Archives for November 11, 2016

Morgenthaler Closes Oversubscribed Fund 2

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Morgenthaler Private Equity (MPE) has held a final closing of its oversubscribed second fund, MPE Partners II, LP, at the hard cap of $250 million.  Fundraising began in April 2016 and MPE did not use a placement agent.

More than 30 investors committed to Fund II and included global asset management firms, insurance companies, family offices, foundations, and high net worth individuals. “We are extremely proud of the quality of our existing and new limited partners and are gratified by their strong support.  In addition, we’re very pleased that all of the institutional investors in Fund I committed to Fund II,” said Peter Taft, a Partner at MPE.

MPE invests in lower middle market companies that are valued from $25 million to $150 million and have EBITDAs in excess of $5 million. Sectors of interest include high-value manufacturing and industrial services.

“We continue to find great investment opportunities through our extensive network of relationships who value our experienced team, focused investment strategy, and proven approach to post-closing value creation,” said Karen Tuleta, a Partner at MPE.

MPE’s current portfolio includes: B&E Group, a manufacturer of machined components used in aerospace and defense applications and a provider of overhaul and repair services for commercial aviation (acquired in 2015); dlhBOWLES, a designer and manufacturer of engineered plastics products used in fluid flow applications in the automotive, consumer, and industrial markets (2014); Polytek, a manufacturer of specialty chemicals used in industrial and consumer applications (2015); Trachte, a maker of preassembled and modularized buildings used in the power generation, energy, chemical processing, data center, and general industrial end markets (2015); and United Pipe & Steel, a distributor of steel pipe, copper tubing, plastic pipe, and electrical conduit (2013).

MPE has offices in Cleveland and Boston (www.mpepartners.com).

© 2016 Private Equity Professional • 11-11-16

New Managing Directors at Sterling

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Sterling Partners has promoted Kim Vender Moffat and Michael Drai from Principal to Managing Director. Sterling invests growth capital in small and mid-market companies in industries with positive, long-term trends, including education, healthcare, and business services.

Ms. Moffat is a member of the investment team with a focus on the healthcare services sector. During her time at Sterling, she has held leadership positions and made material contributions to firm strategy, including leading two fundraising efforts totaling over $1.2 billion in raised capital. Ms. Moffat first joined Sterling Partners in 1999 then left the firm in 2003 to pursue an MBA and law degree at Northwestern University.  After graduation in 2006 she joined McKinsey & Company before rejoining Sterling in 2008. Ms. Moffat has her undergraduate degree from Harvard.

“Kim’s ability to form meaningful partnerships with investors, founders and management, her thoughtful insight and unique style, and now her leadership as part of the healthcare services team, provides tremendous value to both the firm itself and everyone who works with her,” said Danny Rosenberg, a Sterling Managing Director.

Mr. Drai joined Sterling in 2008 and has been integral in the development of Sterling’s business services practice, including identification and due diligence of new acquisitions and management and oversight of the firm’s investment portfolio. Prior to Sterling, he worked at GTCR, Allen & Company and Salomon Smith Barney. Mr. Drai has a BS in finance from the University of Illinois and an MBA from Northwestern University.

“At Sterling, we look for professionals who are differentiated, proven and committed to growth. Michael is the embodiment of that,” said Alan Macksey, a Sterling Managing Director. “Michael has been central to influencing our investments in the middle-market business services sector, particularly in honing our focus on industrial, energy and maintenance services. In his new and well-deserved role, we will continue to lean heavily on Michael to position Sterling for growth and long-term success.”

Sterling Partners was founded in 1983 and has offices in Chicago, Baltimore, and Miami. The firm manages over $5 billion in institutional capital (www.sterlingpartners.com).

© 2016 Private Equity Professional • 11-11-16

J.F. Lehman Completes NRC Add On

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National Response Corporation, a portfolio company of J.F. Lehman & Company, has acquired Boom Technology, a provider of environmental response services.

Boom Technology (BTI) is a marine and land environmental contractor that serves government agencies, commercial facilities, and residential customers in Maine and New Hampshire. Areas of specialization include inland and offshore marine hazardous material and oil spills; soil contamination and remediation; commercial and private vehicle and vessel accidents; natural and environmental disasters; pipeline ruptures and industrial fires; oil spill containment, cleanup and boom maintenance; facility decontamination; marine equipment and cargo decontamination; and road accidents and railroad derailments.

Two examples of work completed by BTI include responding to the Deepwater Horizon oil spill in 2010 and oils spills caused by Hurricane Sandy in 2012. BTI was founded in 2001 by Jim Fox to provide maritime oil spill containment and remediation services. The company is based in Gorham, ME (www.boomtechnologyinc.com).

NRC is a provider of environmental, emergency response, and industrial services, including industrial cleaning and maintenance, HAZMAT emergency response, oil spill response and cleanup, industrial firefighting and rescue, waste management, site remediation, and abatement. NRC is the largest commercial oil spill response organization in the US and has operations worldwide. The company has approximately 1,000 employees and is headquartered on Long Island in Great River, NY with regional offices throughout the US and internationally (www.nrcc.com). NRC is led by Paul Taveira, its Chief Executive Officer.

“NRC has continued to expand its geographic presence and service offering in recent years and the addition of Boom-Tech strengthens our capabilities in the Northeastern US,” said Mr. Taveira. “We are very happy to welcome the Boom-Tech team and look forward to continuing to grow NRC’s business in this region.”

This is the seventh add-on acquisition completed by NRC since J. F. Lehman acquired the company in March 2012. “NRC has demonstrated strong growth by expanding its geographic footprint and depth of service offerings since our acquisition of the company in 2012.  Boom-Tech is a continuation of this strategy and brings a strategic facility in Maine as well as new customer relationships to NRC’s portfolio,” said Alex Harman, a Partner at J.F. Lehman & Company.

J.F. Lehman & Company is a middle-market private equity firm focused primarily on the maritime, defense, and aerospace sectors. The firm was founded by Dr. John Lehman, who served six years as Secretary of the United States Navy. To date, J.F. Lehman has made investments in companies with an aggregate transaction value of approximately $1.6 billion. The firm was founded in 1992 and is headquartered in New York with additional offices in Washington DC and London (www.jflpartners.com).

© 2016 Private Equity Professional • 11-11-16

Wynnchurch Sells JAC Products

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Wynnchurch Capital has completed the sale of JAC Products to Argonaut Private Equity and Hall Capital. Wynnchurch acquired JAC Products in December of 2010 from Annex Capital Management.

JAC Products is a designer and manufacturer of a roof racks, cargo management systems, assist steps and other similar functional components. The company’s aluminum, plastic and steel products are sold to automotive OEMs worldwide and used on more than 110 different platforms. JAC operates manufacturing facilities across North America, Europe and Asia. The company was founded in 1967 and is headquartered west of Detroit in Saline, MI (www.jacproducts.com).

“We are thankful to have partnered with a world class management team to capitalize on JAC’s leading market position and drive significant operational improvement,” said Ian Kirson, a Partner at Wynnchurch. “These efforts significantly increased earnings and allowed us to realize an outstanding return for our investors. It is satisfying to see our combined efforts produce a company that is the clear industry thought leader and is well positioned to enter its next phase of growth.”

“Since Wynnchurch acquired the company in 2010, JAC has gone through a multi-year transformation. The senior management team, with assistance from Wynnchurch, has taken steps to improve the business including developing a culture of transparency, problem solving and continuous improvement, increasing profitability through the elimination of waste and improving productivity, and focusing the company on customer quality and product innovation,” said Mike Wood, JAC’s CEO.

Wynnchurch Capital makes investments of $10 million to $90 million in middle-market companies that have revenues of $5 million to $500 million. Sectors of interest include niche manufacturing, business and industrial services, energy and power services, logistics, transportation and value-added distribution. The firm was founded in 1999 and is located in the Chicago suburb of Rosemont with additional offices in Detroit (Bloomfield Hills), Los Angeles (El Segundo), and Toronto (www.wynnchurch.com).

Argonaut Private Equity makes investments of $1 million to $200 million in companies in the consumer electronics, specialty materials, telecommunications, software, aviation, and healthcare industries. Argonaut’s portfolio includes investments in the United States, China, Israel, Japan, Eastern Europe and Australia. The firm has $3.5 billion of assets under management and is based in Tulsa (no website found).

Hall Capital Partners (HCP) is the private equity affiliate of Hall Capital, a private investment company owned by the Hall family. HCP makes control or non-control investments of $2 million to $25 million in manufacturing, distribution, or service companies with revenues of $10 million to $100 million and operating profit of at least $1 million. The firm has raised three private equity funds with a total of $250 million of committed capital from the Hall family and outside partners, both individual and institutional. HCP has offices in Oklahoma City, Chicago (Lake Forest), Nashville, and New York (www.hall-capital.com).

Quarton International (www.quartoninternational.com) was the investment banking advisor to JAC Products on this transaction.

© 2016 Private Equity Professional • 11-11-16

AlixPartners Sold by CVC

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CVC Capital Partners has agreed to sell global business advisory firm AlixPartners to a new investment group formed by founder Jay Alix, Caisse de dépôt et placement du Québec (CDPQ), Public Sector Pension Investment Board (PSP Investments) and Investcorp Group. CVC acquired AlixPartners in June 2012 through its fifth fund.

This transaction values AlixPartners at more than $2.5 billion and is expected to close by year end. AlixPartners’ senior leadership team will continue to hold a large equity interest in the firm.

“We are delighted to welcome CDPQ, PSP Investments and Investcorp as long-term shareholders,” said Simon Freakley, Chief Executive Officer of AlixPartners. “Their commitment will allow us to continue to grow our business and best serve our clients. We are now in our 35th year and, with revenues of $1 billion, AlixPartners is on a great trajectory.”

AlixPartners advises its Fortune 500 and middle-market clients on financial and operational performance; corporate turnarounds and restructurings; litigation consulting; forensic accounting; and information management services. The firm was founded in 1981 and has more than 1600 professionals in 25 offices. The firm was founded in 1981 and is headquartered in New York (www.alixpartners.com).

“Over the past 35 years, AlixPartners has developed expertise that is now sought after worldwide and helps companies stay on the leading edge in highly competitive markets. The resilient nature of its activities and its strongly diversified business model make it an attractive investment for CDPQ. By working with partners that share our long-term vision, we aim to support AlixPartners’ growth for many years to come and help further expand the firm’s footprint and capabilities,” said Roland Lescure, Chief Investment Officer and Head of Private Equity at CDPQ.

CDPQ is a Quebec-based institutional investor that manages funds primarily for public and para-public pension and insurance plans. As at June 30, 2016, it held C$255 billion in net assets. CDPQ invests globally in major financial markets, private equity, infrastructure and real estate (www.cdpq.com).

PSP Investments is one of Canada’s largest pension investment managers with C$117 billion of net assets under management. PSP has been investing in private equity since 2004 and has approximately C$10 billion of private equity assets under management. PSP manages pension investments for the Federal Public Service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force. PSP has offices in Montreal, New York and London (www.investpsp.com). Guthrie Stewart, Senior Vice President and Global Head of Private Investments, led the transaction for PSP.

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

CVC Capital Partners currently manages over $33 billion of assets and funds managed or advised by CVC are invested in 51 companies worldwide. The firm, founded in 1981, is based in London and has a network of 24 offices and 340 employees throughout Europe, Asia and the United States (www.cvc.com).

Bank of America Merrill Lynch, Deutsche Bank and Goldman Sachs acted as financial advisors to AlixPartners and CVC.

© 2016 Private Equity Professional • 11-11-16