Archives for September 7, 2017

Littlejohn Sells Newgistics to Pitney Bowes

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Littlejohn & Co. has agreed to sell its portfolio company Newgistics, a provider of technology-enabled parcel logistics, to Pitney Bowes for approximately $475 million. Littlejohn acquired Newgistics in 2013.

Newgistics is a provider of parcel logistics and related services to the e-commerce and direct-to-consumer retail industry.  The company’s systems and services include e-commerce development, data analytics, relationship management, systems integration, fulfillment, parcel delivery and returns management. The company is headquartered in Austin, TX (www.newgistics.com).

Newgistics is best known for its returns-processing capabilities and provides its ecommerce services to nearly 500 retail clients. It is a workshare partner of the United States Postal Service and processes nearly 100 million parcels annually, including more than 50 percent of all Parcel Returns Select packages shipped through the USPS. It’s parcel services and ecommerce logistics network includes nine operating centers and an asset-light national transportation network of more than 50 partners.

During Littlejohn’s ownership of Newgistics the firm made investments in software development, new products, automation and expanded the company’s international network which is now Newgistics’ fastest growing segment. The net effect of Littlejohn’s efforts is that the company had a greater than 50% increase in both revenue and EBITDA since 2013.

“Newgistics is an outstanding business and we are proud to have supported the company’s growth and mission to deliver best-in-class omni-channel commerce solutions,” said Edmund Feeley, a Managing Director at Littlejohn.  “Over the course of our partnership with Newgistics, the company has been transformed into the leading player in the rapidly evolving and expanding e-commerce, logistics and fulfillment sectors.  The company’s accomplishments over the past four years are representative of the value we look to create and actively support in our portfolio companies. It has been a great pleasure working with the Newgistics team and we wish them continued success as part of Pitney Bowes.”

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 which has $2 billion in capital commitments.  Littlejohn is based in Greenwich, CT (www.littlejohnllc.com).

“Littlejohn has been an instrumental partner in helping us execute on our growth plan,” said Todd Everett, President and Chief Executive Officer of Newgistics. “With their support, we made great progress in capitalizing on the tremendous opportunities from the growth of e-commerce, by developing new capabilities, significantly growing our revenue and earnings, adding new customers, and globalizing our portfolio of services. We wish the Littlejohn team well and look forward to our next chapter as part of Pitney Bowes.”

The acquisition of Newgistics will accelerate Pitney Bowes’ expansion into the US domestic parcels market at scale, enabling the company to deliver a broader range of consumer-focused ecommerce and parcel management services to retailers, small and medium businesses, and enterprise clients.

Pitney Bowes (NYSE:PBI) is a provider of ecommerce services, shipping and mailing products, customer engagement and customer information management. Revenues in 2016 were approximately $3.4 billion. Pitney Bowes is headquartered in Stamford, CT (www.pitneybowes.com).

Goldman Sachs was the financial advisor to Littlejohn. The transaction is expected to close in the late third or early fourth quarter of 2017.

© 2017 Private Equity Professional | September 7, 2017

Rotunda Capital Buys IF&P Foods

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Rotunda Capital Partners has acquired IF&P Foods, a food service distributor of fruit, vegetables, dairy and floral products.

IF&P Foods was formed in 1997 through the merger of Indianapolis Fruit and Piazza Produce, two produce distribution companies that served the grocery and foodservice industries. IF&P’s group of companies also includes Garden Cut, a fresh cut processing company, and food service produce distributors, Circle City Produce and Papania Produce. IF&P provides fresh and packaged produce varieties, as well as partially prepared meal components, to approximately 7,500 customers throughout the Midwest, including grocery stores, restaurants, schools and food management companies.

IF&P has a fleet of over 340 refrigerated trucks that service 14 states from five facilities totaling over 225,000-square-feet of warehouse space. The company is headquartered in Indianapolis (www.indyfruit.com) (www.piazzaproduce.com) (www.gardencut.com) (www.circlecityproduce.com) and (www.papaniasinc.com).

Rotunda Capital acquired IF&P Foods from Mike and Chris Mascari, and Danny and Joe Corsaro. The Mascari family founded Indianapolis Fruit in 1946. “We’ve been looking for a platform company in the produce distribution sector for quite some time, and IF&P is an exciting company with tremendous growth prospects,” said Dan Lipson, a Partner at Rotunda Capital. “Their team has built a leading company in the category, and they are well-positioned to serve their customers’ growing demand for high quality product and services. Combined with our distribution expertise, there’s a great opportunity to expand IF&P’s reach and offerings and provide a new platform for growth.”

Rotunda Capital invests in businesses with enterprise values of $15 million to $100 million. Sectors of interest include logistics, value-added distribution, specialty finance, and business services. Since founding in 2009, Rotunda has completed ten platform investments and realized three exits. The firm is headquartered in Bethesda, MD with an office in Evanston, IL (www.rotundacapital.com).

“Our investment in IF&P is in line with Rotunda’s proven approach of acquiring family and founder-owned distribution companies and partnering with strong management to expand on their existing value proposition,” added Corey Whisner, a Partner at Rotunda Capital. “What IF&P has built over the better part of a century is truly impressive, and we’re committed to helping them achieve new heights through both organic growth as well as potential acquisitions to expand their offerings.”

According to Rotunda, many industry trends are driving increased consumer demand for produce. A more informed consumer is demanding fresh and healthy eating options, either through purchase at retail or through meals ordered at restaurants. That trend is driving expansion of produce offerings at grocery and growing the number of independent restaurants to meet the evolving palates of their patrons.

“Rotunda’s significant distribution expertise with industries undergoing strong growth trends and their focus on partnership with existing management and workforce was very appealing to us as we look to continue our market leadership,” said Greg Corsaro, CEO of IF&P. “Our mission remains unchanged – to deliver on the promise to our customers and employees to help them succeed and be the best they can be, and Rotunda’s investment and partnership will help maintain that pledge as we take our business to the next level.”

Kayne Anderson was the lead agent for a $34 million senior secured credit facility to support this transaction. In addition, both Kayne Anderson and Patriot Capital provided subordinated debt and made equity co-investments.

© 2017 Private Equity Professional | September 7, 2017

Resilience and North Park Build Innovatus

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Innovatus Imaging, a newly created holding company formed by private equity firms Resilience Capital Partners and North Park Capital Partners, has acquired three medical device servicing and manufacturing companies.

The three acquired companies are Multi Vendor Service (MVS), a Pittsburgh-based provider of repair and maintenance services for non-Bayer radiology devices including ultrasound probes, magnetic resonance coils, computed radiography readers and dry film printers. MVS was acquired from Bayer Corporation; Wetsco, a Tulsa-based provider of repair services for standard and 3D/4D ultrasound probes. Wetsco has had an exclusive services agreement with MVS since 2008; and MD MedTech (MDMT), a Denver-based designer and manufacturer of medical ultrasound products for the OEM, third-party repair and research markets. Before becoming part of Innovatus, all three of these businesses had worked together through strategic alliances and supplier relationships for more than a decade.

MVS, Wetsco, and MDMT employee approximately 170 people and the operations will remain in Pittsburgh (headquarters), Tulsa and Denver. Wetsco President Dennis Wulf will become CEO of Innovatus Imaging, with MVS General Manager Bill Kollitz becoming President and COO, and MDMT co-founder Michael Labree becoming the new company’s Chief Technology Officer.

“The creation of Innovatus Imaging through the acquisitions of MVS, Wetsco and MDMT gives us the scale and synergies to succeed in a market that is projected to grow by double-digit figures over the next five years as healthcare providers are asked to do more with less and extend the life of costly medical devices through repair and servicing,” said Steven Rosen, Co-CEO of Resilience Capital Partners.

In addition to the buys of MVS, Wetsco and MDMT, Innovatus has also agreed to acquire the European operations of MVS which are based in the Netherlands. This transaction is expected to close by March 31, 2018. In the interim, Innovatus will continue to serve European customers through a transitional service agreement with Bayer.

“All three of these businesses have enjoyed strategic partnerships and customer relationships over the years, and so it is a natural fit to combine them under a single company umbrella,” said Bassem Mansour, Co-CEO of Resilience Capital Partners. “This combination of talent and resources will enhance performance in high-growth areas, helping increase the new company’s offerings in medical equipment repair while enabling it to develop groundbreaking medical imaging products.”

Funding for the Innovatus Imaging transaction comes from Resilience Fund IV, which closed in October 2015 with $350 million in capital and from co-investors including North Park Capital Partners.

Resilience Capital Partners invests in middle market companies with $25 million to $250 million in revenues across a range of industries. Since its founding in 2001, Resilience has acquired 48 companies under 26 platforms with over $2 billion in revenues. The firm is based in Cleveland (www.resiliencecapital.com).

North Park Capital Partners invests in companies that have enterprise values of $3 million to $30 million, are non-core business divisions of larger corporate parents or are undergoing some degree of operation distress, and are located in the “Rust Belt” – Pennsylvania, West Virginia, western New York, Ohio, Indiana, and Michigan. Sectors of interest include manufacturing, distribution, industrial services, healthcare products and services, retail and restaurants, consumer, and oil and gas. North Park was co-founded by Managing Partner John DiDonato in 2016 as a family office and is headquartered in Pittsburgh (www.northpark-capital.com).

© 2017 Private Equity Professional | September 7, 2017

Clearlake Invests in FloWorks

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Clearlake Capital Group has made an investment in FloWorks International, a portfolio company of TowerBrook Capital Partners and The Stephens Group. TowerBrook and The Stephens Group formed FloWorks in March 2012 through the acquisition and merger of Shale-Inland, then a portfolio company of The Stephens Group, with the industrial pipe, valves and fittings business of HD Supply.

FloWorks is a supplier of pipe, valves, fittings and related products to the energy and industrial sectors. The company’s products are sold under the following brand names: Sunbelt Supply and Major, suppliers of manual and automated valve products and accessories; Southwest Stainless & Alloy, stainless and alloy steel piping products, fittings, and flanges; J&J Alloys, a distributor and manufacturer of nickel alloy fittings and flanges; and J&J Bar Plus, a nickel and stainless alloy round bar distributor to the Southwest and Gulf Coast regions of the United States. In total, FloWorks has global distribution capabilities and operates 44 facilities across North America, China and Saudi Arabia. The company is led by CEO Frank Riddick and is headquartered in Houston (www.floworkspvf.com).

The company’s two flagship distribution facilities in Texas, including its 205,000 sq. ft. state-of-the-art distribution center and seven acre pipe yard in Pearland, Texas and its 185,000 sq. ft. distribution center in Pasadena, Texas, are open and fully operational after the events of hurricane Harvey. FloWorks stocks an inventory of more than 128,000 products from over 1,900 vendors and serves more than 5,000 customers.

“This is an exciting time to invest in FloWorks’ award-winning family of brands as the company continues to demonstrate a track record of providing customers with the highest quality specialized PVF products and services,” said José Feliciano, Managing Partner and Co-Founder of Clearlake. “FloWorks can now leverage Clearlake’s substantial resources and expertise in the company’s core industrial and energy end markets to propel its growth strategy.”

“We look forward to supporting the company in its strategic growth initiatives, including further strengthening its product and service offerings and pursuing strategic acquisitions, all underpinned by the company’s unwavering focus on customer service,” added James Pade, a Principal of Clearlake.

Clearlake Capital Group has over $3.5 billion of assets under management and invests in the following sectors: industrials and energy; software and technology-enabled services; and consumer. The firm was co-founded by Mr. Feliciano and Behdad Eghbali in 2006 and is headquartered in Santa Monica, CA (www.clearlakecapital.com).

© 2017 Private Equity Professional | September 7, 2017