Archives for January 2018

Tonka Bay Adds to The Sierra Company

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The Sierra Company, a portfolio company of Tonka Bay Equity Partners since May 2015, has acquired the assets of Burke Industrial Coatings.

Burke is a maker of liquid stainless steel and antimicrobial industrial coatings. The company’s flagship products are stainless steel finishes that are heavily pigmented with stainless steel flakes to provide corrosion resistance and long-term durability even under extreme exposures. The company’s coatings provide resistance to general weather, coastal environments, chemical fumes, spillage and abrasion.

Burke’s specialty antimicrobial coatings are used in a range of applications in the food and beverage, HVAC, travel and medical sectors. Company-owned brand names include Superlife, Steel Tuff, Steel Plus, Supertemp and Silverbullet. Burke was founded in 1984 and is headquartered just north of Portland in Ridgefield, WA (www.burkeindustrialcoatings.com).

“Burke has some unique technology that complements our specialty coatings product line and expands our product offerings within the high-performance coatings market for industrial and OEM applications,” said Ray Torres, CEO of Sierra.

The Sierra Company manufactures industrial coatings and specialty concrete treatments, sealants and coatings that are used in commercial construction, residential construction and government infrastructure. The company is headquartered near Minneapolis in Minnetonka, MN (www.sierrapaint.com).

In October 2017, Sierra completed the add-on acquisition of Dade City, FL-based SureCrete Design Products, a manufacturer of decorative and specialty concrete products that are used to resurface floors, walls, ceilings, countertops, and structural castings (www.surecretedesign.com).

Tonka Bay invests in manufacturing, value-added distribution and business services companies that have EBITDAs greater than $2 million. The firm is based in the Minneapolis suburb of Minnetonka (www.tonkabayequity.com).

© 2018 Private Equity Professional | January 30, 2018

Monroe Forms Independent Sponsor Vertical

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Monroe Capital has established an independent sponsor finance vertical to focus on providing both debt and equity financing for acquisitions, mergers, business combinations and recapitalizations initiated by independent sponsors.

In the last few years, Monroe has funded 12 transactions involving over $300 million of debt and equity capital to independent sponsors. The new group will be based in Chicago and will be led by managing directors Brad Bernstein, Chris Larson and Zia Uddin. Mr. Bernstein joined Monroe in 2017 from Chicago-based private equity firm SE Capital. Mr. Larson also joined Monroe in 2017 after 5 years at Willis Stein & Partners. Mr. Uddin has been with Monroe since 2007.

Monroe provides senior and junior debt and equity co-investments to middle market and lower middle market companies based in the US and Canada. The firm is led by Theodore Koenig, President and CEO; Michael Egan, EVP & Chief Credit Officer; and Thomas Aronson, Managing Director, Head of Originations. Monroe has approximately 90 professionals including 50 investment professionals averaging over 17 of direct investing experience.

The independent sponsor finance vertical will complement Monroe’s existing healthcare, technology, media, specialty finance, and retail and consumer products asset-based lending focused verticals.

Monroe has $5.2 billion of committed and managed capital under management. In 2017, the firm financed 77 direct lending investment transactions, involving over $2 billion of new capital. Monroe was founded in 2004 and is headquartered in Chicago with additional offices in New York, Los Angeles, San Francisco, Atlanta, Boston, and Dallas (www.monroecap.com).

© 2018 Private Equity Professional | January 30, 2018

J.F. Lehman Acquires Waste Control Specialists

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J.F. Lehman & Company has acquired Waste Control Specialists from publicly-traded Valhi. The acquisition of Waste Control Specialists is J.F. Lehman’s fourth platform investment in the environmental and technical services sector.

Waste Control Specialists (WCS) owns and operates a waste disposal, storage, and treatment facility in Andrews County, TX (located 350 miles west of Dallas) that is used for highly specialized and regulated waste streams including low-level radioactive waste, hazardous waste and mixed hazardous and radioactive waste. WCS is headquartered in Dallas (www.wcstexas.com).

WCS is the only site in the United States licensed to process and dispose of Class A, B, and C low-level nuclear waste from government and commercial generators located in all 50 states.  Customers include the Department of Energy, the Environmental Protection Agency, and blue-chip utility and healthcare enterprises.

J.F. Lehman already had a relationship with WCS through its portfolio company NorthStar Group, a provider of environmental and technical services that support electric utilities in decommissioning nuclear power generation sites. NorthStar Group was acquired by J.F. Lehman in June 2017 and is headquartered in New York (www.northstar.com).

“WCS maintains an industry-leading reputation and provides an essential solution for the safe disposal of specialized waste streams,” said Alex Harman, a Partner at J.F. Lehman. “We are excited to support the long-term success of the business through continued engagement and partnership with industry stakeholders, including strengthening the partnership with NorthStar to deliver a best-in-class nuclear power plant decommissioning solution.”

“Through its unique technical competencies and industry leadership, WCS exemplifies many of the values and attributes J.F. Lehman emphasizes in its investment strategy,” said Glenn Shor, Managing Director at J.F. Lehman. “Our partnership with WCS will ensure the business has the resources required to support its long-term growth strategy across the government and commercial marketplace.”

Valhi (NYSE: VHI), the seller of Waste Control Specialist, is a large diversified company with interests in chemicals, component products, waste management, and real estate businesses worldwide. The company operates through its subsidiaries, including NL Industries, Kronos Worldwide, CompX International and Waste Control Specialists (now sold). The company, with annual revenues of approximately $1.6 billion, was founded in 1971 and is based in Dallas (www.valhi.net).

J.F. Lehman & Company is a middle-market private equity firm focused primarily on the maritime, defense, and aerospace sectors. The firm was founded in 1992 by Dr. John Lehman, who served six years as Secretary of the United States Navy. To date, J.F. Lehman has acquired 61 operating entities within 25 platform investments with an aggregate transaction value of approximately $3.1 billion. The firm is headquartered in New York with an additional office in Washington, DC (www.jflpartners.com).

Evercore (www.evercore.com) was the financial advisor to J.F. Lehman and also acted as placement agent for the debt financing for the transaction which was provided by The Carlyle Group’s Credit Opportunities Fund.

© 2018 Private Equity Professional | January 29, 2018

Mill City Capital Acquires HN Precision

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Mill City Capital has acquired HN Precision, a manufacturer of machined products, from Cerberus Business Finance.

HN Precision’s capabilities include horizontal milling and turning, vertical milling, gun drilling, honing, broaching, centerless grinding, screw machining and laser etching. The company’s products are used in multiple end markets including heavy truck, off-highway vehicle, recreational firearms, rail, and general industrial.

HN Precision is led by CEO Dan Nash and it has 240 employees and 175 CNC machines with 300,000 sq. ft. of manufacturing space in Lake Bluff, IL (headquarters) and Rochester, NY (www.hnprecision.com).

“The Mill City team has a successful history investing in precision machining businesses, making HN Precision a great fit,” said Zander Rutlin, a Managing Director at Mill City Capital. “HN Precision’s management team and long-standing customer relationships across multiple industry verticals evidences a platform with significant upside. The business has a disciplined approach of perfecting manufacturing processes which aides and supports new business generation. There is a strong foundation at HN Precision that we look forward to growing with Dan Nash and his team.”

“I am very proud of how our business has evolved over the past several years, both through diversification of end markets and steady growth in five key industries. Our team is confident that Mill City can help us extend and enhance our ongoing growth strategy,” said Mr. Nash.

Mill City Capital invests from $10 million to $30 million of equity capital in companies with enterprise values of $30 million to $150 million and EBITDA of $5 million to $25 million. Sectors of interest include engineered industrial products; industrial services; transportation & distribution; agribusiness & food ingredients; food; and consumer products & services. Mill City focuses on companies headquartered in the Midwestern United States and western and central Canada, with a particular focus on companies located in Minnesota, Wisconsin, Iowa, North Dakota, and South Dakota. The firm is based in Minneapolis (www.millcitycapital.com).

Angle Advisors was the financial advisor to HN Precision on this transaction. “I enjoyed working with the Angle team, and especially appreciated their attentiveness and dedication to a quick moving process and transaction,” said Mr. Nash. Angle Advisors has completed 185 transactions since 2009 for multinational corporations, privately-held companies, private equity funds, and public sector clients. The firm has offices near Detroit in Birmingham, MI; Houston, TX; Wiesbaden, Germany; and Shanghai, China (www.angleadvisors.com).

“HN Precision is an excellent company with a tremendous management team. We were impressed with Angle Advisors’ ability to understand its business and industry dynamics and execute a strategic transaction with a great financial sponsor in Mill City,” said Joseph Naccarato, Chief Operating Officer at Cerberus Business Finance.

Cerberus Business Finance, the seller of HN Precision, is the middle market lending group of Cerberus Capital Management. The group is based in New York (click HERE for the group’s website).

© 2018 Private Equity Professional | January 29, 2018

Seacoast Invests in Stone Road Energy

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Seacoast Capital has made an investment of $15.4 million in Stone Road Energy, a retail distributor of propane and heating oil in New England, and a portfolio company of Stone Road Capital.

Stone Road Energy, through its subsidiaries, provides fuel delivery services for homes or businesses in Maine and New Hampshire. The company offers heating oil, kerosene, and diesel, as well as propane for use in heating hot water, heating homes, cooking, and other uses. The company was founded in 2008 and is headquartered near Portland in Gorham, ME (www.stoneroadenergy.com).

Seacoast’s investment in Stone Road will be used to support the company’s strategy of acquiring, operating, and growing family-owned companies in the propane and heating oil sector. Seacoast expects to make follow-on investments in Stone Road as it executes on its acquisition growth strategy.

“Being New Englanders ourselves, we understand the importance of the heating fuels sector to our geographic footprint,” said Tom Gorman, a Partner with Seacoast Capital.  “Stone Road’s ownership of multiple fuel retailers and the associated storage capacity results in substantial competitive barriers.”

Seacoast Capital makes non-control subordinated debt and equity investments of $5 million to $25 million in lower middle market companies with revenue of at least $10 million and $2 million or more of EBITDA. Sectors of interest include specialty manufacturing; value-added distribution; health and wellness; logistics and infrastructure services; and commercial and consumer services. Seacoast Capital is currently investing its fourth fund, Seacoast Capital Partners IV LP, with $239 million of capital commitments.  The firm was founded in 1994 and has offices in Boston and San Francisco (www.seacoastcapital.com).

“In one of the coldest regions of the US, a lack of natural gas infrastructure coupled with high alternative (non-fossil-fuel) home heating costs should result in consistently strong demand for propane and oil used to heat homes,” said Alan Rich, a Vice President with Seacoast Capital. “We have high hopes for our Stone Road investment.” The investment in Stone Road is Seacoast’s seventh 2017 non-controlling platform investment.

“We are excited about beginning our relationship with Seacoast Capital,” said Bill Overbay, Managing Partner at Stone Road Capital. “They were the most thoughtful of any of the other groups we evaluated and were able to take the inevitable deal hurdles in stride and with great flexibility. We look forward to growing Stone Road alongside Seacoast for many years to come.”

Stone Road Capital invests from $10 million to $50 million in companies that have from $5 million to $20 million of EBITDA. Sectors of interest include telecommunications and infrastructure, manufacturing, energy, business services, and agriculture. The firm is based in Providence, RI (www.stone-roadcap.com).

© 2018 Private Equity Professional | January 29, 2018

Comvest Closes Fourth Direct Lending Fund

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Comvest Credit Partners has held a final close of Comvest Capital IV LP and affiliated funds (Fund IV) with total equity commitments of $836 million, above the original target of $650 million. Together with leverage, total available capital is expected to exceed $1.2 billion. Comvest Credit Partners is the middle-market direct lending platform of private equity firm Comvest Partners.

The new fund will provide senior debt, unitranche credit facilities, junior debt, and equity co-investments, with transaction sizes ranging from $20 million up to $200 million. Target borrowers will be both sponsored and non-sponsored businesses that are active in healthcare, technology, transportation and logistics, financial services, industrials, and consumer and retail.

“We are pleased to mark the close of Fund IV and are grateful for the strong support of both our existing and new limited partners, including public and private pension plans, financial and insurance companies, foundations, and family offices,” said Robert O’Sullivan, Managing Partner of Comvest Partners. “With the increased fund size, we believe we are well positioned to provide middle-market companies with a one-stop financing solution, as well as greater flexibility on structure and pricing.” Comvest Capital’s third fund closed in June 2015 with $450 million in capital commitments.

Comvest Partners provides debt and equity to middle-market companies. For debt investments, the firm will invest from $10 million to $50 million per transaction in companies with at least $15 million of revenue and EBITDA of at least $3 million. For equity investments, the firm will invest from $35 million to $125 million of equity per transaction in companies with $50 million to $1 billion of revenue that have positive or negative EBITDA. Comvest is based in West Palm Beach with additional offices in Chicago, New York, and Los Angeles (www.comvest.com).

Since it was founded in 2000, Comvest Partners has raised more than $3.7 billion across its private equity and private credit funds.

Kirkland & Ellis provided legal services to Comvest Credit Partners for the formation of Fund IV.

© 2018 Private Equity Professional | January 29, 2018