Archives for April 4, 2019

DFW Closes Sixth Fund

by

DFW Capital Partners has held an oversubscribed first and final closing of its sixth fund, DFW Capital Partners VI LP, at the fund’s hard cap of $500 million.

The new fund saw an increase in participation from DFW’s existing limited partners and added several new institutional investors as well. Fund VI follows the firm’s earlier fund which closed in April 2016 with $360 million of commitments. DFW now manages in excess of $1 billion in assets.

“We are once again thrilled with the continued support of our long-standing limited partner base, as well as the interest and commitment of new insurance company, endowment, family office and other institutional investors,” said Keith Pennell, managing partner of DFW. “We were fortunate to launch and complete the fundraising process in a little over three months, which allows us to focus on the important work of seeking new platform investments and supporting our growing portfolio of unique service businesses. As in prior funds, DFW will maintain its proven strategy of investing in high growth lower-middle market businesses and working closely with management to build industry leaders.”

DFW invests in service companies, with an emphasis on healthcare and outsourced business and industrial support services, that have revenues of $20 million to $150 million and EBITDA of $5 million to $15 million. DFW typically invests from $20 million to $75 million of capital in each of its platform acquisitions but can lead larger deals with the support of its institutional co-investors.

Fund VI has not made any platform investments yet but is actively looking for its first platform. Fund V acquired its last platform in March 2019 with the buy of Sev1Tech, a Woodbridge, VA-based provider of information technology, cybersecurity, cloud, and program management support services to the federal government.

Other Fund V investments include Lotus Clinical Research, a Pasadena, CA-based pain-focused clinical research organization and clinical site business (November 2018); Restoration & Recovery, a Durham, NC-based provider of mobile inspection, maintenance and repair of  stormwater systems (June 2018); ReSource Pro, a New York, NY-based provider of business process management and analytics services to the insurance industry (April 2018); Envocore, a Gambrills, MD-based provider of lighting and water efficiency retrofit services for government, university, school and hospital facilities (June 2017); Saol Therapeutics, a Roswell, GA-based specialty pharmaceutical company focused on rare and orphan diseases (February 2017); and Children’s Dental Health Associates, a Malvern, PA-based provider of management and support services to pediatric dentists (December 2016).

DFW’s fourth fund remains invested in four companies: Sebela Pharmaceutical, a specialty pharmaceutical company; Insight2Profit, a provider of price optimization technology and consulting services; TheraPlay, a provider of free-standing and contract-based pediatric therapy services; and Superior Controls, a provider of automation and control systems integration and engineering services focused on the biotech industry.

DFW is headquartered in Teaneck, NJ, and has an additional office in Chevy Chase, MD (www.dfwcapital.com).

© 2019 Private Equity Professional | April 4, 2019

H.I.G. Continues Specialty Chemical Build

by

Vantage Specialty Chemicals, a portfolio company of H.I.G., has agreed to acquire the natural oils business of Textron Plimon.

Textron is a manufacturer, processor and formulator of natural oils for the personal care, food and chemical industries. The company’s product portfolio includes cosmetic oils, specially formulated plant oils sold under the EVOILS brand name, food oils, bismuth derivatives, cosmetic ingredients and preservatives. Textron was founded in 1980 by CEO Martin Lascorz and is headquartered near Barcelona in Granollers, Spain (click HERE for the Textron web page).

The distribution business of Textron Plimon is not part of this transaction and will remain with the prior ownership group and continue distributing products for Textron.

Vantage Specialty Chemicals is a supplier of chemical products used in personal care applications, industrial lubricants, chemical derivatives and other household and industrial products. The company’s more than 2,000 products include chemical ingredients for hair, skin, sun care and other cosmetic products; chemicals with applications in oil and gas, food production, lubricants, precision cleaning and other industry specialties; and oleochemicals which are chemicals derived from plant and animal fats.

The company is headquartered in Chicago and operates a global manufacturing and supply chain across 9 manufacturing facilities, 14 formulation laboratories and 19 distribution warehouses located in 14 countries across the United States, Latin America, South Africa, Europe, and Asia (www.vantagespecialties.com).

The buy of Textron is the fourth add-on acquisition that Vantage has completed since H.I.G. reacquired the company in October 2017. Vantage was first formed by H.I.G. in May 2008 through the acquisition of Croda International’s US oleochemical business. In January 2012, H.I.G. sold Vantage to The Jordan Company and then in October 2017 reacquired a majority equity interest in the company with The Jordan Company maintaining a minority equity interest.

Vantage’s three earlier add-on acquisitions were LEUNA-Tenside, a Leuna, Germany-based maker of specialty surfactants used in the personal care, soaps and detergents, industrial cleaning, lubricants, and paints and coatings markets (November 2018); The Amarna Company, a Delta, CO-based manufacturer of water-based release agents sold under the Amarnakote brand name (September 2018); and B&B Tritech, a Hialeah, FL-based manufacturer of chemical compounds and solutions used primarily by the aviation industry for cleaning, paint removal, and de-greasing of aircraft and aircraft components (April 2018).

“Textron significantly diversifies Vantage’s natural oils business beyond jojoba and establishes Vantage as a leading producer of high-quality, natural oils with unique supply chain, testing, and formulation capabilities,” said Keval Patel, a managing director at H.I.G. “We are excited to build upon Vantage’s European manufacturing footprint following the acquisition of LEUNA-Tenside last year as we continue to expand our specialty personal care business globally.”

“The acquisition of Textron supports our commitment to strategically grow and expand the value we bring our customers throughout the world in natural oils,” said Andy Harris, chief executive officer of Vantage. “This strategic combination builds upon Vantage’s existing leadership position in jojoba oil and further establishes Vantage and Textron as premier providers of natural oils to broaden and complement our specialty ingredient solutions for evolving trends in personal care and food.”

H.I.G. specializes in providing capital to small and medium-sized companies and invests in management-led buyouts and recapitalizations of manufacturing and service businesses. H.I.G. has more than $30 billion of capital under management. The firm is based in Miami with additional offices in New York, Boston, Chicago, Dallas, Los Angeles, San Francisco, Atlanta, London, Hamburg, Madrid, Milan, Paris, Bogotá, Rio de Janeiro, and São Paulo (www.higcapital.com).

The buy of Textron by Vantage Specialty Chemicals is expected to close by the end of June 2019.

© 2019 Private Equity Professional | April 4, 2019

Wellspring Closes Buy of Paragon Films

by

Wellspring Capital Management has completed its acquisition of Paragon Films, a maker of stretch films used in storage and transit applications, from Wind Point Partners.

Paragon is a manufacturer of cast stretch films that are used to unitize pallet loads while in storage and transit. The company sells its products in all 50 states, as well as Canada, Mexico, South America and several other international locations.

Paragon operates three manufacturing facilities: Broken Arrow, OK (opened at founding in 1988); Taylorsville, NC (opened in 2005); and Union Gap, WA (opened in 2013). The company, led by CEO Darin Tang, was founded in 1988 and is headquartered southeast of Tulsa in Broken Arrow, OK (www.paragonfilms.com).

“Our partnership with Paragon represents an exciting opportunity to build on Wellspring’s track record in the packaging space,” said John Morningstar, a managing partner at Wellspring who leads the firm’s investment effort in the packaging sector. “The company has an impressive reputation as one of North America’s premier stretch film manufacturers by offering customers a superior product coupled with tangible cost savings. We are very excited to partner with the management team, led by Darin Tang, to support Paragon through its next phase of growth.”

Wind Point, in partnership with Mr. Tang, acquired Paragon Films from its founder Mike Baab in December 2016. During Wind Point’s term of ownership, Paragon invested over $10 million in capital for capacity expansion, and revenue and earnings grew at double-digit rates.

The market for stretch film is experiencing significant growth driven by transportation and e-commerce trends that are increasing points of distribution and warehousing. “There are strong tailwinds in the high-performance stretch film industry and Paragon is exceptionally well positioned to capitalize on these trends,” said Matthew Harrison, a partner at Wellspring.  “We look forward to partnering with the Paragon team to pursue a range of growth opportunities, including internal initiatives and select acquisitions.”

Wellspring invests in companies with $20 million to $100 million of EBITDA and $100 million to $1 billion of enterprise value. Sectors of interest include general industrial, business services, healthcare services, packaging, distribution, consumer, and restaurants. In January 2018, Wellspring closed its latest fund, Wellspring Capital Partners VI LP, at its hard cap of $1.4 billion. Wellspring was founded in 1995 and is based in New York (www.wellspringcapital.com).

Wind Point invests from $50 million to $100 million in companies with EBITDAs of at least $10 million. Industries of interest include business services, consumer products and industrial products. In June 2017, Wind Point held a final closing of its eighth fund, Wind Point Partners VIII LP, with $985 million of capital commitments. The fund exceeded its initial hard cap of $750 million and marks the largest fund closing in Wind Point’s history. The firm was founded in 1984 and is based in Chicago (www.wppartners.com).

Rothschild & Co. (www.rothschildandco.com) was the financial advisor to Paragon.

© 2019 Private Equity Professional | April 4, 2019