Archives for November 8, 2019

Hanover Forms Ag Equipment Platform

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Hanover Partners has acquired Westside Equipment Company, a designer and manufacturer of tomato harvesting and pistachio harvesting equipment. Greyrock Capital Group was a co-investor in this transaction alongside Hanover.

Westside Equipment is headquartered in Madera, CA in the heart of California’s central valley – home of 95% of the United States’ domestic processed tomato production. The company has three additional branch offices in California and a company-owned distribution facility in Chile.

According to Hanover, Westside is the market leader in tomato harvesters for processed tomato applications, with multiple models sold under the Commander, Johnson, and STAR brands. The company’s customers include many of the world’s major tomato and pistachio processors and farms located near the company’s headquarters and its products are also sold internationally in Brazil, Peru, Spain, Israel, Australia, and China. In addition to its tomato and pistachio harvesting equipment, the company also provides related aftermarket parts.

“In reviewing the Westside opportunity, we were especially impressed with the company’s long-term and leading brand name, robust organization, product development core-competencies, commanding market share, and exceptionally high recurring revenues for an equipment manufacturer,” said Aaron Aiken, a partner with Hanover. “In addition, we were attracted to the overall stability of the processed tomato market, as well as the significant growth of the pistachio market.”

Westside was founded in 1986 by six entrepreneurs and two of its co-founders, Dan Rodrick and John Perez, have both reinvested in the company in partnership with Hanover. Mr. Rodrick will continue as CEO of Westside and Mr. Perez will remain a board member of the company.

“My team and I are excited to partner with Hanover to build upon Westside’s dominant market share in tomato harvesters and expand into other related agricultural machinery equipment applications,” said Mr. Rodrick. “We were attracted to Hanover’s decades of experience backing the growth of specialty equipment manufacturers and their support will enable to us to better serve our existing customers, as well as enhance our new product development efforts both internally and via acquisition.”

The buy of Westside is Hanover’s third new platform investment in the last year and a half, and its second transaction of 2019, including its July exit, after just over a four-year hold, of Freedom Communication Technologies, a Kilgore, TX-based maker of land-based mobile radio test equipment, which was sold to Astronics (NASDAQ: ATRO).

The two other recently acquired Hanover platforms include Ligchine International, a Floyds Knobs, IN-based (near Louisville, KY) maker of laser-guided boom operated concrete screeds which are used to flatten and level concrete floors. Ligchine was acquired in August 2018 in partnership with Blue Sage Capital; and Blast Deflectors, a Reno, NV-based manufacturer of jet blast deflectors, ground run-up enclosures, and end-around taxiway screens used in aviation infrastructure applications. Blast Deflectors, and its sister-company APS Germany, were acquired in March 2018 with Greyrock Capital Group as a co-investor.

Hanover Partners makes control investments in lower middle-market companies that are active in the specialty equipment, industrial equipment, niche branded consumer products and non-consumer software sectors. Typical targets will have enterprise values of $8 million to $60 million, revenues of at least $8 million, and adjusted EBIT of $2 million to $8 million. With the addition of Westside, Hanover now has six active portfolio companies located across the United States. Hanover was founded in 1994 by John Palmer and Andrew Ford and has offices in the Portland suburb of Lake Oswego and in San Francisco.

Greyrock Capital Group, Hanover’s co-investor in Westside, provides from $5 million to $35 million of subordinated debt and equity to lower middle-market companies that have revenues of at least $10 million and EBITDA of at least $3 million. In February 2017, the firm held a final closing of its oversubscribed and above target fourth fund, GCG Investors IV LP, with $275 million of capital. Greyrock has offices in Berkeley, CA; Chicago, IL; and Wilton, CT.

© 2019 Private Equity Professional | November 8, 2019

Boyne Buys Engineered Soils Maker

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Greenrise Technologies, a portfolio company of Boyne Capital since August 2017, has acquired Southern Nurseries, a manufacturer and supplier of engineered soils.

Southern Nurseries’ products are sold to commercial and residential customers located in the Nashville metropolitan area and include the Holy Cow! Soils brand of biofiltration soils which are used to clean and absorb stormwater runoff, and are applied in the development of retention reservoirs, erosion control applications, and landscaping.

Southern also sells topsoil, compost, mulches, gravels, and hardscaping materials. The company, based in Hendersonville, TN, was founded by President Terry Flatt in 1983.

Greenrise Technologies is a provider of infrastructure services – including design, component selection, installation and maintenance – for green roofs and outdoor landscapes. According to Greenrise, green roofs have several advantages over empty and unused space including stormwater runoff reduction, better insulation and roof life extension. The company is led by CEO Ray Derbecker and is headquartered near Nashville in Readyville, TN.

“The custom soils that make up the Southern Nurseries product suite are critical to on-roof applications given their weight and water retention properties,” said Mr. Derbecker. “Southern Nurseries enhances our portfolio, allowing us to leverage our robust component supply chain to reliably serve our customers and provide market-leading pricing. We are planning to expand Southern Nurseries’ geographic reach and are delighted to welcome the team to Greenrise.”

“Southern Nurseries fits perfectly within the Greenrise mission to ‘deliver innovative, reliable, and precisely engineered green roof and stormwater management turnkey systems, landscape media, componentry and maintenance.’ We are excited to support the growth of Greenrise through this strategic investment,” said Derek McDowell, Boyne’s managing partner and CEO.

Boyne makes investments in lower middle-market market companies that have revenues of less than $100 million and EBITDA of $2 million to $10 million. Sectors of interest include healthcare services, agriculture, consumer products, niche manufacturing, and business and financial services. Boyne was founded by Mr. McDowell in 2006 and is headquartered in Miami.

© 2019 Private Equity Professional | November 8, 2019

NovaQuest Hits Hard Cap on Latest Fund

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NovaQuest Capital has held a hard cap closing of NovaQuest Private Equity Fund I LP with $275 million of capital. NovaQuest now has more than $3 billion of capital under management.

Limited partners in the new fund include a range of institutional investors, including insurance companies, pension plans, asset managers, and family offices.  The new fund will invest in North American-based companies that are active in the tech-enabled healthcare and pharmaceutical services sectors.

“We are thrilled to have achieved this important milestone and are grateful for the support we received from our new and existing limited partners,” said Jeff Edwards, a partner at NovaQuest.

Eaton Partners, a subsidiary of Stifel Financial (NYSE: SF), was the placement agent for this fundraise. “Eaton Partners was a thoughtful, knowledgeable, and committed fundraising partner,” added Mr. Edwards.

Raleigh, NC-based NovaQuest was formed in 2000 and makes product-based investments in late-stage clinical and commercial biopharma programs, and acquires middle-market healthcare companies. The firm has been actively investing out of its new fund and has closed on three platform investments as follows:

  • Azurity Pharmaceuticals (formerly CutisPharma) is a Woburn, MA-based specialty pharmaceutical company that provides customized drug doses and user-friendly formulations for pediatric and elderly patients that are not served by commercially available therapies (acquired in March 2018). In June 2019, Azurity added-on with the buy of Silvergate Pharmaceuticals, a Greenwood Village, CO-based specialty pharmaceuticals company that develops and commercializes pediatric medications, from Frazier Healthcare Partners;
  • Clinical Ink, is a Winston-Salem, NC provider of real-time and same-day data capture and data integration technology used in clinical research trials (acquired in May 2018); and

“NovaQuest’s strategic partners, operating advisory board, and deep industry network differentiates NovaQuest with powerful value creation capabilities for middle-market healthcare companies,” said Eric Deyle, a managing director and co-head of private equity at Eaton Partners.

Eaton Partners was founded in 1983 and advises and raises institutional capital for investment managers across alternative strategies – private equity, private credit, real assets, real estate, and hedge funds – in both the primary and secondary markets. The firm is headquartered in Rowayton, CT and has offices throughout North America, Europe and Asia.

“It has been our pleasure to partner with one of the leading life sciences and healthcare investors and the entire NovaQuest team on a successful fundraise,” added Jeff Eaton, a partner at Eaton Partners.

© 2019 Private Equity Professional | November 8, 2019

Gridiron Building IT and Data Operating Talent

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Gridiron Capital has hired Jeff Steinhorn as the firm’s newest operating partner. Gridiron has been active in expanding its operating capabilities in information and process technology, digital marketing, data analytics, artificial intelligence, and machine learning.

“We are thrilled to have Jeff join the Gridiron team, as we continue to expand upon the digital and data capabilities we started building several years ago,” said Tom Burger, co-founder and managing partner of Gridiron. “Jeff demonstrates all the qualities we look for in an operating partner.”

Prior to joining Gridiron, from 2014 to 2019, Mr. Steinhorn was the chief information officer (CIO) for Johnson & Johnson’s Janssen Pharmaceutical business, and earlier was the CIO for Johnson & Johnson’s consumer medical devices business. Before his time at Johnson & Johnson, Mr. Steinhorn held CIO positions at energy company Hess (2006 to 2013) and Linens ‘n’ Things (2001 to 2006). Mr. Steinhorn has his undergraduate degree in business from the University of Vermont.

Gridiron invests in manufacturing, service and specialty consumer companies that have EBITDAs from $8 million to $50 million. Sectors of interest include branded consumer, B2B and B2C services, and niche industrial.

Gridiron has been an active investor in 2019 and recently closed three new platforms with the buys of Colibri Group, a St. Louis-based provider of online learning services for professionals operating in regulated end markets, from Quad-C (May 2019); Jacent, a Huntingdon Valley, PA-based distributor and merchandiser of non-edible, general merchandise impulse items sold through grocery stores and other retail channels, from Lariat Partners (April 2019); and Remington Products Company, a Wadsworth, OH-based maker of branded and private label orthotic products sold to specialty retailers, footcare OEMs, and orthopedic soft goods distributors, from Remington’s employee stock ownership plan (April 2019).

“We continue to invest in differentiated digital and technology transformation capabilities to support our partnership companies,” said Kevin Jackson, a managing partner at Gridiron. “Jeff’s track record of success in these areas adds tremendous value and we are excited to have him on the Gridiron team.”

In October 2016, Gridiron held a final closing of the firm’s third fund, Gridiron Capital Fund III LP, at the hard cap of $850 million. The firm is headquartered in New Canaan, CT.

© 2019 Private Equity Professional | November 8, 2019