Archives for December 20, 2019

Genstar Buys Truck-Lite

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Genstar Capital has acquired a majority equity interest in Truck-Lite, a provider of safety lighting, filtration systems and telematics services for commercial vehicles, from BDT Capital Partners and Koch Equity Development. Penske Corporation is remaining as a minority investor in the company in partnership with Genstar.

Truck-Lite was founded in 1955 and was acquired in 1997 by Penske with backing from General Electric. Private equity firm Kelso & Co. acquired a 49% equity interest in Truck-Lite in 2010 before exiting its investment through a sale to BDT and Koch Equity in 2015.

Truck-Lite is a producer of forward and safety lighting, wiring harnesses, turn signal switches and safety accessories for the medium- and heavy-duty truck, trailer and commercial vehicle industries.

The company also designs and manufactures the Road Ready telematics systems for heavy- and light-duty trailers and off-road industrial usage; fuel filtration and water separation systems (through its Davco subsidiary); and rugged LED lighting for the off-road and marine industries (through its Lumitec and Rigid Industries subsidiaries).

Truck-Lite has an annual EBITDA of more than $100 million according to industry sources. The company, led by CEO Brian Kupchella, is constructing a new global headquarters in the Detroit suburb of Southfield, Michigan, and has eleven additional facilities in New York; Pennsylvania (4); Michigan (Davco); Florida (Lumitec); Arizona (Rigid Industries); United Kingdom; Mexico; and China.

“We are very excited to partner with Genstar,” said Mr. Kupchella. “We believe its investment philosophy aligns extremely well with Truck-Lite’s long-term strategy and will allow us to accelerate our growth plans, continue to invest in new products and markets, and improve our value proposition to our customers and partners.”

San Francisco-based Genstar invests from $50 million to $400 million in middle-market companies that have enterprise values from $50 million to $1 billion and EBITDAs greater than $15 million.  The firm targets investments in the financial services, software, industrial technology, and healthcare industries. In February 2019, Genstar held a final closing of Genstar Capital Partners IX LP with $5.9 billion in capital commitments.

“Truck-Lite has a leading position in attractive market segments, with a history of innovation, product development and industry superior technology,” said Rob Rutledge, a managing director at Genstar. “For over 60 years they have worked to build strong brand recognition and we see an opportunity to support the continued expansion of the business through growth in new products, technologies, and Truck-Lite’s Road Ready telematics systems and look to further expedite that growth by pursuing strategic acquisitions.”

“Truck-Lite serves as a valuable partner to many of the world’s largest commercial vehicle fleets, OEMs and distributors,” said Patrick Conroy, the chief financial officer of Penske and a member of the Truck-Lite board of directors. “Truck-Lite has a strong history of developing new innovations that make them leaders in providing technologically advanced products that allow truck fleets to operate with improved safety and reduced costs. We look forward to continuing our relationship with Truck-Lite and supporting Genstar to accelerate Truck-Lite’s growth.”

Penske is a closely-held, diversified, on-highway, transportation services company with interest in retail automotive, truck leasing, transportation logistics, and professional motorsports. The company’s combined businesses have revenues of more than $32 billion, more than 64,000 employees, and operations at more than 3,600 locations. Penske is headquartered near Detroit in Bloomfield Township, Michigan.

BDT Capital Partners was founded in 2009 by Byron Trott, the former vice-chairman of Goldman Sachs. The firm manages more than $9 billion across its committed funds as well as $3.7 billion of co-investments from its limited partners. The firm is a bit secretive and does not have a web presence but does maintain offices in Chicago, New York, London, and Frankfurt.

Koch Equity Development (KED) is part of Koch Industries, one of the largest privately-held businesses in America, with estimated annual revenues as high as $100 billion. KED operates from offices in Wichita, Kansas and London, UK.

MidCap Financial was the Administrative Agent, Joint Lead Arranger, and Joint Bookrunner for a senior secured credit facility that supported Genstar’s buy of Truck-Lite. MidCap’s deal team was led by Rodney Craig. MidCap Financial, in alliance with its investment manager Apollo Capital Management, is a middle-market focused finance firm that provides debt instruments of $10 million to $750 million to companies across all industries.

Baird and Barclays were the financial advisors to Truck-Lite on this transaction.

© 2019 Private Equity Professional | December 20, 2019

Thoma Bravo Closes J. D. Power Buy

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J.D. Power, a provider of data analytics and consumer intelligence, has merged with Autodata Solutions, a portfolio company of Thoma Bravo. J.D. Power was acquired by Thoma Bravo from London-based XIO Group. Thoma Bravo acquired Autodata Solutions in May 2019 from Internet Brands, a portfolio company of KKR.

Autodata provides software and SaaS solutions that are used to increase the effectiveness of the automotive sales chain. The company’s products range from back-end automation systems that enable dealer-to-OEM vehicle ordering to data-driven marketing initiatives such as brand websites, dealer websites, and dealership sales tools. Customers of Autodata include most of the automotive companies in North America including Chrysler, Ford, GM, Nissan, Toyota, Mazda, Honda, Hyundai, Kia, Volvo, and Jaguar. The company, founded in 1990, is headquartered in London, Ontario and Troy, Michigan.

J.D. Power is a global provider of consumer insights, advisory services, data, and analytics. The company conducts surveys of customer satisfaction, product quality, and buyer behavior for industries ranging from cars to marketing and advertising firms. J.D. Power is best known for its customer satisfaction research on new-car quality and long-term dependability and its service offerings include industry-wide syndicated studies, proprietary research, consulting, training, and automotive forecasting.

The Costa Mesa, California-headquartered firm, led by CEO Dave Habiger, has over 800 employees and 16 offices serving North America, South America, Asia Pacific, and Europe.

J.D. Power was founded in 1968 by James David Power III. He later sold the company to McGraw Hill Financial in April 2005 for $400 million. XIO Group acquired J.D. Power in September 2016 from McGraw Hill Financial (now S&P Global) for $1.1 billion.

“We saw J.D. Power as an iconic brand with strong upside potential and have been greatly impressed with the management team’s accelerating the digitization of the platform, including the successful implementation of AI initiatives and the introduction of innovative analytics products,” said Joseph Pacini, CEO of XIO Group. “As we exit our investment, we wish them every success in the years ahead.”

The purchase price for J.D. Power was not released by either Thoma Bravo or XIO Group but industry sources report that the company was being valued at up to $1.9 billion. Further, a source familiar with this transaction reports that J.D. Power’s trailing twelve-month EBITDA is approximately $135 million.

The newly combined company led by CEO Dave Habiger, will operate under the name J.D. Power and will be headquartered in Troy, Michigan. Autodata Solutions will operate as a division of J.D. Power and will be led by President Craig Jennings, the former president and CEO of Autodata Solutions.

As part of the merger transaction, J.D. Power’s management team will reinvest their ownership interest in the newly combined company, and all Autodata Solutions and J.D. Power employees will have the opportunity to take an ownership stake in the company.

“The combination of J.D. Power’s deep data, analytics, and customer experience insights with Autodata Solutions’ comprehensive vehicle feature data and dealer and manufacturer technology platforms will create a robust and insightful automotive industry resource for analyzing consumer demand and optimizing the vehicle sales process,” said Mr. Habiger. “As the auto industry continues to be disrupted by changing patterns of consumer behavior and new technologies such as connected vehicles, electric vehicles, autonomous vehicles, and ridesharing, we are building a company that will help the entire industry rise to the challenge.”

“The joining of these two leading companies will enable the auto industry to make the process of configuring, ordering and selling cars more efficient, which can improve profitability and capital deployment,” said Scott Crabill, a managing partner at Thoma Bravo. “This capability is exactly the kind of proven, concrete insight the auto industry needs as it confronts changing consumer demands in a transforming technology environment.”

Thoma Bravo specializes in investing in application, infrastructure and security software and technology-enabled services businesses. The firm’s investments typically are in the form of take-private transactions, leveraged buyouts and growth equity investments in established companies that have or can quickly reach EBITDA of greater than $50 million. Thoma Bravo has offices in Chicago and San Francisco.

XIO Group has more than $5 billion of committed capital and invests in companies across North American and Europe. The firm is headquartered in London with additional offices in Germany, Switzerland, Hong Kong and mainland China.

© 2019 Private Equity Professional | December 20, 2019

J.H. Whitney Exits Confluence Outdoor

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Pelican International, a portfolio company of Fonds de solidarité FTQ (Funds FTQ), has acquired Confluence Outdoor, a portfolio company of J.H. Whitney.

Confluence is a designer, manufacturer, and marketer of kayaks, canoes, surf and stand-up paddleboards, and related accessories. Company-owned brand names include Wilderness Systems, Perception, Dagger, Mad River Canoe, Harmony Gear, and Boardworks. Confluence has a 300,000-square-foot manufacturing and headquarters facility in Greenville, South Carolina.

Confluence was formed in 1998 through the merger of Wilderness Systems and Mad River Canoe and was acquired by American Capital in 2002. J.H. Whitney acquired the company from American Capital in April 2014.

Pelican International is a designer, manufacturer, and marketer of kayaks, stand-up paddleboards, canoes, pedal boats, and fishing boats. The company operates two manufacturing facilities in Laval (headquarters) and in Salaberry-de-Valleyfield, Quebec. Pelican was founded as Eskay Plastics in 1968 by Gérard Élie (the name was changed to Pelican International in 1978) and was purchased by his sons Antoine and Christian Élie in 1995.

“The entire Pelican team, my brother Christian and I are thrilled to welcome the Confluence team to the Pelican family,” said Antoine Élie. “The combination of these two businesses will produce by far the largest and most comprehensive group in the paddle sports space. This paddle sports powerhouse will offer, under the best brands, a complete line-up of products spanning all paddle sports categories, catering to the needs of all types of consumers.”

“The acquisition aims to capitalize on the strengths and capabilities of two synergistic businesses and brands, from the products that make their success to the people that make them shine, in a consolidating and globalizing industry,” said Danick Lavoie, president and CEO of Pelican International. “With more than 800 employees in three manufacturing sites strategically located in North America, an improved distribution network and a strong commitment to innovation, the momentum behind both brands is stronger than ever.”

“Pelican and Confluence are the ideal fit. It’s the optimal union of two industry leaders poised to drive innovation and serve consumers better than ever before. This is very powerful as a force for good for the industry and consumers in general,” said Todd King, vice-president of marketing at Confluence.

J.H. Whitney invests in small and middle-market companies that are active in the consumer, healthcare, specialty manufacturing, and business services sectors. The firm was founded in 1946 and is based in New Canaan, Connecticut.

Funds FTQ, which has been a minority investor in Pelican since December 2015, is a development capital investment fund founded in 1983 by the Quebec Federation of Labor (FTQ), the largest labor union in Quebec with over 500,000 members.

© 2019 Private Equity Professional | December 20, 2019

AEA Closes Funds, Names New CEO

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AEA has finalized two funds with the hard cap close of its seventh flagship fund, AEA Investors Fund VII LP (Fund VII), with total equity commitments of $4.8 billion, and its fourth small business fund, AEA Investors SBF IV LP (Fund SB), with total equity commitments of $877 million.

Fund VII was oversubscribed and backed by both new and existing limited partners including more than 130 public and private pensions, sovereign wealth funds, endowments and foundations, insurance companies, financial institutions, asset managers, fund of funds, and family offices. Fund VII’s general partner committed $275 million of capital, representing the largest single investment in the new fund. AEA’s earlier flagship fund, AEA Investors Fund VI LP, closed with $3.2 billion of capital in 2015.

Fund SB was oversubscribed and received commitments from investors in earlier funds as well as first-time commitments from new institutions. Fund SB’s general partner committed $115 million of capital, representing the largest single investment in the new fund. AEA’s earlier small business fund, AEA Investors SBF III LP, closed in 2015.

With the closing of these new funds, AEA has announced the transition of Brian Hoesterey from president to CEO. AEA’s former chairman and CEO, John Garcia, will remain as executive chairman and continue to serve on the investment committees of all AEA funds with Mr. Hoesterey. Mr. Hoesterey and Mr. Garcia both joined AEA in 1999.

“We are thrilled to close AEA Fund VII at its hard cap, marking yet another important milestone in the firm’s history,” said Mr. Garcia. “The enthusiasm we saw from both our new and existing limited partners around the globe is a testament to the hard work of our team and further solidifies our position as a preferred source of private equity capital for leading management and family-led companies. I look forward to working together with Brian to build upon the firm’s overall strategy, growth and, importantly, its culture which has been core to AEA delivering attractive returns to our investors for many years.”

Fund VII will make control investment of $150 million to $450 million in North American and European-headquartered companies that are active in the value-added industrial, consumer and services sectors.

Fund VII has already closed on two investments with the buys of Jack’s Family Restaurants, a Birmingham, Alabama-based quick-service restaurant serving Southern-inspired food across 162 company-owned units in Alabama, Tennessee, Georgia, and Mississippi (acquired from Onex in July 2019); and Haltom City, Texas-based BMS Enterprises, the second-largest non-franchised provider of property restoration and reconstruction services to commercial and residential end markets in the United States (acquired in September 2019).

Like its larger sibling, Fund SB also makes control investments in North American and European-headquartered companies that are active in the value-added industrial, consumer and services sectors, However, Fund SB targets smaller companies that have enterprise values between $25 million and $250 million. Alan Wilkinson and John Cozzi, both partners at AEA, are the co-heads of the small business funds.

Fund SB closed its first investment in July 2019 with the buy of Allied Power Group (APG), a Houston-based provider of maintenance and repair services for industrial gas turbines, from OFS Energy Fund.

“While our firm has grown, we have maintained our investment philosophy over many years and economic cycles to deliver meaningful returns to our investors,” said Mr. Hoesterey. “We continue to build upon our established investment strategy by leveraging the deep industry/subsector knowledge of our investment and operating partners. Further, our extensive network and global resources are important in identifying and adding value to middle-market businesses that are poised for their next stage of growth. We view ourselves as providing these companies with transformational capital; helping them improve operationally, strategically and financially. As evidenced by our deployment so far, there are substantial opportunities to put capital to work addressing the significant demands across the value-added industrial, consumer and services sectors.”

AEA was founded in 1968 by the Rockefeller, Mellon, and Harriman family interests and S.G. Warburg & Co. as a private investment vehicle for a select group of industrial family offices. The firm, with 80 investment professionals, is headquartered in New York with additional offices in Connecticut, London, Munich and Shanghai.

Kirkland & Ellis provide legal services to AEA on both Fund VII and Fund SB, and AEA did not utilize a placement agent for either of the new funds.

© 2019 Private Equity Professional | December 20, 2019