexus Fund II, a $175 million 2009 vintage fund, has returned 19.6% net annualized returns to investors to-date.  Plexus Fund III, a $300 million 2013 vintage fund, is now 96% deployed in 28 companies.

Plexus has a team of 19 professionals – two more will be joining the team by year end – and has offices in Charlotte and Raleigh, NC (www.plexuscap.com).

Curt Brewer, a Partner at Raleigh-based Smith Anderson provided legal services (www.smithlaw.com).

Plexus did not use a placement agent to raise Fund IV.

© 2016 Private Equity Professional • 11-9-16

Gemspring Closes Debut Fund

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Lower middle market investor Gemspring Capital has held a final closing of its debut fund, Gemspring Capital Fund I LP, with $350 million of capital commitments.

According to Gemspring, the new fund was oversubscribed and closed at its hard cap after just three months of fundraising. Limited partners are composed of endowments, foundations, family offices, gatekeepers, pension plans and fund of funds.

“We could not be more pleased with the support and quality of our investors and the efficiency of the fundraising process,” said Bret Wiener, the Managing Partner of Gemspring. “We are excited to execute on our operationally-focused investment strategy and help transform businesses to achieve their full potential.”

Gemspring invests in companies that have revenues from $25 million to $250 million. Sectors of interest include business and industrial services; distribution and logistics; healthcare services; specialty manufacturing; and media, technology and software. The firm is based in Westport, CT (www.gemspring.com).

Acalyx Advisors (www.acalyx.com) served as Gemspring’s placement agent. “We appreciate that in this crowded market, limited partners have significant choice as to where they invest their capital, and it was clear that Gemspring’s strategy and the team’s long record of outstanding executive references stood out in a meaningful way,” said Jennifer Cho Rinehart, a Partner and CEO of Acalyx.

Kirkland & Ellis – led by John Muno, Bruce Ettelson and Noah Mulli – served as legal counsel to Gemspring.

© 2016 Private Equity Professional • 11-9-16

Topspin and Motivity Buy Palmetto Moon

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Topspin Partners and Motivity Capital Partners have acquired Palmetto Moon, a specialty retailer of men’s, women’s and children’s apparel.

Palmetto Moon operates eleven stores across South Carolina, Georgia and North Carolina and sells men’s, women’s and children’s apparel, accessories and footwear. The company was founded by Bob and Karen Webster and is headquartered in Charleston, SC (www.palmettomoononline.com).

With the closing of the transaction, Mr. and Mrs. Webster will be stepping back from their day-to-day roles within the company, but will continue to serve the company in advisory roles.

Under Topspin and Motivity ownership, the company’s management team will be led by CEO Eric Holzer, who took over the role in 2016 from Mr. Webster and has over 14 years of experience with Palmetto Moon, serving in nearly every area of the organization. “Palmetto Moon has become a strong regional player in the specialty retail market over the last 15 years, growing to eleven stores across South Carolina, Georgia and North Carolina. I am excited about partnering with Topspin to continue growing Palmetto Moon’s footprint,” said Mr. Holzer.

“We are very impressed with the business the Websters have built and the growth that the company has achieved to date, and we see great potential for continued expansion within the southeast and beyond,” said Steve Lebowitz, Managing Partner at Topspin. “We are excited to partner with Eric and the company’s management team to capitalize on that potential and accelerate the company’s growth.”

Topspin Partners makes control investments in profitable and established lower middle-market businesses. Sectors of interest include health and wellness, niche consumer, food and beverage, business services and security. The firm is based near New York in Roslyn Heights, NY (www.topspinpe.com).

Motivity Capital Partners invests in specialty retail companies that have revenues of $10 million to $250 million and EBITDA of at least $1.5 million. Retail sectors of specific interest include apparel & footwear; consumer products; medical practices (optical, dental and podiatry); consumer products; service companies; and incentive marketing. The firm is based near Dallas in Irving, TX (www.motivitycapital.com).

“We are excited to team up with Topspin and the management team at Palmetto Moon. The company’s dynamic merchandising concept led by their strong management team has produced outstanding results and we look forward to working with them to grow the business,” said Jack Gunion, a Partner at Motivity.

© 2016 Private Equity Professional • 11-9-16

O2 Adds-On to Alpha Sintered Metals

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Alpha Sintered Metals, a portfolio company of O2 Investment Partners since January 2014, has acquired Precision Compacted Components.

Precision Compacted Components (PCC) is a producer of sintered metal products used in automotive variable valve timing and variable cam timing applications. Sintering is the process of compacting and forming a solid mass of material by heat or pressure without melting it to the point of liquefaction. PCC was founded in 1994 and is headquartered 130 miles northeast of Pittsburgh in Wilcox, PA. The company, led by CEO Hugh Dornisch, has an additional facility in nearby St. Marys, PA (www.pccpm.com).

Alpha Sintered Metals (ASM) is a designer and manufacturer of powdered metal components, such as spur, bevel, and helical gears; sprockets, cams, and flanges. These components are used primarily in small engines, transmissions and mechanical drive applications for the outdoor power equipment (including lawn and garden), automotive, and general industrial markets. The company is headquartered in Ridgway, PA (www.alphasintered.com).

This is the second add-on acquisition completed by ASM this year. In May 2016 the company acquired Precision Made Products (PMP), a producer of sintered metal parts used in the medical, aerospace, and firearms markets. PMP is headquartered in Brunswick, OH (www.pmp-tech.com).

Each of ASM, PCC and PMP remain as separate operating companies but are owned by Alpha Precision Group (APG), a holding company formed by O2 Investment Partners.

“The PCC management team is highly respected within the industry and has worked closely with the ASM management team in the past,” said Jay Hansen, Managing Partner of O2 Investment Partners. “We are very excited about the opportunities for growth created by bringing these three businesses together under the APG umbrella. In this case, one plus one plus one truly equals five for this family of businesses.”

“PCC is a highly regarded supplier in the variable valve timing and variable cam timing market segment. Alpha Sintered Metals is primarily focused on providing products that are consistent with reducing emissions, improving fuel economy, and enhancing engine performance, thus making PCC an ideal strategic fit. We are thrilled to add PCC and their variable valve and variable cam technology and expertise to the APG portfolio and look forward to expanded participation in this high-growth segment,” said JoAnne Ryan, CEO of Alpha Precision Group.

O2 Investment Partners makes control investments in companies with EBITDAs from $2 million to $10 million located anywhere in the US and Canada but has a preference for the Midwest and the Great Lakes regions. The firm’s typical transaction size is $5 million to $75 million. Sectors of interest include niche manufacturing, niche distribution, select service businesses, and certain technology businesses. O2 Investment Partners is based in the Detroit suburb of Bloomfield Hills (www.o2investment.com).

© 2016 Private Equity Professional • 11-9-16

Southfield Capital Adds On to Vanguard

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Vanguard Dealer Services, a portfolio company of Southfield Capital, has acquired Centurion Automotive Products, a seller of finance and insurance products to automobile dealerships in the Northeast.

Centurion offers third party vehicle service contracts and provides consulting services to dealerships. The company also distributes vehicle appearance protection products.  Centurion is based in Syracuse, NY (www.centurionauto.net). The senior management team, led by CEO Mark Fiorini, will continue in their operational roles with the company.

“We are very excited to partner with an organization with such deep roots in the finance and insurance industry. Centurion’s long history in the Northeast is a testament to its customer-centric focus and the value it creates for the dealers it services. Mark Fiorini and his team are excellent additions to the Vanguard platform and we will look to leverage them in our ongoing pursuit to create a best-in-class service offering,” said Jim Polley, CEO of Vanguard.

Vanguard is an agent and administrator of finance and insurance products and services to franchised automobile dealers.  Vanguard offers a portfolio of proprietary and third party auto extended warranty (vehicle service contracts) and ancillary products such as tire protection, key replacement, dent repair and pre-paid maintenance.  The company also offers other financial and insurance consulting services to dealers such as training, compensation plan development, reinsurance, incentive management, sales strategy, compliance review, and staffing.  Vanguard was founded in 1999 and is headquartered just west of New York City in Fairfield, NJ (www.vanguarddealerservices.com).

Southfield Capital provides capital for majority recapitalizations and management-led buyouts of lower middle-market businesses. The firm makes control investments of $10 million to $40 million of equity in transactions with $20 million to $100 million of enterprise value. Typical target companies will have from $4 million to $12 million of EBITDA.  Sectors of interest include: business services; consumer products & services; distribution & fulfillment; energy; healthcare; media & entertainment; niche manufacturing; power & infrastructure; specialty finance; and specialty retail.  Southfield Capital was founded in 2005 as the successor company to the private investment firm Levison & Company and is headquartered in Greenwich, CT (www.southfieldcapital.com).

East West Bank (www.eastwestbank.com) provided the senior debt financing for this transaction. East West provided the original senior financing when Southfield acquired Vanguard in August 2015. Finn Dixon & Herling (www.fdh.com) was the legal advisor to Vanguard.

© 2016 Private Equity Professional • 11-9-16