Archives for January 10, 2020

AEA Carves Out Pest Products Business

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AEA Investors has acquired the environmental sciences business (Environmental Sciences) of publicly traded Univar Solutions for $195 million.

Austin, Texas-based Environmental Sciences is a distributor of pest control products and a provider of related services. The company’s products include a range of pesticides and rodent control devices that are sold to thousands of local service providers within the structural pest control, public health, wildlife management, industrial vegetation management, and post-harvest end markets.

“Environmental Sciences is already well established as an industry leader in pest management, and we are confident that AEA has the right resources and vision to position the business for long term sustainable growth,” said David Jukes, Univar’s president and chief executive officer.

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.

In December 2019, AEA finalized two new 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. AEA’s investment in Environmental Sciences was made through Fund SB.

Trace McEuen, a vice president of Environmental Sciences, will continue to lead the business under AEA’s ownership. “AEA has a deep understanding of the Environmental Sciences business and our future opportunities, including our ability to meet the growing demand in our existing and adjacent end markets,” said Mr. McEuen. “As a standalone company, with the focused ownership and committed resources of AEA, we expect to be even better positioned to serve our customers and partner with suppliers as we drive growth and build on the momentum we have already created at Univar Solutions.”

Univar Solutions (NYSE: UNVR) is a chemical and ingredient distributor headquartered near Chicago in Downers Grove, Illinois. In 2018, the company had revenues of more than $8.6 billion. Univar was founded in 1924 as Van Waters & Rogers and changed its name to Univar in 1974. Following the acquisition of Nexeo Solutions in March 2019, the company changed its name to Univar Solutions.

MidCap Financial was the Administrative Agent, Joint Lead Arranger and Joint Bookrunner for a $120.5 million senior secured credit facility that supported AEA’s buy of Environmental Sciences. MidCap’s deal team was led by Managing Director Puja Parekh. 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.

Piper Jaffray & Co. (now Piper Sandler Companies (NYSE: PIPR) as of January 1, 2020) was the financial advisor to Univar on this transaction.

© 2020 Private Equity Professional | January 10, 2020

Shoreline Partners Up to Acquire Mr. Greens

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Following hard on the heels of its hard cap, first fund close earlier this week at $300 million, Shoreline Equity Partners has made an investment in Florida Veg Investments (DBA Mr. Greens) in partnership with the company’s owners, management team, and other investors.

Mr. Greens is a value-added distributor of produce, dairy, and dry goods to more than 1,500 restaurants, hotels, country clubs, caterers, grocery stores, cruise ships and other export and retail clients. The company makes product deliveries 365 days a year, 7 days a week, with multiple delivery runs every day.

Miami-based Mr. Greens was acquired by Chairman Peter Politis in August 2011 and has grown from six employees in a 3,000 square foot facility to over 270 employees across three facilities with a total of 125,000 square feet. The Mr. Greens management team, including CEO Nick Politis (cousin of Peter Politis), will continue to lead the company under Shoreline ownership and maintains a significant ownership position in the company.

“Peter, Nick, and the rest of the Mr. Greens team have built an incredible business that has redefined customer service in the produce distribution space,” said Mike Hand, managing partner at Shoreline. “We are extremely grateful to be able to partner with the Mr. Greens’ team to help accelerate growth both organically and through add-on acquisitions.” According to Mr. Hand, Mr. Greens continues to grow rapidly and is immediately pursuing add-on acquisition opportunities across the country.

“We are thrilled with our new partnership with Shoreline as they share our vision for the future of Mr. Greens,” said Peter Politis. “As we grow, we will continue to remain committed to holding ourselves to the highest standard on product quality, service, and customer satisfaction.”

“We are very excited to be partnering with Shoreline to continue to grow Mr. Greens and accelerate expansion into new markets across the country,” said Nick Politis. “Our partnership with Shoreline will allow us to make significant investments in the business to further enhance our capabilities and chef-driven service model.”

The Shoreline transaction team for this investment was led by Mr. Hand; Partner Peter Franz; Vice President Ian Garland; Vice President Zach Mittelmark; and Associate Mike Mancini.

Jacksonville, Florida-based Shoreline invests up to $100 million per transaction in support of buyouts, recapitalizations, and corporate divestitures. Typical target companies will have enterprise values from $25 million to $250 million and EBITDA of $5 million to $25 million. Areas of interest include non-capital-intensive businesses within the specialized manufacturing, value-added distribution, and business and industrial services sectors. Shoreline was founded in March 2019 by Michael Hand and Peter Franz.

Al Recher, the president and CEO of Five Star Food Service, a Chattanooga-based provider of on-site food and beverage services, and Fred LeFranc, founding partner of Results Thru Strategy, a Charlotte-based consulting firm, advised Shoreline on the transaction and have joined the board of directors of Mr. Greens. Five Star Food Service is a former portfolio company of PNC Riverarch. Mr. Hand led the acquisition of Five Star in October 2016 when he was a managing director at PNC Riverarch before leaving in 2019 to form Shoreline with Mr. Franz. Five Star was sold by PNC Riverarch to Freeman Spogli in March 2019.

Nuveen, Private Advisors (an affiliate of New York Life Insurance Company), investors affiliated with The Hillman Company (a Pittsburgh-based family office), NXT Capital, and Mr. Greens’ management have co-invested alongside Shoreline.  Senior financing for the transaction was provided by NXT Capital and the junior debt financing was provided by Nuveen.

SunTrust Robinson Humphrey was the financial advisor to Mr. Greens on this transaction.

© 2020 Private Equity Professional | January 10, 2020

After Long Hold, Blue Point Sells Lion to Encore

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Encore Consumer Capital has acquired Lion Beverages, a contract and branded manufacturer of specialty beverages, from Blue Point Capital Partners.

Lion Beverages provides brewing, blending, canning, bottling, and packaging services for a wide array of customers including large national beverage brands. The company’s products include energy drinks, non-alcoholic brewed beverages, better-for-you sodas, and craft beer. Lion annually produces approximately 50,000 barrels of its own beers, sold under the Lionshead and Stegmaier brands, for regional distribution in the Northeast. The company, led by President Jeff Meoni and CEO Michael Clarke, is headquartered in Wilkes-Barre, Pennsylvania.

“We are very energized and excited to work with the Encore team,” said Mr. Clarke. “We have a terrific opportunity to leverage Encore’s abilities and expertise as the business continues to drive to reach its full potential.”

“With its experienced management team and efficient operation, we feel Lion is well-positioned for growth in the specialty beverage category over the next few years,” said Scott Sellers, a managing director at Encore.

Encore Consumer Capital invests from $5 million to $30 million in consumer products companies that have revenues between $10 million and $100 million and where it can utilize its own consumer experience and the expertise of its operating partners at Encore Associates, a strategic advisory firm to the consumer products industry. San Francisco-based Encore was founded in 2005 and is currently investing out of its $260 million third fund which closed in 2016.

Encore has been active in the beverages space and acquired Kyla, a Hood River, OR-based brewer of alcoholic kombucha in May 2019; and Full Sail Brewing, a Hood River, OR-based brewer of craft beer under the Session and Full Sail brands in March 2015.

“Lion’s location is ideal to serve the densely populated Northeast, and its consistency in product quality and delivery has afforded the company with demand that exceeds its current capacity,” said Juli Marley, a partner with Blue Point.  “We are delighted to see that our support of the business and management team created numerous growth opportunities and positioned Lion to continue to build on and realize optimized results throughout its future.”

Blue Point first invested in Lion in October 2007 and its investment was held through U.S. Drinks LLC, a portfolio company of Blue Point’s $400 million second fund which was raised in 2006. During Blue Point’s more than 12-year ownership term, EBITDA at Lion nearly doubled.

Blue Point invests in companies that are active in the manufacturing, distribution and business services sectors and have from $20 million to $300 million in revenue and EBITDA greater than $5 million. The firm has offices in Cleveland, Charlotte, Seattle, and Shanghai.

Cascadia Capital was the financial advisor to Lion on this transaction.

© 2020 Private Equity Professional | January 10, 2020

MiddleGround Grabs Fourth Platform with Banner Buy

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MiddleGround Capital has acquired Banner Industries, a processor and distributor of metal bar products.

Banner has more than 200,000 square feet of production floor space and maintains a metals inventory of more than 4,000 tons. The company was founded in 1961 and is headquartered near Chicago in Carol Stream, Illinois with additional facilities in Ohio, North Carolina, Indiana, and Texas.

Banner Industries operates through two divisions – Banner Service Corporation and Banner Medical Innovations.

Banner Service (BSC) is a value-added distributor of carbon and stainless steel, aluminum, brass, titanium, and other exotic materials. The divisions’ value-added metal services include straightening, turning, grinding, chamfering (beveling), chrome-plating, line marking, polishing, and non-destructive testing. The customers of BSC include industrial businesses and steel service centers that are active in the irrigation, diesel fuel systems, electric motors, agriculture, aerospace, and automotive sectors.

Banner Medical (BMI) processes medical-grade metals for device manufacturers in orthopedic, spine, dental, and other medical fields.

MiddleGround Capital makes control equity investments from $25 million to $65 million in North American-based business-to-business companies in the industrial and specialty distribution sectors that have enterprise values of up to $200 million. The firm was formed in May of 2018 by former Monomoy Capital professionals John Stewart, Lauren Mulholland and Scot Duncan.

“Banner is a proven leader serving a critical role within the metals supply chain and has an impressive history of growth,” said Mr. Stewart. “We are excited to partner with the Banner team to further expand the business, both organically and through strategic add-on acquisitions.”

The buy of Banner is the fourth platform investment for the firm’s inaugural private equity fund, MiddleGround Capital I LP, which had a final close in September 2019 with $459.5 million of capital.

The three earlier platform acquisitions include Alco Manufacturing, a Elyria, Ohio-based maker of steel, aluminum, and brass connectors used in industrial and consumer applications (acquired in July 2018); Peterson Spring, a Southfield, Michigan-based maker of springs and wire forms for automotive OEMs, motorsport/racing and industrial companies (acquired in April 2019); and Steel Craft, a Hartford, Wisconsin-based provider of outsourced manufacturing services including fabrication, welding, stamping and coating (acquired in May 2019).

“We were looking for a partner who had the right operational experience and shared the same strategic vision,” said Banner president and CEO Mark Redding. “We have found that in the MiddleGround team and look forward to working together as we continue to grow and serve our customers.”

MiddleGround is headquartered in Lexington, Kentucky with an additional office in New York City.

© 2020 Private Equity Professional | January 10, 2020