Archives for 2019

Corinthian Completes Second Dividend Recap of Best Lighting

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Corinthian Capital Group has closed a second dividend recapitalization of Best Lighting Products, one of the largest designers and manufacturers of private-label emergency and exit lighting products in the United States.

Best Lighting sells its products primarily to manufacturers and OEMs in the commercial, industrial, and institutional lighting industries. Other products sold by the company include emergency ballasts and recessed lighting products; and lighting accessories such as bubble guards, wire guards, remote lamp heads, and retrofit kits.

Best Lighting was founded in 1997 and is led by its CEO Jeffrey Katz with a headquarters east of Columbus in Pataskala, OH. The company also operates a manufacturing facility in Dongguan, China and has recently diversified its supply chain to include manufacturing capabilities in Vietnam, Cambodia, Malaysia, and Indonesia.

Corinthian Capital acquired Best Lighting in August 2015 from Wafra Partners. “The partnership with Corinthian Capital since 2015 has provided us additional expertise and resources to execute on the growth opportunities in the industry. Corinthian Capital has supported our product and facility expansion efforts and we look forward to continuing on our strong growth trajectory,” said Mr. Katz.

“Since our acquisition of Best Lighting, we have worked with management to implement a number of initiatives to accelerate growth, including introducing new products, expanding warehouse capacity, and improving strategic supply chain management. I commend the management team for executing on these initiatives and for doing a phenomenal job growing the business,” said Peter Van Raalte, CEO and president of Corinthian Capital.

Corinthian Capital targets investments in North America-based companies with EBITDA between $5 million and $30 million that are active in the light manufacturing and assembly, distribution, and services sectors. The firm was founded in 2005 and is headquartered in New York with an additional office in Boston.

Financing for this dividend recapitalization transaction was provided by BMO Sponsor Finance.

© 2019 Private Equity Professional | December 18, 2019

BGL Looks to Automotive Sector, Adds New MD

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Investment bank Brown Gibbons Lang & Company (BGL) has added Todd Cassidy as a new managing director within its industrials team.

In addition to providing coverage of the general industrials sector, Mr. Cassidy will lead BGL’s expansion into the automotive sector, including automotive supply chain, automotive aftermarket, and the on- and off-highway commercial vehicle sectors.

Mr. Cassidy has nearly 20 years of experience in middle-market investment banking and industry. Prior to joining BGL, from February 2017 to October 2019, he led the North American automotive and aftermarket practice at Raymond James, covering the vehicular supply chain, aftermarket, commercial vehicle, and specialty vehicle markets. Earlier in his career, he spent nearly 10 years in the industrials group at William Blair, where he led the firm’s coverage of the automotive and aftermarket sector. Mr. Cassidy has also held positions in product planning, program management, and engineering at Ford Motor Company, as well as engineering roles at DaimlerChrysler and Boeing.

“I’m thrilled to be joining BGL,” said Mr. Cassidy. “I have been impressed with the firm’s strong reputation and longstanding commitment to the industrial sector. It’s a great time to be joining a team that is committed to growth and is doing so rapidly. I look forward to expanding the firm’s industrial coverage and expertise in the automotive and aftermarket spaces.”

Mr. Cassidy has an MBA from Harvard Business School, an MS in mechanical engineering from the University of Michigan, and a BA in philosophy and a BS in mechanical engineering, both from the University of Notre Dame.

“Todd is an accomplished and trusted advisor who knows how to drive value for his clients,” said Andrew Petryk, the head of BGL’s industrials team. “His unique background in manufacturing and product design, coupled with his years of investment banking experience, have made him a sought-after banker in the automotive industry. We look forward to leveraging his transaction and operational experience for the benefit of our clients.”

Brown Gibbons Lang is a mid-market investment bank that specializes in mergers and acquisitions, divestitures, capital markets, financial restructurings, valuations and fairness opinions. The firm was founded in 1989 and has investment banking offices in Chicago, Cleveland, and Philadelphia.

© 2019 Private Equity Professional | December 18, 2019

Giant Contract Manufacturer of Cosmetics Formed

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Knowlton Development Corporation has agreed to merge with HCT Group to create a global contract manufacturer of cosmetics products.

In December 2018, Cornell Capital and HarbourVest acquired Knowlton Development Corporation (KDC) from Novacap. At that time, members of the senior management team of KDC invested alongside Cornell and HarbourVest, and Caisse de dépôt et placement du Québec (CDPQ) and Investissement Québec (IQ) rolled over significant stakes of their equity as part of the transaction. Both CDPQ and IQ co-invested with Novacap on its buy of KDC in October 2014.

HCT is a contract manufacturer of cosmetic products and provides a range of services including concept development and design, manufacturing, fill and assembly, and logistics.

HCT was founded by Chris Thorpe, along with his wife Clare and eldest son James, in 1992. The company is headquartered in Santa Monica with additional offices in New York, New Jersey, London, Paris, Milan, Hong Kong, South Korea and Shanghai.

At the close of the KDC and HCT merger, which is expected in early 2020, Cornell Capital and HarbourVest and their co-investors will have a controlling equity interest in the combined companies.

KDC is a contract manufacturer of regulated and non-regulated personal care products including lotions, soaps, fragrances, cosmetics and deodorants. The company also manufactures home care products (disinfectants, cleaners, and detergents), industrial products (floor waxes, protectants, cleaners, degreasers, and disinfectants), and auto care products (car waxes, protectants, cleaners, and air care).

KDC, founded in 2002, has approximately 5,000 employees and is headquartered near Montreal in Longueuil, Québec with 16 operating facilities throughout North America, the UK, France and the Czech Republic.

Under Cornell and HarbourVest ownership, KDC has made three add-on acquisitions to scale the platform, acquire new technologies and expand globally. In July 2019, the company acquired the manufacturing business of UK-based Swallowfield, a contract manufacturer of personal care and beauty products; also in July 2019, KDC acquired Alkos, a France-based contract manufacturer of makeup, skincare products, cosmetic pencils and perfumed soaps; and in November 2019, KDC acquired Benchmark Cosmetic Laboratories, a California-based formulator of skin, hair and sun care products.

“Together, these businesses will provide greater innovation and growth opportunities in one of the most attractive subsectors in the consumer packaged goods space,” said Justine Cheng, the chair of the KDC board of directors and a partner at Cornell Capital. “KDC and HCT have best-in-class management teams and we expect that coupling KDC’s manufacturing capabilities with HCT’s packaging design expertise will enable the new platform to better serve its customers globally. In addition, the transaction will improve the overall financial profile of the companies through further diversification and increased scale.”

Following the close of the merger, Nicholas Whitley, the president and CEO of KDC, and Tim Thorpe, the president and CEO of HCT, will continue as CEOs of each business.

“This transformative transaction will enhance how we serve beauty and personal care brands around the world,” said Mr. Whitley. “Our vertically integrated platform will offer the industry a true one-stop solution. With the support of our partners at Cornell Capital, as well as CDPQ, IQ and HarbourVest, we have been able to build our reputation as a top-tier innovator for an expanded base of customers. HCT’s cutting-edge designs, engineering, manufacturing and global reach will enable us to further elevate our product and service offerings to better serve and anticipate the evolving needs of our valued customers.”

Cornell Capital was founded in 2013 by Henry Cornell, the former Vice Chairman of Goldman Sachs’ Merchant Banking Division, to invest in companies in the consumer, energy, financial and industrial sectors. In June 2018, the firm held a final closing of its inaugural private equity fund, Cornell Capital Partners LP, with total capital commitments of $1.3 billion.  The firm has offices in New York and Hong Kong.

HarbourVest invests in venture capital, buyout, mezzanine debt, credit, and real estate through primary fund investments, secondary purchases, and direct co-investments.  The firm has more than 500 employees, including 125 investment professionals, located in Asia, Europe, Latin America, and the United States.  In over 30 years of investing in private equity, the firm has committed more than $36 billion to newly-formed funds, completed over $21 billion in secondary purchases, and invested $10 billion directly in operating companies. HarbourVest is headquartered in Boston with additional offices in Beijing, Bogotá, Hong Kong, London, Seoul, Tel Aviv, Tokyo, and Toronto.

UBS Securities and Jefferies are acting as joint lead arrangers for the debt financing for this transaction. Jefferies is the financial advisor to KDC and Cornell Capital, and Houlihan Lokey is the financial advisor to HCT.

© 2019 Private Equity Professional | December 17, 2019

Frontenac Sells Liquid Technologies to Pritzker

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PLZ Aeroscience, a portfolio company of Pritzker Private Capital, has acquired Liquid Technologies, a contract formulator and manufacturer of personal care products, from Frontenac.

Liquid Technologies’ (LTI) capabilities include formulation, development, blend manufacturing, filling and packaging. Products include shampoos, conditioners, styling products and aerosols, in addition to skincare products such as creams and lotions.

The company’s customers range from small growth-oriented startup brands and salons to established mid-sized brands. LTI, led by CEO Steve Dickstein, was founded in 1998 and is headquartered east of Los Angeles in Chino, California.

Frontenac acquired LTI in April 2016. “During our ownership, we invested in the successful implementation of numerous growth initiatives and unlocked significant value through operational improvements,” said Neal Sahney, a vice president at Frontenac. “The company doubled in size in under four years and is positioned for continued growth under new ownership and leadership from PLZ.”

PLZ Aeroscience develops, manufactures, packages and distributes a line of contract fill, branded and private-label products including industrial solvents, lubricants and degreasers, adhesives, sanitary supply disinfectants, insecticides, cleaners, polishes, air fresheners and personal care products.  The company, led by CEO Ed Byczynski, is headquartered near Chicago in Addison, Illinois. Pritzker Private Capital acquired PLZ Aeroscience in July 2015 from Olympus Partners.

“We are thrilled to be partnering with Steve Dickstein and the LTI team,” said Mr. Byczynski “We believe the combination of PLZ and LTI will make us better partners to our customers as we will now be able to offer them a full suite of personal care products across a national footprint.”

Frontenac invests in lower middle-market businesses that operate primarily in the food, industrial, and services industries. The firm was founded in 1971 and is headquartered in Chicago.

“Partnering with growth-focused, founder-owned businesses is a core pillar of our strategy and we are delighted by the successful partnership we forged with Liquid Technologies,” said Ron Kuehl, a managing director of Frontenac.

Pritzker Private Capital (PPC) acquires North America-based middle-market companies that have enterprise values between $100 million and $750 million and EBITDA in excess of $15 million. Sectors of interest include manufactured products, services and healthcare. The firm is led by Tony Pritzker and the former investment and operating professionals of Pritzker Group Private Capital. In July 2018, PPC held a final closing of PPC Fund II LP at its hard cap of $1.8 billion. The firm has offices in Chicago and Los Angeles.

SunTrust Robinson Humphrey was the financial advisor to Liquid Technologies.

© 2019 Private Equity Professional | December 17, 2019

Ampersand Builds Peptide Maker

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New England Peptide, a portfolio company of Ampersand Capital Partners since October 2019, has acquired Peptides International.

A peptide is a chain of no more than 50 amino acids and they have the same structure as proteins which are composed of chains of hundreds to thousands of amino acids. Simply, a peptide is the scientific word for a small piece of protein and peptides are widely used to study how proteins function in the human body. Manufacturers of peptides can alter their design to increase or decrease their functionalities according to the needs of the end-user.

Peptides International (PI) manufactures and distributes catalog and custom peptides, enzyme substrates and inhibitors, polymers and other related products which are sold to pharmaceutical, biotech, life sciences, and research companies.

The business, led by CEO Jackie Spatola, was founded in 1983 and has a 12,000 square foot facility and headquarters in Louisville, Kentucky.

“Ampersand Capital’s acquisition of PI enables high-quality custom peptide market development, which fortifies our 35-year-old company’s world leader strategy and position,” said Ms. Spatola. “We look forward to offering even better services to our worldwide customer base through working with New England Peptide.”

New England Peptide (NEP) designs and manufactures peptide and antibody solutions that are sold to pharmaceutical companies, biotech companies, research universities and hospitals. The company specializes in custom peptide synthesis, polyclonal antibody production, stable-labeled bioanalytical peptide standards, and catalog peptide products. NEP, led by founder and CEO Sam Massoni, was founded in 1998 and has a 25,000 square foot facility and headquarters in Gardner, Massachusetts.

“Whereas New England Peptide has a leading position in manufacturing thousands of small-scale peptides and antibody-related services, Peptides International is best known for making larger-scale quantities of high-quality custom peptides and for maintaining a unique catalog of off-the-shelf products,” said José de Chastonay, chairman of the NEP board of directors. “The combination of the two companies creates a comprehensive, “one-stop-shop” for non-GMP peptides.”

“Ampersand’s goal with our original investment in New England Peptide earlier this year was to build a world-class leader in peptide synthesis services, and this transaction furthers that goal,” said Eric Lev, a partner at Ampersand. “Ampersand looks forward to working with the management team in the next phase of organic and inorganic growth as the company strives to provide industry-leading peptide solutions to the biotechnology, pharmaceutical, and academic markets.”

Ampersand makes majority or minority equity investments of $10 million to $50 million in healthcare-related companies that have from $10 million to $100 million of revenue. Ampersand is typically the first institutional investor in founder-owned businesses.  Sectors of specific interest within healthcare include laboratory services; laboratory products; contract manufacturing; pharmaceutical services; specialty pharmaceuticals; and healthcare services. Ampersand was founded in 1988 and is based in the Boston suburb of Wellesley, Massachusetts.

© 2019 Private Equity Professional | December 17, 2019

Gryphon Closes Second Mezz Fund at Hard Cap

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Gryphon Investors has held a final closing of Gryphon Mezzanine Partners II LP at its hard cap with $300 million of capital commitments. The new fund was oversubscribed and closed above its $225 million target with commitments from both new and existing limited partners.

The new mezzanine fund will participate on a minority basis in the junior debt financings of Gryphon portfolio companies, in all cases led by independent third-party lenders. This is Gryphon’s second junior debt fund and follows Gryphon Mezzanine Partners LP which closed in August 2017 at its hard cap of $105 million.

Gryphon makes leveraged acquisitions and growth investments in middle-market companies. The firm invests from $100 million to $300 million of capital in companies with sales ranging from $100 million to $500 million and EBITDA of up to $50 million. Sectors of interest include business services, consumer products and services, healthcare, industrial growth, and software.

“Our mezzanine strategy was initiated to satisfy the demand of a number of the firm’s limited partners seeking attractive risk-adjusted yields in the junior debt securities of Gryphon portfolio companies,” said Gryphon founder and CEO David Andrews. “We viewed this as an opportunity to add a complementary strategy to our primary strategy of control equity investing. We are pleased that the fund has been well-received, both by existing investors and investors not previously invested in Gryphon funds. As always, we very much appreciate their enthusiastic support.”

In April 2019, the firm held a final closing of Gryphon Partners V LP at its hard cap of $2.1 billion. This fund now includes eight portfolio companies and is approximately 80% committed.

  • Heartland Veterinary Partners, a Chicago-based veterinary support organization with nearly 100 veterinary practices across the Mid-American and Southern markets, acquired in December 2019;
  • Mechanix Wear, a Valencia, California-based designer and manufacturer of work gloves and personal protective equipment, acquired in October 2019;
  • LEARN Behavioral, a Baltimore, Maryland-based provider of behavioral health treatment services for children with autism and other special needs, acquired in March 2019;
  • Milani Cosmetics, a Vernon, California-based “masstige” beauty company that markets its face, lip and eye products under the Milani and Jordana brands, acquired in June 2018. Masstige is a marketing term and is a portmanteau of the words mass and prestige and has been described as “prestige for the masses”;
  • RegEd, a Morrisville, North Carolina-based SaaS provider of governance, risk, and compliance services to the financial sector, acquired in December 2018;
  • RoC Skincare, a New York-based anti-wrinkle and anti-aging skincare brand, acquired in December 2018;
  • Shermco Industries, an Irving, Texas-based provider of testing, maintenance, and repair services for electrical infrastructure, acquired in June 2018;
  • Transportation Insight, a Hickory, North Carolina-based provider of non-asset logistics and freight brokerage services, acquired in August 2018.

Gryphon Investors was founded in 1997 and is headquartered in San Francisco.

© 2019 Private Equity Professional | December 17, 2019