July 28, 2017
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Archives for July 28, 2017

Platte River Exits ACT

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Platte River Equity has sold its portfolio company, ACT Independent Turbo Services, to publicly-traded Doosan Heavy Industries & Construction. Platte River acquired ACT (formerly Advanced Combustion Technology, Inc.) in June 2010.

ACT is a provider of on-site and off-site turbine component repair services such as inspection, cleaning, repair, vacuum heat-treating, custom machining, coating, testing and metallurgical analysis. Most of the company’s customers are in the power generation and industrial markets and use large frame gas and steam turbines. ACT, founded in 1996 and led by CEO Billy Coleman, has a 100,000 sq. ft. operating and headquarters facility located near Houston in La Porte, TX (www.act-texas.com).

“The financial, strategic and operational support Platte River has provided to ACT throughout our partnership has been invaluable,” said Mr. Coleman. “We accomplished all we had set out to do, and our management team looks forward to a new chapter of continued growth.”

“It has been an honor to work with Billy Coleman and the rest of the world-class team at ACT,” said Platte River Managing Director Peter Calamari.  “They have built a company with tremendous growth potential, and I believe the organization will be able to serve its expanding customer base even better under Doosan’s ownership.”

Doosan Heavy Industries & Construction (KRX: 000150) is a subsidiary of Doosan Group, a heavy industrial company that is active in the manufacturing and construction of nuclear power plants, thermal power stations, turbines and generators, desalination plants, castings, and forgings. The company was founded in 1962 and is headquartered in the southern port city of Changwon, South Korea (www.doosanheavy.com).

Platte River makes equity investments of $20 million to $80 million in lower middle-market companies with enterprise values between $40 million and $250 million. The firm focuses on investing in the aerospace and transportation; energy and power; agriculture and chemicals; and metals and minerals. Platte River is based in Denver (www.platteriverequity.com).

Incline Sells Double E to RAI

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Incline Equity Partners has sold Double E Company, a maker of components for web converting applications, to River Associates Investments. Incline first invested in Double E in April 2012.

Double E’s product line includes wear components such as cores and chucks, core shafts, core plugs, fiberglass cores, rollers, shafted roll stands, and core cutters. These products are used to secure, straighten, apply tension, cut and move rolled raw materials through continuous manufacturing processes. Double E has an established brand name and a large installed base – more than 10,000 customers in the paper, film, foil, corrugated, packaging, and printing markets – which provides recurring replacement demand for its products. The company operates from three manufacturing facilities in the United States and Europe with additional sales offices in Colombia, the Czech Republic, France, Germany, Italy, Mexico and the United Kingdom. Double E was founded in 1972 and is headquartered south of Boston in West Bridgewater, MA (www.ee-co.com).

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 $50 million and $200 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).

River Associates Investments (RAI) invests in US and Canadian-based companies with revenues of $20 million to $100 million and EBITDA of $3 million to $12 million.  Sectors of interest include niche manufacturing, high margin distribution, industrial services, and business services. The firm was founded in 1989 and to date has completed 80 investments, including platform and add-on acquisitions. RAI is based in Chattanooga, TN (www.riverassociatesllc.com).

Last month, RAI closed its seventh fund – River VII, LP – with total commitments of $285 million. The new fund was raised in approximately eight months and exceeded the original $250 million target. RAI’s earlier fund closed at an above target $222 million in May 2012.

The buy of Double E is Fund VII’s first portfolio company. RAI is actively seeking to businesses that manufacture similar or complementary components for the web converting market and have revenues greater than $5 million.

Birmingham, MI-based Quarton International was the financial advisor to Double E and Incline Equity Partners in this transaction.

© 2017 Private Equity Professional | July 28, 2017

LongueVue Acquires Zavation

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LongueVue Capital (LVC) has acquired Zavation Medical Products. This is LongueVue’s fourth healthcare platform investment and the second medical device business it has acquired in the past 18 months.

Zavation designs, engineers, and manufactures a portfolio of spinal hardware used in thoracolumbar (the thoracic and lumbar regions of the spine), cervical, interbody fusion, and minimally invasive surgery. Other products include related medical instruments and micro-and-macro porous bone graft substitutes. Zavation’s products are sold through a network of more than 100 distributors in 35 states. Zavation, founded in 2010, has approximately 50 employees and operates a 24,000 square foot facility near Jackson in Flowood, MS (www.zavation.com).

Zavation has commercialized over 10 product families since its founding and has 10 additional products expected to launch over the next two years. “Zavation fits well within our investment strategy,” said Rick Rees, Founder and Managing Partner of LVC. “We love partnering with entrepreneur owned businesses at inflection points that have proven management teams willing to invest meaningfully alongside LVC. The company’s rapid growth is a testament to management’s ability to capitalize on compelling demographics and other industry tailwinds favoring smaller, more agile, and customer focused OEMs. Lastly, although we are geographically agnostic, it is always great to partner with entrepreneurs in our back yard, the Gulf South.”

LVC makes equity and debt investments in lower middle-market companies that have over $3 million of EBITDA and up to $150 million of annual revenue. Sectors of interest include business services, transportation and logistics, healthcare, energy services, and niche manufacturing. In March 2017, the firm held a final close of LongueVue Capital Partners III, LP. The new fund was oversubscribed and closed at its hard cap of $252 million. LVC was founded in 2001 and is based in New Orleans with additional offices in New York and Salt Lake City (www.lvcpartners.com).

“Zavation has demonstrated exceptional growth and is a perfect cornerstone to our expanding healthcare portfolio. This is our fourth healthcare platform investment and our third in the past 18 months,” said Principal Ryan Nagim. “Furthermore, we believe the company is at an inflection point and has the opportunity to become a market leader in the spinal implant sector, as management has shown an incredible ability to execute. We look forward to our partnership with Zavation’s management team and driving significant growth, both organically and through acquisitions of unique technologies.”

“The management team at Zavation chose LVC due to their entrepreneur-friendly investment approach to value creation and their knowledge and expertise in growing middle market companies at inflection points like ours,” said Jeffrey Johnson, President and CEO of Zavation. “LVC’s financial and operational resources will allow us to introduce new products, meet and exceed distributor and surgeon expectations, expand our market presence, and take market share at an even faster and more deliberate speed.”

Abacus Finance provided the senior debt financing to Zavation to support the transaction. Abacus provides cash flow senior financing to private equity-sponsored, lower-middle market companies that have EBITDA between $3 million and $15 million. Debt facilities can be as large as $60 million with a typical hold size ranging from $10 million to $30 million. Abacus is based in New York (www.abacusfinance.com).

Robert W. Baird & Co.’s healthcare team, led by Robert Andrews and Manish Gupta, served as the financial advisor to LVC on this transaction.

© 2017 Private Equity Professional | July 28, 2017

H.I.G. Adds Diamond Gypsum to ACG

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ACG Materials, a portfolio company of H.I.G. Capital, has acquired Diamond Gypsum Company. The buy of Diamond Gypsum is the seventh add-on acquisition that ACG has completed since H.I.G. acquired the company at the end of 2012.

Diamond Gypsum is a miner of gypsum products and owns and operates a quarry in central Oklahoma. The company’s aggregate and processed gypsum products are sold to a number of blue chip customers and are used in a variety of oil and gas, infrastructure and agricultural applications. Diamond Gypsum is located seventy miles northwest of Oklahoma City in Watonga, OK.

“We are excited to further strengthen our position as the leading industrial mineral and aggregate producer in the Midwest,” said Paul Harrington, Chief Executive Officer of ACG Materials. “Diamond Gypsum helps expand our presence in the STACK shale basin, one of the fastest growing energy markets in the US.”

ACG Materials is a diversified minerals miner and processor with 21 mines, 4 downstream processing facilities and over 500 million tons of reserves across Oklahoma, Texas, Nevada, Washington and British Columbia. The company supplies varying grades of gypsum, anhydrite, limestone, caliche, sand & gravel, and aggregate products that serve industries such as building products (wallboard, plasters, decorative home goods), agriculture (fertilizer), infrastructure (roads, bridges), oil & gas (roads and well pads) and food & pharmaceuticals (animal feed, beer, baked goods).

ACG Materials was founded as Harrison Gypsum in 1955 and is headquartered in Norman, OK (www.acgmaterials.com).

“We are pleased to support ACG Materials in its acquisition of Diamond Gypsum and continue our successful track record of acquiring leading mining and processing operations in attractive, high growth, markets,” said Keval Patel, a Managing Director at H.I.G.

H.I.G. specializes in providing capital to small and medium-sized companies and invests in management-led buyouts and recapitalizations of manufacturing or service businesses. H.I.G. has more than $22 billion of capital under management. The firm was founded in 1993 and is based in Miami with additional offices in New York, Boston, Chicago, Dallas, Los Angeles, San Francisco, Atlanta, London, Hamburg, Madrid, Milan, Paris, Bogotá, Mexico City and Rio de Janeiro (www.higcapital.com).

© 2017 Private Equity Professional | July 28, 2017

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