October 10, 2017
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Archives for October 10, 2017

IOP Acquires Creative Foam

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Industrial Opportunity Partners (IOP) has acquired Creative Foam Corporation, a manufacturer of die cut, formed foam, nonwoven, and other multi-material components that are used in the automotive, medical, and wind energy markets.

Creative Foam’s Automotive Division manufactures products that are used to address issues primarily related to noise, vibration, sealing, airflow, and insulation. The Medical Division manufactures foam patient positioners and table pads for use in diagnostic imaging applications, and has molding and fabricating technologies that secure electrical components inside foam products to ensure that flammability and patient contact surface requirements are met. Lastly, through its Composites Division, Creative Foam manufactures cores used in turbine blade construction in the wind energy market.

Creative Foam was founded in 1969 and is headquartered north of Detroit in Fenton, MI. The company has one million square feet of production space in 14 facilities located in Michigan, Tennessee, Colorado, Indiana, Ohio, Florida and Mexico (www.creativefoam.com).

Creative Foam is the first platform investment for IOP’s third fund, Industrial Opportunity Partners III, which closed in July 2017 at its hard cap of $450 million, and is IOP’s largest investment since its founding in 2005.

IOP is partnering on its investment in Creative Foam with David Swallow, Creative Foam’s President, the Swallow family, and the company’s management team, all of whom have ownership interests and will remain in their current leadership roles. In addition, Phil Fioravante, an IOP Operating Principal, will assume the position of Chairman. Dr. Fioravante is a member of IOP’s Board of Operating Principals, which is comprised of executives who provide leadership to the businesses in which IOP invests.

“We are thrilled to partner with the Swallow family and Creative Foam. We believe that Creative Foam has an extremely talented team, a highly entrepreneurial culture, and strong competitive position in three key markets with attractive growth prospects,” said Bob Vedra, Senior Managing Director of IOP.

IOP focuses on acquiring middle-market manufacturing and value-added distribution businesses, typically with revenues between $30 million and $350 million. The firm targets businesses with strong product, customer, and market positions and provides both management and operational resources to support sales growth and operational improvements. IOP is headquartered in the Chicago suburb of Evanston (www.iopfund.com).

“The Creative Foam management team and I are excited to partner with IOP. IOP brings both capital and significant industry experience, which I believe will enhance the company’s ability to support growth and to expand our capabilities for our customers,” said Mr. Swallow.

Senior debt financing was provided by a bank group led by JP Morgan and Comerica.  Hancock Capital Management and Norwest Mezzanine Partners provided the subordinated debt financing. Western Reserve Partners, a division of Citizens Capital Markets, was the financial advisor to Creative Foam.

© 2017 Private Equity Professional | October 10, 2017

Bain Builds Diversey with Zenith Buy

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Diversey, a portfolio company of Bain Capital Private Equity, has reached an agreement to acquire Zenith Hygiene Group, a UK-based manufacturer of cleaning and hygiene chemicals. The closing of this transaction is expected by the end of the first quarter of 2018.

Zenith Hygiene manufactures a range of products serving customers in the healthcare, food service, hospitality, leisure and facilities management, pharmaceutical, and food and beverage processing industries. The company has more than 500 employees and had net sales in FY 2017 of £67 million ($75 million).

Zenith Hygiene was founded by Ringo Francis in 1996 and went public in 2005. In 2008 the company was taken private in a management buyout led by Chairman Lord Stanley Fink and CEO Ringo Francis. The company is headquartered near London in Welham Green, UK (www.zhgplc.com).

Bain Capital completed the $3.2 billion acquisition of the Diversey Care division and the food hygiene and cleaning business within its Food Care division from Sealed Air in September 2017. The acquired company – now called Diversey – is a provider of cleaning and hygiene products to the institutional marketplace, serving lodging, food service, retail, healthcare, food and beverage companies, as well as building service contractors worldwide. The company was founded in Chicago in 1923 and was acquired in October 2011 by Sealed Air for $4.3 billion. Net sales in FY2016 were approximately $2.6 billion and the company has more than 8,600 employees (www.diversey.com).

“I am excited by the opportunity to build Diversey’s local scale in the UK and Ireland with the acquisition of Zenith Hygiene” said Dr. Ilham Kadri, President and Chief Executive Officer of Diversey. “This combination, with the backing of Bain Capital, would create significant scale and help us serve a broader base of customers in key markets around the world.”

Bain Capital Private Equity was founded in 1984 and invests in the consumer and retail; financial and business services; healthcare; industrials; and technology, media and telecommunications sectors. The firm has a team of approximately 220 investment professionals and has offices in Boston, New York, London, Munich, Mumbai, Hong Kong, Shanghai, Sydney and Tokyo (www.baincapitalprivateequity.com).

“We are committed to growing Diversey’s geographic reach and the addition of Zenith Hygiene would be a first valuable step towards creating a world-class provider of cleaning and hygiene solutions,” said Michel Plantevin, a Managing Director of Bain Capital Private Equity.

“We are excited to join Diversey and be part of a group benefiting from Bain Capital’s integrated global platform and bold growth plans for Diversey,” said Ringo Francis, CEO of Zenith Hygiene. “During the past 20 years, we have successfully grown the business by developing a comprehensive product offering in the UK and Ireland. We believe that all customers will benefit from the combination of both companies’ innovations and application expertise.”

© 2017 Private Equity Professional | October 10, 2017

DFW Exits Covenant Surgical

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DFW Capital Partners has sold Covenant Surgical Partners to KKR. DFW acquired Covenant in January 2013 in partnership with PineBridge Investments and Iroquois Capital.

Covenant is an owner and operator of ambulatory surgery centers (ASCs) focused on endoscopy and ophthalmology specialties. Covenant also owns interests in several related medical practices, as well as anesthesia operations and its own anatomical pathology lab business. The company is headquartered in Nashville (www.covenantsurgicalpartners.com).

Covenant’s operating model is to acquire majority interests in single or limited specialty ASCs with a minority investment retained by the center’s affiliated physicians or physician groups. Covenant then brings its systems and procedures to the acquired centers and also consolidates financial, administrative, regulatory, contracting and human resources management functions.

During DFW’s ownership term, Covenant grew to 35 ambulatory surgical centers (ASCs) from 19 at the time of acquisition and expanded its management team and systems capabilities. “It has been a privilege to partner with the Covenant team in building one of the premier ambulatory surgery platforms and physician services companies in the nation,” said Keith Pennell, Managing Partner at DFW Capital Partners.

DFW invests from $15 million to $50 million in lower middle-market service companies. Sectors of interest include healthcare and outsourced business and industrial support services.  The firm is headquartered in Teaneck, NJ, and has an additional office in Chevy Chase, MD (www.dfwcapital.com).

“This transaction marks the next stage of Covenant’s evolution,” said Lew Little, Chief Executive Officer of Covenant. This is the second time I’ve had the opportunity to work with KKR. Having seen firsthand what their partnership and resources can contribute to a company, I am thrilled to welcome them to the Covenant family and together accelerate our future growth.” Mr. Little was previously the CEO of Harden Healthcare. KKR led a debt refinancing for Harden in 2010.

KKR (NYSE:KKR) makes private equity, fixed income and other investments in companies in North America, Europe, Asia and the Middle East.  The firm has $148 billion in assets under management. KKR was founded in 1976 and in addition to its New York headquarters has offices in 19 cities around the world (www.kkr.com).

“Covenant provides an important role in improving patient access and reducing costs for the healthcare system. We look forward to partnering with Covenant in building a premier professional services organization to support its affiliated surgery centers and physician practices,” said Jim Momtazee, Head of KKR’s Health Care investment team.

Piper Jaffray was the financial advisor to Covenant on this transaction.

© 2017 Private Equity Professional | October 10, 2017

TPG Closes Acquisition of Transplace

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TPG Capital has completed its acquisition of Transplace, a provider of transportation management and other third-party logistics services, from Greenbriar Equity Group which acquired the company in May 2013 from CI Capital Partners.

Transplace, with annual revenues of approximately $1.8 billion, is a provider of non-asset based third party logistics, intermodal and truck brokerage services. The company provides full transportation outsourcing, carrier contracting and negotiation, and freight brokerage services to more than 1,000 mid-market shippers and Fortune 500 companies. The company, led by President and COO Frank McGuigan, was founded in 2000 and is based in Frisco, TX (www.transplace.com).

“As customer expectations for fast and transparent service and delivery increase, the supply chain is quickly becoming more complex. As a result, many companies have started to outsource freight spend in order to achieve better procurement at a lower operating cost,” said Jack Daly, Firm Partner and Global Head of Industrials and Business Services for TPG Capital. “Transplace is providing an expansive, high-quality, customizable solution for managing today’s supply chain and we believe Transplace is well-positioned to thrive from the immense technological change happening within logistics today.”

This investment marks TPG’s third investment in the supply chain space within the last year. In May 2017, TPG Capital acquired LLamasoft, a provider of supply chain modeling and design software. This transaction followed the firm’s August 2016 investment in Transporeon, a provider of a cloud-based industrial logistics platform.

TPG was founded in 1992 and makes investments throughout North America, Europe, Asia and Australia.  Sectors of interest include industrials, retail, consumer, financial services, travel and entertainment, technology, media and communications, and healthcare.  In May 2016, TPG held a final close of its latest fund, TPG Partners VII, LP, with $10.5 billion in commitments. The firm has offices in Austin, Beijing, Boston, Dallas, Fort Worth, Hong Kong, Houston, London, Luxembourg, Melbourne, Moscow, Mumbai, New York, San Francisco, Seoul, and Singapore (www.tpg.com).

Greenbriar Equity Group invests from $50 million to $150 million per transaction in the global transportation industry, including companies in aerospace & defense, automotive, freight & passenger transport, logistics & distribution, and related sectors. The firm manages $2.5 billion of committed capital and is based in Rye, NY (www.greenbriarequity.com).

Goldman Sachs, JP Morgan Securities, Barclays, Deutsche Bank Securities, KeyBanc, and RBC Capital Markets were the financial advisors to TPG on this transaction.

© 2017 Private Equity Professional | October 10, 2017

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