Archives for February 2, 2017

Huron Closes Fund V

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Huron Capital Partners has closed the firm’s fifth fund, The Huron Fund V, LP, with $550 million of total limited partner capital commitments.

The new fund closed at its hard cap and in excess of its $500 million target. The final close was reached after just three months of marketing and was oversubscribed with over $1 billion of demand. Limited partners in the new fund included endowments, foundations, multi-manager funds, public pensions, corporate pensions and family offices. The firm’s earlier fund, The Huron Fund IV, LP, closed with $500 million of total commitments in January 2013.

Huron invests up to $70 million per transaction in middle market companies that have revenues up to $200 million and EBITDAs of $5 million or more. Sectors of interest include specialty manufacturing, business services, consumer goods & services, and healthcare. The firm is led by its senior partners Brian Demkowicz, Michael Beauregard, John Higgins and Peter Mogk. Huron was founded in 1999 and has offices in Detroit and Toronto (www.huroncapital.com).

“We deeply value the tremendous confidence and broad support that our new and existing investors have placed with our experienced investment team and remain focused on delivering strong returns to our LP base,” said Mr. Demkowicz. “We look forward to deploying our buy-and-build strategy in partnership with seasoned executives to improve and grow our businesses through strategic initiatives, operational improvements and add-on acquisitions.”

Sixpoint Partners was the placement agent on this fundraise. “With over $1 billion of demand for Fund V, we believe Huron’s 16-year track record drove robust demand from investors for its disciplined investment process and proven strategy,” said Eric Zoller, a Partner at Sixpoint. “Huron is an excellent representative of Sixpoint’s exceptional relationships in the lower middle market for our LPs.” Just last month, Incline Equity Partners with Sixpoint as its placement agent, held a final close of its fourth fund with $601 million of total capital commitments. Sixpoint is headquartered in New York with offices in Chicago, San Francisco and Hong Kong (www.sixpointpartners.com).

Kirkland & Ellis (www.kirkland.com) counseled Huron on the formation of this fund. The Kirkland team was led by investment funds partners Nicholas DiCrescenzo and Bruce Ettelson and associates Zachary Oswald and Michael Wester; and included investment management partner Michael Chu; and tax partner Daniel Meehan. In the past three years alone, Kirkland has advised nearly 300 private investment fund sponsors, raising more than 400 funds representing in excess of $315 billion of capital commitments.

© 2017 Private Equity Professional | February 2, 2017

Riverside Sells YourMembership to Insight

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After a five year hold, The Riverside Company has sold YourMembership, a SaaS provider of membership management software, to Ministry Brands, a portfolio company of Insight Venture Partners since December 2016.

YourMembership.com is a SaaS provider of membership management software, learning management software, online career centers, websites, event management, and online social communities. The company’s products are used by its customers – mainly member-based organizations, such as associations, non-profits, chambers, and corporate groups – to attract more members, reduce costs, and increase revenue. The company was founded in 1998 and is headquartered in St. Petersburg, FL (www.YourMembership.com).

YourMembership saw growth in both sales and EBITDA during Riverside’s ownership driven in part by three add-on acquisitions, which enhanced the company’s product capabilities, expanded its customer base, and strengthened its management team. The company’s revenues and EBITDA increased roughly eight-fold and seven-fold, respectively, since 2011. The three add-on acquisitions completed by Riverside were Digital Ignite (Lombard, IL) in January 2015; JobTarget’s Career Center Business Unit (New London, CT) in September 2014; and Affiniscape (Austin, TX) in December 2012.

“Coupled with excellent organic growth, the integration of three key add-ons helped transform YourMembership during the Riverside hold period,” said Riverside Managing Partner Loren Schlachet. “Working with an outstanding management team at YourMembership helped us rapidly scale the business. They were true innovators in their industry.”

Riverside Partner Joe Manning said that investments in product development, sales and marketing, and geographic expansion helped drive rapid growth. “When we invested in YourMembership in January 2012, it was a single product company with a relatively small base of employees and revenue, a single office location, and a limited product development team,” said Mr. Manning. “Fast forward five years, and YourMembership has been transformed into a multi-product company with over 300 employees, six offices including offices in Europe and Asia, a global base of over 4,000 customers, and a market leadership position that will enable the company to continue its rapid growth trajectory.”

Ministry Brands, the buyer of YourMembership, 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).

Working with Mr. Schlachet and Mr. Manning on the transaction for Riverside were Operating Partner John Kish, Finance Director Lynda Barr and Associate Rahul Mohan.

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 450 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).

Harris Williams (www.harriswilliams.com) was the financial advisor to Riverside on the transaction.

© 2017 Private Equity Professional | February 2, 2017

PNC Riverarch Sells CMP

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PNC Riverarch Capital has sold its portfolio company Custom Molded Products to Tenex Capital Management. PNC Riverarch and Florida Capital Partners acquired Custom Molded Products in November 2013.

Custom Molded Products (CMP) is a manufacturer and distributor of plastic components used in spas, pools, and whirlpool baths. The company offers over 3,500 SKUs and is focused on outward-facing components such as jets and filters. CMP has over 350 active customers, including spa OEMs and pool distributors. The company was founded in 1989 by Bill Drury and Charles Li and is headquartered 40 miles southwest of Atlanta in Newnan, GA (www.c-m-p.com).

During PNC Riverarch’s ownership term, CMP significantly grew revenue and profitability. “We had a very positive experience with PNC as an equity partner,” said Bill Drury, President and CEO of CMP. “They made crucial contributions to the company’s growth and development over the past three years. And personally, I respect and appreciate that PNC took a forward looking approach to our business that positioned CMP for continued success in the future.”

“PNC’s investment in CMP is consistent with our strategy of investing in companies protected by a sustainable competitive advantage and then partnering with management to execute a multifaceted growth strategy,” said Mike Hand, a Managing Director at PNC. “It was a true pleasure to work with the CMP team, and we are very excited for the company as it embarks on its next chapter of growth.” The transaction for PNC Riverarch was led by Mr. Hand along with Rob Dolan, Director; David Poss, Senior Associate; and Zachary Mittelmark, Associate.

PNC Riverarch invests from $10 million to $50 million in privately-held companies headquartered throughout North America. Sectors of interest include 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).

Tenex Capital Management, the buyer of CMP, 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).

Charlotte-based investment bank Fidus Partners (www.fiduspartners.com) was the financial advisor to CMP.

© 2017 Private Equity Professional | February 2, 2017

Sterling Adds On to Axle and Brake Biz

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DexKo Global, a portfolio company of The Sterling Group, has acquired the axle, brake and actuation business assets of Tie Down Engineering. Dean Samuelson, President of Tie Down Engineering, will continue to lead the acquired business.

DexKo Global began when The Sterling Group acquired the Dexter Axle business from Tomkins Industries in November 2012. Dexter – based in Elkhart, IN – is a designer and manufacturer of trailer axles, brake, and suspension assemblies and related replacement parts and components that are used in the utility trailer, recreation vehicle, heavy duty, manufactured housing, agricultural, marine, and specialty trailer markets (www.dexteraxle.com). In January 2016, Dexter Axle acquired AL-KO Vehicle Technology, a Kötz, Germany-based designer and manufacturer of trailer axles, trailer and caravan components, and chassis (www.al-ko.us). The Sterling Group combined the two companies under the umbrella of DexKo Global (www.dexko.com). DexKo Global is led by CEO Fred Bentley.

Tie Down Engineering was founded in 1969 by Chuck MacKarvich and serves the construction, utility, industrial & marine markets.  With the conclusion of this transaction with DexKo Global, Tie Down will continue to operate, providing products and services through its manufactured housing, roofing, marine and industrial laser divisions. Tie Down is based in Atlanta (www.tiedown.com).

“By adding Tie Down’s axle, brake and actuation products to our marine product portfolio, we continue to improve our industry leading portfolio of customer solutions.  This acquisition broadens our aftermarket offering and as all of our recent acquisitions have done, allows us further growth in adjacent areas,” said Mr. Bentley. “I want to congratulate Chuck on the great business he built and we look forward to taking it to a new level of performance.”

Prior to the close of the buy of the Tie Down Engineering assets, DexKo Global acquired Rockwell American from Polar Corporation, a portfolio company of American Industrial Partners, in September 2016. Rockwell American is a manufacturer and distributor of trailer components, including axles, leaf springs, fenders, tires and wheels, jacks and couplers, and a variety of other components. Rockwell American has 400 employees, five manufacturing locations and operates 16 distribution branches across the US and is headquartered northwest of Ft. Worth in Azle, TX (www.rockwellamerican.com).

DexKo Global now has annual revenues that exceed $1 billion. It has been reported that The Sterling Group has engaged investment bank JPMorgan Chase to sell the company which could realize an enterprise value of approximately $1.6 billion.

The Sterling Group targets controlling interests in manufacturing, industrial services and distribution companies that have enterprise values from $100 million to $500 million.  The firm emphasizes an operational approach in partnership with management teams to grow and improve the companies it acquires.  Sterling was founded in 1982 and is headquartered in Houston (www.sterling-group.com).

© 2017 Private Equity Professional | February 2, 2017

Littlejohn Completes Buy of Crescent’s Brown Jordan

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Littlejohn & Co. has completed its December 2016 announced acquisition of Brown Jordan International, a manufacturer of indoor and outdoor furniture sold to the commercial and consumer markets.

Brown Jordan International (BJI) operates four divisions – Brown Jordan, Charter, Texacraft, and Tropitone – that collectively sell a complete line of indoor and outdoor furnishings primarily for use in hospitality, leisure, multi-family, corporate, restaurant and other commercial environments. The company also sells into the consumer market but this is a sidelight to the company’s commercial operations. BJI, headquartered in St. Augustine, FL (south of Jacksonville), was founded in 1945 and today has approximately $300 million of annual sales (www.bji.com).

“BJI’s low-cost, domestic manufacturing and distribution footprint is a strategic asset and we welcome Littlejohn’s expertise and support to help us execute on a number of high-return continuous improvement initiatives to deliver even more value to our customers,” said Gene Moriarty, Chief Executive Officer of BJI.

“Brown Jordan is an iconic brand and BJI is a unique platform in the outdoor and indoor furniture market,” said David Simon, a Managing Director of Littlejohn.  “We are excited to partner with BJI’s management team to drive the company’s next leg of growth.”

Littlejohn acquired BJI from Crescent Capital. Crescent‘s involvement with BJI dates back to 2006 when BJI was a portfolio company of Trivest.  An overleveraged balance sheet led to a 2006 out of court restructuring of the company’s debt and equity by Trust Company of the West (TCW). In January 2011, Crescent Capital spun out of TCW but retained the investment in BJI as part of its portfolio.

Crescent Capital is active in investing in below investment grade credit opportunities. Crescent was founded in 1991 by Mark Attanasio and Jean-Marc Chapus. In 1995, Crescent was acquired by TCW and rebranded as TCW’s Leveraged Finance Group. On January 1, 2011, Messrs. Attanasio and Chapus, along with the entire investment team, spun out of TCW and formed Crescent Capital Group. Today the firm has approximately $23 billion in assets under management and 145 employees. Crescent is headquartered in Los Angeles with additional offices in Boston, Chicago, New York and London (www.crescentcap.com).

Littlejohn makes control and non-control investments in middle-market companies that are undergoing a fundamental change in capital structure, strategy, operations or growth.  The firm invests from $50 million to $150 million of equity in middle market companies that have annual revenues of $100 million to $800 million.  Littlejohn invests across a range of industries and acquires manufacturers, distributors, and service providers.  The firm is currently investing from Littlejohn Fund V, LP, which has $2 billion in capital commitments.  Littlejohn is based in Greenwich, CT (www.littlejohnllc.com).

“Under Gene Moriarty’s leadership, BJI has diversified and grown its end market exposure through a focus on investing in its commercial segment,” said Steven Kalter, a Principal of Littlejohn. “We look forward to supporting the company’s acquisition program to further strengthen its positioning as a one-stop shop for its customers in both the commercial and consumer markets and leverage its best-in-class distribution network.”

Financing for the transaction was provided by Goldman Sachs and Société Générale.  Moelis & Company was the financial advisor to BJI. Gibson, Dunn & Crutcher provided legal services to Littlejohn.

© 2017 Private Equity Professional | February 2, 2017