AE Industrial Partners has acquired Resolute Industrial, a provider and servicer of heating, ventilation, air conditioning and refrigeration equipment (HVAC&R), from One Equity Partners.
Resolute Industrial provides HVAC&R equipment rental, compressor remanufacturing, and refrigerant storage services for a range of applications across numerous end markets in North America. The company’s customers are end users and OEMs operating in industrial manufacturing, aviation, energy, power, healthcare, education, and telecommunications.
Resolute Industrial has seven depot facilities and 18 branch locations which support its delivery of temporary temperature control services anywhere in the country. The company provides its commercial HVAC&R rental services through a national fleet of large to small tonnage cooling equipment and heaters. Heating equipment is manufactured in-house under the company’s proprietary Tioga brand. Also, the company remanufactures HVAC&R compressors and provides refrigerant storage and recovery services. Resolute Industrial is headquartered in Indianapolis (www.resolute-industrial.com).
In October of 2015, One Equity Partners carved Resolute Industrial out of Johnson Controls and created it as an independent entity. In August 2017, Resolute Industrial acquired Detroit-based Tioga HVAC Rentals, a provider of portable commercial heating, ventilation and small-tonnage cooling equipment to general contractors, mechanical contractors, and non-residential customers. The buy of Tioga doubled the size of Resolute’s business.
The sale of Resolute Industrial is One Equity’s first exit from its $1.65 Billion Fund VI which closed above target in February 2017. Though One Equity’s Fund VI is the firm’s sixth private equity fund, it was the first fund raised with outside capital following the firm’s spinout from JP Morgan in 2015. Sources indicate that the sale of Resolute Industrial to AE Industrial Partners resulted in an IRR of 28% and a 2.1x return on invested equity.
One Equity Partners is a middle-market private equity firm that invests in industrial, healthcare, and technology companies that are based in North America and Europe. Since 2001, the firm has invested in more than 150 transactions worldwide. One Equity, founded in 2001, spun out of JP Morgan in 2015. The firm has offices in New York and Chicago, and an advisory office in Frankfurt, Germany (www.oneequity.com).
AE Industrial Partners (AEI) identified Resolute through its proprietary origination efforts and in partnership with former HVAC&R industry executives, David Myers, and David Kornblatt. Mr. Myers and Mr. Kornblatt were the CEO and CFO, respectively, at York International, a market leader in the HVAC&R sector. Following Johnson Controls’ acquisition of York International in 2005 for$2.4 billion in cash, Mr. Myers became President of Johnson Controls’ Building Efficiency Group. Both Mr. Myers and Mr. Kornblatt will serve on the Board of Directors of Resolute.
“Resolute is a unique specialty industrial business serving mission-critical applications for its growing customer base,” said Charlie Santos-Buch, a Partner at AEI. “We are excited to partner with the Resolute management team and our operating executives to grow the business and execute our value creation plan.”
AEI invests in the aerospace & defense, power generation and specialty industrial sectors with a specific focus on technical manufacturing, distribution and supply chain management, MRO (maintenance, repair and overhaul) and industrial service-based businesses. Typical company targets will have from $50 million to $500 million of revenue. The firm is headquartered in Boca Raton (www.aeroequity.com).
Looking forward, Resolute sees a unique opportunity to further penetrate a wide range of aerospace, power generation and infrastructure related opportunities under AEI’s ownership. “AE Industrial is a perfect partner for us,” said Mike McGraw, CEO of Resolute. “They are a strategic investor with a proven track record for building and growing high-quality industrial businesses. They identified Resolute as a unique opportunity in their target markets and share our vision for continued growth.”
“Resolute has the opportunity to accelerate its organic growth by expanding its capabilities and geographic footprint throughout North America,” said Trey Bivins, a vice president at AEI. “In addition, we have identified a number of potential strategic acquisitions that would allow us to grow the business and enhance the company’s market position.”
Kirkland & Ellis provided legal services and PricewaterhouseCoopers was the financial advisor to AEI. Sidley Austin was the legal advisor and Robert W. Baird & Co. was the financial advisor to Resolute and One Equity Partners.
© 2019 Private Equity Professional | March 11, 2019