Archives for June 20, 2019

Rotating Machinery Switches Sponsors

by

Cortec Group has acquired Rotating Machinery Services (RMS) from Incline Equity Partners.

RMS is a provider of specialty aftermarket repair, maintenance and overhaul services for large, highly engineered rotating machinery including centrifugal compressors, axial air compressors, oil-free screw compressors, expanders and steam turbines. The company has approximately 200 employees, four primary operating locations, and a staff that travels globally to serve RMS’s base of over 500 customers.

RMS, led by CEO John Bartos, was founded in 1998 and is headquartered in Bethlehem, PA with an additional repair and service center in Houston, TX (www.rotatingmachinery.com).

Incline first invested in RMS in October 2015. “When we initially partnered with RMS, it was a durable business with tremendous potential but was underinvested in and operating without a growth mandate,” said Justin Bertram, a senior partner with Incline.  “We focused our efforts on developing the infrastructure needed to enhance operations and recruiting a talented management team with a growth vision. Those efforts paid off, and in just three and half years, we more than tripled the size of the business.  We’re very proud to have helped transform the company from a single facility to a global provider with five locations across two continents.”

During its ownership term, Incline closed two add-on acquisitions for RMS including the May 2018 buy of AC Compressor and CONMEC Engineered Compressors (together ACC) from Baker Hughes, a subsidiary of General Electric. ACC services and repairs industrial compressors in the refining & petrochemical, industrial, onshore/offshore production and pipeline & gas processing industries; and the May 2017 buy of Houston-based Mepco, a provider of repair services for turbines and compressors.

“Incline was instrumental in RMS completing two very strategic, sizeable acquisitions,” said Mr. Bartos. “Their deep experience completing acquisitions allowed us to better analyze the investments initially and significantly improved our ability to achieve a smooth integration and seamless transition for customers.”

The buy of RMS is the seventh platform investment for Cortec Group Fund VI LP which closed in May 2015 with $1.1 billion in capital commitments. “Cortec is an ideal partner for RMS given its track record of successfully investing in high growth specialty services businesses,” added Mr. Bartos. “During the transaction process, Cortec demonstrated that it understood our business model, embraced our culture and brought relevant experience to the table. They did everything they said they would and closed the transaction on schedule and as promised.”

Cortec invests in companies with revenues of $40 million to $300 million and EBITDA of $7 million to $35 million. Sectors of interest include healthcare products and services, business and consumer products, value-added distribution and specialty services. The firm was founded in 1984 and is based in New York (www.cortecgroup.com).

“We are excited to support John Bartos and the RMS management team as they continue to grow their business and market presence globally through both organic and acquisition initiatives,” said Scott Schafler, a managing partner at Cortec.

Senior debt to support the acquisition was provided by Twin Brook Capital Partners and Antares Capital.

Piper Jaffray & Co. and Lincoln International were the financial advisors to RMS.

© 2019 Private Equity Professional | June 20, 2019

EQT Sells AutoStore to THL

by

Thomas H. Lee Partners (THL) has agreed to acquire AutoStore, a provider of cube storage systems including robotics and software, from EQT which acquired the company in January 2017. Members of AutoStore’s management team and EQT will continue to hold minority positions in the company.

AutoStore’s systems are used to maximize efficiencies in warehouses by creating dense storage configurations accessed by robots. The company has installations in 350 warehouses with 11,000 robots in 28 countries in a range of industries and end-markets.  AutoStore’s high-speed robots, modular and flexible cube storage grid systems, and controls software enable its customers to achieve nearly four times the inventory storage relative to manual alternatives, with enhanced inventory picking speed and accuracy.

AutoStore uses third-party system integration partners for design, installation and systems servicing. The company was founded in 1996 and is headquartered in Nedre Vats, Norway, with production facilities in Koszalin, Poland (www.autostoresystem.com).

During EQT’s ownership term, AutoStore’s revenues have quadrupled, EBITDA has increased by 4.5 times and the employee base, including the R&D department, has more than doubled. “The AutoStore and EQT partnership has been excellent,” said AutoStore CEO Karl Lier. “EQT has played a critical role from A to Z and has actively supported us in overperforming the company’s ambitious targets set in 2016. We look forward to continuing our growth journey with our new partner THL and are happy that EQT has rolled over some of its proceeds.” EQT will maintain a 10% equity interest in AutoStore in partnership with THL.

According to THL, AutoStore is the most deployed provider of grid-based, high-density goods-to-person systems, participating in the global automated storage and retrieval systems (ASRS) market. Global trends, including an increasing focus on automation and robotization, urbanization and need for space-efficient solutions, as well as eCommerce demands requiring increased speed and accuracy, are all expected to continue to fuel AutoStore’s growth globally.

In 2019, AutoStore launched its Black Line series of retrieval robots which generate up to 140 percent higher throughput compared to its predecessors. Through Black Line, AutoStore expects to expand its addressable market by 40 percent.

“We are thrilled about the opportunity to partner with the AutoStore team,” said Jim Carlisle, a managing director at THL. “Through its grid-based technology and proprietary software platform, AutoStore has demonstrated a superb reputation in the marketplace underpinned by its visionary engineering and R&D talent, impressive global distribution network, and exceptional product quality. We are excited to invest behind Karl and his team and look forward to supporting AutoStore’s rapid growth.”

“Today’s announcement marks a great step forward into the next phase of our company’s growth,” added Mr. Lier. “We are excited to partner with THL, who have deep industry expertise and financial and operational resources to help accelerate AutoStore’s overall growth strategy, including our continued geographic expansion.”

THL was founded in 1974 and is one of the oldest private equity investment firms in the United States. Industries of interest include consumer and retail; healthcare; media and information services; and business and financial services. Since its founding, Boston-based THL has raised over $25 billion of equity capital, acquired over 140 portfolio companies and completed over 400 add-on acquisitions (www.thl.com).

“EQT has been proud to support AutoStore’s mission to become one of the leading logistic technology providers globally. We are highly impressed by the innovation spirit and R&D efficiency in AutoStore and the result-oriented culture,” said Anders Misund, a partner at EQT Partners. “Management has done an outstanding job in accelerating growth and solidifying its global presence in the ASRS market and EQT is happy to remain invested in the coming years”.

EQT invests in medium-sized companies operating in a range of industries in Northern Europe, Eastern Europe, China and the US. Sectors of interest include infrastructure, industrials, consumer goods & retail, services, technology, media and telecom, energy, environment, and healthcare. The firm was founded in 1994 in Sweden and has offices in 14 countries across Europe, Asia and North America

This transaction is expected to close during the third quarter of 2019.

© 2019 Private Equity Professional | June 20, 2019

Wynnchurch Buys Cultured Marble Maker

by

Wynnchurch Capital has acquired MPL Company, a maker of cultured marble bath products.

MPL is a build-to-order manufacturer of cultured marble bath products including panels, surrounds, shower pans, and other accessories. Cultured marble is a blend of stone particles, resins, and pigments that is cast in molds to produce specific forms in a range of colors and natural looking patterns.

The company’s customers are active in the hospitality and multi-family housing markets and include Marriott International, Hilton Hotels & Resorts, InterContinental Hotels Group, Choice Hotels International, and La Quinta Inns & Suites. MPL, led by CEO Bob Claxton, was founded in 1962 and is headquartered in Fairland, IN (www.mplcompany.net).

“MPL’s success is driven by our commitment to providing customers with market leading service and quality; we are excited to partner with Wynnchurch in furthering these efforts,” said Mr. Claxton. “Wynnchurch understands what has propelled us to the position we are in today and has the resources to fuel the company’s aspirations for continued growth.”

“MPL has developed strong customer relationships through its impressive product offering, collaborative approach and reliability,” said Paul Ciolino, an operating partner at Wynnchurch. “We are thrilled to partner with Bob and his team to help facilitate the next phase of growth for the business.”

Wynnchurch makes investments in middle-market companies that have revenues of $50 million to $1 billion. Sectors of interest include aerospace & defense, automotive, building products, chemicals, food, logistics, energy services & equipment, environmental services, industrial products & services, metals & mining, and paper & packaging.

“The MPL team has established a strong foundation for growth and we believe that through further investment in the business by Wynnchurch, we can expand on that track record of success,” added Chris O’Brien, a managing partner at Wynnchurch.

Wynnchurch is actively investing from its $1.3 billion fourth fund which closed in November 2014. Earlier this month, Wynnchurch acquired two closed-die forging facilities from publicly traded Allegheny Technologies for $37 million in cash. The acquired closed-die operations are in Portland, IN and Lebanon, KY and produce carbon and alloy steel forged products for blue-chip OEMs primarily in the oil & gas, transportation and construction & mining industries. In April, the firm acquired Alliance Designer Products, a Mirabel, QC-based manufacturer of polymeric sand and other installation products that are used in residential and commercial hardscaping projects. And in February, Wynnchurch acquired Boss Industries, a LaPorte, IN-based maker of power take-off (PTO) rotary screw air compressor systems that are used to power tools that need constant air pressure (jackhammers) and tools that require intermittent air pressure (wrenches and drills).

Wynnchurch was founded in 1999 and is located in the Chicago suburb of Rosemont with additional offices in Los Angeles (El Segundo), and Toronto (www.wynnchurch.com).

© 2019 Private Equity Professional | June 20, 2019

HKW Adds to Xirgo Technologies

by

Xirgo Technologies, a portfolio company of Hammond, Kennedy, Whitney & Company (HKW), has acquired Baltic Car Equipment. HKW acquired Xirgo Technologies in December 2016.

Baltic Car Equipment (BCE) is a provider of telemetry and automotive security products and software used for fleet management of light vehicles, trucks, heavy machinery, and agricultural equipment. The company was founded in 2006 and is headquartered in Kaunas, Lithuania (www.bce.lt/en).

“We are very excited to welcome the BCE team to Xirgo,” said Xirgo CEO Shawn Aleman. “The joining of our companies will allow Xirgo to establish a European footprint improving our access to Europe, the Middle East, and Africa, enabling our companies to target new customers and better serve our existing clients. BCE’s product offering will also provide select North American customers access to customized end to end solutions.”

Xirgo provides M2M (machine-to-machine) telematics modules that support communication among devices connected to the Internet of Things (IoT) sector. M2M refers to devices other than cell phones that use wireless networks to communicate with other devices or networks. Typically, a small device known as an M2M module is embedded in a larger device that needs to communicate over the wireless network.  Xirgo’s products are used in fleet management, heavy equipment, asset tracking, usage-based driving, high-risk vehicle finance, and rental applications. Xirgo is headquartered near Los Angeles in Camarillo, CA (www.xirgotech.com).

“BCE’s geographic footprint and mix of products complement Xirgo’s existing portfolio quite well,” said Luke Phenicie, Lead Transaction Partner at HKW. “We are looking forward to working with founder, Andrius Zabulionis, and director, Giedrius Žibikas, as well as their talented team on this opportunity.  We also feel fortunate to continue HKW’s support of Xirgo as it continues its expansion in the IoT sector.”

Hammond, Kennedy, Whitney & Company invests in companies with revenues between $20 million and $200 million and EBITDAs between $2 million and $20 million. Since 1982, HKW has completed 60 platform management buyouts of small middle-market companies throughout North America as well as 64 add-on acquisitions. The firm was founded in 1903 and is headquartered in Indianapolis with an additional office in New York (www.hkwinc.com).

Near Earth LLC, an investment bank serving the satellite, aerospace and M2M telematics sectors, was the financial and strategic advisor to Xirgo.

© 2019 Private Equity Professional | June 20, 2019