Archives for December 14, 2016

Wind Point Buys Plastic Film Maker

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Wind Point Partners has acquired Paragon Films, a maker of stretch films used in storage and transit applications.

According to Wind Point, Paragon is a market leading manufacturer of high performance cast stretch films that are used to unitize loads while in storage and transit. The company sells its products in all 50 states, as well as Canada, Mexico, South America and a number of other international locations. Paragon operates three manufacturing facilities: Broken Arrow, OK (opened at founding in 1988); Taylorsville, NC (opened in 2005); and Union Gap, WA (opened in 2013). The company was founded in 1988 by Mike Baab who will remain a significant investor and a member of the board under Wind Point ownership. Paragon is headquartered southeast of Tulsa in Broken Arrow (www.paragonfilms.com).

“Wind Point is the perfect fit with Paragon’s culture and core values,” said Mr. Baab. “This partnership will provide Paragon with the opportunity to pursue tremendous growth and will benefit our customers and employees which was my most important goal as I begin to transition into retirement.  I am thankful that Wind Point will allow Paragon to continue its vision and goals.”

As part of the transaction, Wind Point is partnering with Stan Bikulege, who will serve as Paragon’s non-executive Chairman, and Darin Tang, who will join Paragon as CEO.

Mr. Bikulege is a Wind Point advisor and the current Chairman and CEO of Novolex, a manufacturer of flexible paper and plastic packaging products.  Wind Point invested in Hilex Poly (Novolex’s predecessor) in 2012 and under Mr. Bikulege’s leadership the company grew from $500 million to over $2 billion in revenue.  In November 2016, Wind Point agreed to sell Novolex to The Carlyle Group.

Mr. Tang was most recently Senior Vice President of Strategic Packaging Solutions ($2.8 billion in revenue) at Veritiv, an Atlanta-based paper and packaging distributor that was formed in 2014 through the merger of International Paper’s XpedX and Unisource Worldwide. Prior to Veritiv, he was President of Unisource Worldwide’s Packaging Solutions Group ($1.3 billion in revenue) and oversaw over 650 employees across multiple countries.

“We are excited to acquire Paragon and invest in the next phase of its growth,” said Alex Washington, a Managing Director at Wind Point. “Mike Baab has built a phenomenal company with best-in-class technical leadership.  Wind Point has a proven strategy of working with family-owned companies to navigate leadership transition.  With Stan and Darin’s complementary experience and track records for creating value in the packaging and industrial film markets, we look forward to continued success.”

Wind Point invests from $20 million to $70 million of equity in companies with revenues from $100 million to $500 million and EBITDAs of at least $8 million. Industries of interest include business services, consumer products, healthcare and industrial products. Wind Point is an active investor in the packaging industry having recently acquired Burrows Paper (expected to close by year end), Heritage Bag (2016), Wisconsin Film & Bag (2015), Duro Bag (2014), and Packaging Dynamics (2014).

Financing for the transaction was provided by NewStar Financial, Antares, BMO Capital Markets, BlackRock Capital, and Northwestern Mutual Capital.  KPMG provided transaction advisory services to Wind Point on the transaction. Blaige & Company served as financial advisor to Paragon.

Wind Point Partners was founded in 1984 and is based in Chicago (www.wppartners.com).

© 2016 Private Equity Professional | December 15, 2016

Spell Invests in Deacro Industries

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Spell Capital Partners has made an investment in Deacro Industries, a maker of slitting machines, roll slitters, rewinders and material handling equipment that is used in the converting industry.

Roll slitting is a shearing operation that cuts a large roll of material into narrower rolls. There are two types of slitting: log slitting and rewind slitting. In log slitting the roll of material is treated as a whole and one or more slices are taken from it without an unrolling or re-reeling. In rewind slitting the roll of material is unwound and run through the slitter, passing through knives or lasers, before being rewound on one or more shafts to form narrower rolls.

“Deacro has been in business for over 37 years and makes a fantastic machine; there’s tremendous value in that,” said Bill Spell, President and Founder of Spell Capital. “Additionally, the converting/flexible packaging industry is growing and Deacro’s machines are critical components to any expansion plans.”

Spell Capital Partners makes control investments of $3 million to $15 million in industrial manufacturing companies with revenues of at least $5 million and EBITDAs of at least $1 million. The firm, through Spell Capital Mezzanine, will also make subordinated debt investments of $3 million to $10 million in companies with EBITDAs of at least $2 million. The firm is based in Minneapolis (www.spellcapital.com).

In October 2016, Spell closed on its oversubscribed fifth fund, Spell Capital Partners Fund V, LP, with $68 million of capital commitments. The investment in Deacro is Spell’s second platform investment for Fund V. The first platform was the February 2016 buy of Atlas Wire, a manufacturer of polyvinyl chloride, nylon, and cross-linked polyethylene insulated wire used in a variety of applications including in the automotive, machine tools, industrial machinery, building and fixtures, and military sectors.

Deacro was founded in 1979 and has a state-of-the-art 75,000 square foot facility located near Toronto in Mississauga, ON (www.deacro.com). The company is led by its CEO Ed de Boer.

© 2016 Private Equity Professional | December 15, 2016

PNC Builds Team

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PNC Bank has hired Daniel Morihiro and Patrick Simpson as new Senior Vice Presidents. In an additional move, Graham Holding, who has been with PNC since 2007, was promoted to Vice President on the firm’s senior secured financing team. Each of these three professionals will be responsible for business development and loan origination sourced from middle market companies and private equity groups.

Mr. Morihiro will be part of PNC’s senior secured financing team based in Pasadena. He is a 20-year veteran of banking and finance, most recently serving as senior vice president with BBVA Compass, originating cash flow and asset-based loans for middle market companies in southern California. He has his undergraduate degree in mechanical engineering from UCLA and an MBA from USC.

Based in New York, Mr. Simpson joins PNC with more than a dozen years of commercial banking experience with Wells Fargo Capital Finance, most recently as a business development officer responsible for middle market loan originations. He has an undergraduate degree and an MBA from the University of Florida. Mr. Simpson also served with honor in the United States Marine Corp.

Since 2007, Mr. Holding has held a variety of positions in field examination and portfolio management, managing relationships with PNC’s middle market clients. With this promotion, he will transition to the senior secured financing team based in Boston. Mr. Holding has both a Bachelor of Arts degree and a Bachelor of Science degree from Villanova University.

The senior secured financing team is part of PNC’s Corporate & Institutional Banking, a national provider of products and services for middle market customers. PNC Bank, headquartered in Pittsburgh (www.pnc.com), is a member of The PNC Financial Services Group (NYSE: PNC).

© 2016 Private Equity Professional | December 15, 2016

Wellspring Names New Partners

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Wellspring Capital Management has promoted Matthew Harrison and Seth Pearson to partner. Both were previously principals at the firm.

“We are very pleased to add Matt and Seth as partners. Over the years, both Matt and Seth have played an integral role in the growth and development of Wellspring and our portfolio companies. We look forward to their future contributions and continued success,” said William Dawson, Jr., CEO of Wellspring.

Mr. Harrison joined Wellspring in 2005 and has focused primarily on the consumer, industrial and services sectors. He joined Wellspring from Bear Stearns where he worked on a range of assignments including leveraged buyouts, strategic refinancings and M&A transactions across various sectors. Mr. Harrison graduated from Hamilton College (located near Utica in upstate New York) with a bachelor’s degree in Economics.

Mr. Pearson joined Wellspring in 2007 and has been most actively involved in the firm’s industrial products and healthcare investing efforts. He joined Wellspring from Wachovia Capital Markets where he participated in numerous financings of middle-market companies in support of both private equity and strategic acquisitions. Mr. Pearson has an undergraduate degree from Harvard.

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).

© 2016 Private Equity Professional | December 15, 2016

Incline Buys Midwest Industrial Rubber

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Incline Equity Partners has acquired Midwest Industrial Rubber (MIR), a supplier of lightweight conveyor belting and related components. The buy of MIR is Incline’s tenth transaction in 2016.

Midwest Industrial Rubber is a supplier of industrial maintenance, repair, and operations products, specializing in the fabrication and distribution of lightweight conveyor belting and related conveyor components and accessories. The company serves the conveyor maintenance, replacement, and overhaul needs of approximately 2,500 customers that are active in the manufacturing of non-discretionary consumer staples (such as food, personal care and hygiene products). MIR was founded in 1980 and is headquartered in St. Louis (www.mir-belting.com).

According to Incline, MIR is the largest independent lightweight belting fabricator/distributor in the US. The company has a domestic network of 15 sales and fabrication facilities and provides 24/7 service to customers. “MIR is a leading provider of conveyor belting with strong design and engineering abilities and an impressive track record of growth,” said Jack Glover, a Partner with Incline.  “The company has an expansive service offering across a variety of very stable end markets.  We know the conveyor industry well, and we quickly saw the value in MIR’s market position.”

Incline invests from $15 million to $30 million in support of recapitalizations, buyouts and corporate divestitures of lower middle market companies that have EBITDAs greater than $5 million and enterprise values between $30 million and $150 million. Sectors of interest include value-added distribution, specialized light manufacturing, and business and industrial services.  Incline was formed in 2011 and is based in Pittsburgh (www.inclineequity.com).

“We were looking for a partner that understood our business and our industry,” said Mike Bruhn, Chief Executive Officer of MIR.  “We are well-positioned for multiple avenues of growth.  Incline has a history of helping companies like ours prioritize and plan growth initiatives.  That experience should allow us to grow faster and expand our national footprint.”

According to John Morley, Vice President with Incline, the firm will assist MIR in developing existing locations, opening new locations and pursuing add-on acquisitions in MIR’s fragmented market.

Prestwick Partners (www.prestwickpartners.net) was the financial advisor to Midwest Industrial Rubber on this transaction.

© 2016 Private Equity Professional | December 14, 2016