Archives for February 2020

Olympus Closes Big Add-On to Liquibox

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Liquibox, a maker of liquid packaging products and a portfolio company of Olympus Partners, has closed the buy of the plastics division of DS Smith, for $583 million.

The plastics division (PD) of DS Smith, headquartered near Chicago in Romeoville, Illinois, is a provider of flexible packaging and dispensing products; rigid packaging and containers, and foam products. In 2018, PD had total sales of $479 million.

Liquibox is a supplier of bag-in-box flexible packaging to the dairy, beverage and bulk food markets, and also produces pouches and rigid plastic water bottles. Bag-in-box packaging is primarily used in the foodservice industry to package dairy mix for milkshakes and coffee drinks, fountain beverage syrup and pumpable liquid foods such as food concentrates and sauces. Liquibox, founded in 1961, is headquartered in Richmond, Virginia and has 23 locations around the world. In 2018, Liquibox had revenues of $177 million.

The combination of Liquibox and PD has 35 manufacturing facilities and nearly 3,000 employees. With the close of the acquisition, PD’s flexible packaging and dispensing products will be branded and operate as part of Liquibox, while PD’s rigid businesses for extruded products, injection-molded products, and foam products will be split into three newly branded and independently operated businesses as, respectively, Corplex, DW Reusables and Engineered Foam Products.

This transaction was originally announced in March 2019 but was delayed due to anti-trust concerns in the United States. Earlier this month, Liquibox agreed with a proposal from the Justice Department to divest all of PD’s dairy, post-mix, smoothie, and wine bag-in-box product lines in the United States.

“Liquibox is a core holding for Olympus Partners. The PD acquisition is an important step in achieving our longer-term plan, and we plan to continue to invest in the business in support of its growth strategy,” said Manu Bettegowda, a partner at Olympus.

“We’re excited to complete this transformational acquisition and welcome the PD employees to our team,” said Ken Swanson, CEO of Liquibox. “The new structure and brand identity of these businesses further support our strategy and commitment to lead the way with sustainable packaging solutions. Our best-in-class converting and molding equipment, coupled with further advancements in materials and design will be a big benefit to our customers. We’re excited to unlock additional value through an expanded range of film, bag and dispensing fitments, our best-in-class filler solutions, and an expanded global reach.”

Olympus invests in a range of industries but has a specific interest in business services, food services, consumer products, healthcare services, financial services, industrial services and manufacturing. In December 2017, the firm held a final closing of its seventh institutional private equity fund, Olympus Growth Fund VII LP, with an oversubscribed $3 billion of capital commitments. The firm was founded in 1988 and is based in Stamford, Connecticut.

MidCap Financial was the Joint Lead Arranger and Joint Bookrunner for a $605 million senior secured credit facility that supported Liquibox’s acquisition of the plastics division of DS Smith. 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.

London-based DS Smith (LSE: SMDS) is an international paper and plastic packaging business with more than $7 billion in annual revenues and 32,000 world-wide employees.

© 2020 Private Equity Professional | February 28, 2020

O2 Closes First Fund III Platform

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O2 Investment Partners has acquired sister-companies First Class Air Support and Cargo Repair LLC, the first platform investment for the firm’s third fund.

First Class Air Support is a worldwide distributor of more than 100,000 SKUs of new and overhauled aftermarket aircraft components. The company was founded in 2001 by CEO Isac Roths. In 2012, Mr. Roths founded Cargo Repair, a Federal Aviation Administration (FAA) and European Union Aviation Safety Agency (EASA) certified repair station specializing in the maintenance, repair, and overhaul (MRO) of cargo loading system components installed in Boeing, Douglas and Airbus aircraft.

Customers of both First Class Air Support and Cargo Repair are primarily airlines, ranging from large domestic and global carriers to smaller regional airlines, with a niche focus on the freighter market. The businesses are headquartered in Louisville, Kentucky with additional support facilities in Miami and Pensacola, Florida; Victorville, California; Istanbul, Turkey; and the United Kingdom.

“We are very excited to partner with O2 to help us facilitate our next stage of growth,” said Mr. Roths. “We have built strong and lasting customer relationships and would like to enhance our level of service through strategic inventory purchases and acquisitions of other aviation-related companies to broaden our offerings. We also have an aggressive plan to expand our MRO capabilities, through our newly formed entity First Class MRO, supply partnerships, and end-market presence. Our company and platform are poised to scale and we believe O2 is the perfect partner to help us achieve our goals.”

“First Class Air Support and Cargo Repair have established a strong market position in the highly fragmented aviation aftermarket, and we believe there is a tremendous opportunity for growth in the market over the next decade,” said Jay Hansen, a managing partner at O2.

O2 Investment Partners makes control investments of $5 million to $75 million in companies with EBITDAs from $2 million to $10 million located anywhere in the US and Canada but prefers the Midwest and the Great Lakes regions. Sectors of interest include niche manufacturing, niche distribution, select service businesses, and certain technology businesses. O2, based in the Detroit suburb of Bloomfield Hills, is backed by the Orley family which has been investing in operating businesses and real estate since 1950.

Financing for this transaction was provided by New York-based Graycliff Partners and Cincinnati-based First Financial Bank.

© 2020 Private Equity Professional | February 28, 2020

Trivest Invests in Legal Services Provider

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Trivest Partners has made a growth investment in Technology Concepts & Design (TCDI), a provider of digital legal services.

TCDI is a provider of eDiscovery, litigation management, computer forensics, cybersecurity and document review services to large and small corporations, law firms and government agencies. The company was founded in 1988 by CEO Bill Johnson and is headquartered in Greensboro, North Carolina.

“Trivest is really the ideal partner for TCDI given our current growth trajectory,” said Mr. Johnson. “Their deep understanding of the eDiscovery space and the tools they bring to the table as a partner to founder-owned businesses was the optimal outcome for me. We are tremendously excited about the partnership and path ahead.”

“We are excited to partner with TCDI and Bill Johnson to accelerate TCDI’s solid foundation and impressive track record of innovation and client retention,” said Jamie Elias, a partner at Trivest. “Trivest will assist the leadership team with an aggressive but thoughtful add-on acquisition program aimed at increasing the company’s size, scale, presence and capabilities in the coming years.”

Trivest was founded in 1981 and has completed more than 350 transactions totaling over $6 billion in value. Sectors of interest include niche manufacturing, distribution, business and healthcare services, and consumer industries. The firm has offices in Miami, Los Angeles, Philadelphia, Chicago, and Toronto.

The investment in TCDI is the most recent platform investment for the firm’s Trivest Growth Investment Fund I LP which has $225 million in capital and began investing in 2016.

Earlier this month, Trivest held final closings for Trivest Growth Investment Fund II LP (TGIF II) and the Trivest Discovery Fund LP (TDF) with $435 million and $235 million of total capital commitments, respectively. TGIF II, which will begin investing soon, focuses on companies that have revenues of at least $20 million and EBITDA of at least $4 million; while TDF is a new strategy focused on investments in smaller platform founder and family-owned companies, specifically those with less than $4 million in EBITDA. The two new funds, raised concurrently, are the firm’s sixth and seventh funds focused exclusively on founder and family-owned businesses.

© 2020 Private Equity Professional | February 28, 2020

Sverica Buys Another Communications Software Provider

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Sverica Capital Management has acquired Cytracom, a provider of cloud-based communications software, services and hardware.

Cytracom is a provider of enterprise-grade and cloud-based Voice Over Internet Protocol (VoIP) software, web conferencing software and services, and phone hardware. The company sells its software products and services to over two thousand managed services providers (MSPs) that support the information technology needs of small and medium-sized businesses.

Cytracom was co-founded in 2008 by CEO Zane Conkle and CFO Ben Booth and is headquartered near Dallas in Allen, Texas. The senior management team of Cytracom, including Mr. Conkle, will continue to lead the company in partnership with Sverica.

“Our focus has always been on enabling MSPs to deliver best-of-breed cloud-based voice and messaging solutions,” said Mr. Conkle. “A huge driver of our growth has been our transformation into a truly comprehensive cloud-based unified communications (UCaaS) provider. This investment from Sverica allows us to accelerate our growth and empower more partners with a leading channel-only UCaaS solution for their portfolio.”

“Through its commitment to innovation and reputation for reliability, Cytracom has positioned itself to take advantage of the tremendous market opportunity and widespread adoption of cloud communication solutions,” said Frank Young, a managing partner at Sverica. “We look forward to partnering with Cytracom’s senior leadership as they drive the company through the next phase of growth.”

The acquisition of Cytracom follows Sverica’s November 2019 buy of Gryphon Networks, a Boston-based provider of cloud-based software that is used to screen, collect, and analyze phone-based sales activity data from any device, and transform the data into actionable information in order to improve sales performance.

Boston and San Francisco-based Sverica invests from $10 million to $40 million in US or Canadian-based companies with enterprise values up to $150 million. Sectors of interest include technology, business services, healthcare and high-value industrial products. In October 2019, after just three months in the market, Sverica held a first and final close of its fifth fund, Sverica Capital Partners V LP. The new fund was oversubscribed and closed at its hard cap with $450 million of capital commitments.

© 2020 Private Equity Professional | February 28, 2020

Align Acquires Marco Rubber & Plastics

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Align Capital Partners (ACP) has acquired Marco Rubber & Plastics, a specialty distributor of elastomer components, including O-rings, gaskets, and high-performance seals.

Marco’s specialty rubber and plastic components are used in the aerospace, medical, semiconductor, and chemical markets. The company’s in-house inventory and global network of suppliers represent more than 3,000 material formulations and more than a million SKUs. The company has more than 14,000 customers and through its online ordering system ships more than a million parts each month.

Marco, led by President Chad Belinsky, was founded in 1980 as the Marine and Aerospace Rubber Company (MARCO) and has a 37,000 square foot warehouse and manufacturing facility located just north of Boston in Seabrook, New Hampshire.

“We were looking for an investment partner who understands our market opportunity, believes in our technology platform and unique product offering, and brings clear growth resources to our business,” said Mr. Belinsky. “Align’s relevant specialty distribution experience, marketing and technology resources, and track record of successfully partnering with entrepreneurial management teams fit our needs perfectly.”

ACP’s investment in Marco is the company’s first institutional capital. ACP intends to continue the development of Marco’s technology platform that allows buyers to search and compare products by performance attributes, build Marco’s sales and marketing functions, and pursue a buy-and-build strategy to add additional products and broaden its current distribution capabilities.

“Chad and the Marco management team have built a very unique business model of supplying specialty and custom O-rings and seals designed to solve complex engineering challenges and sealing applications,” said Chris Jones, an ACP managing partner. “Marco creating a technology platform unique to the sealing products market is helping rationalize the industry’s fragmented supplier and customer bases by reinventing the way O-rings and sealing components are purchased. We are thrilled to partner with such a dynamic team and execute on Marco’s many growth opportunities.”

In addition to Mr. Jones, the ACP transaction team included Operating Partner Dave Perotti, Vice President Matt Iodice, and Associate Walker Tiller.

Align Capital Partners makes control investments in companies with enterprise values up to $150 million that have from $3 million to $10 million of EBITDA. Sectors of interest include business-to-business services, specialty manufacturing, and value-added distribution. Last month, Align closed its second fund, Align Capital Partners Fund II LP and Align Capital Partners Fund II-A LP (together ACP II), at the combined hard cap of $450 million.

Align, with offices in Cleveland and Dallas, was founded in 2016 by managing partners Steve Dyke, Rob Langley, and Chris Jones – all formerly of The Riverside Company – and has a total of 18 team members.

© 2020 Private Equity Professional | February 27, 2020

Wynnchurch Buys Pennsylvania Machine Works

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Wynnchurch Capital has acquired Pennsylvania Machine Works (Penn Machine), an integrated manufacturer of high pressure forged fittings and branch connections.

Penn Machine’s products range in diameters from 1/8″ to 72″ and are used in the marine, oil and gas, nuclear power, petrochemical, shipbuilding, cryogenic and steel making industries. The company has capabilities in carbon and stainless steels, nickel alloys, chromium-molybdenum alloys, titanium, aluminum alloys, and copper-nickel.

The company operates through three divisions – Penn Machine, US Drop Forge and Penn Texas – and is headquartered near Philadelphia in Aston, Pennsylvania with a forging facility nearby in Swedesboro, New Jersey and a machine shop in Houston, Texas. Penn Machine was founded in 1931 by Charles Lafferty and today is led by President Joe Pro.

“We are committed to providing our customers with a one-stop solution for all their forged fittings and branch connection needs and are excited to partner with Wynnchurch as we continue that mission,” said Mr. Pro. “Wynnchurch understands the importance of meeting the needs of our customers which is constantly evolving. Wynnchurch is the right partner to enable Penn Machine to reach the next level of growth.”

“Penn Machine has built a strong reputation for providing customers with industry-leading service levels across a broad offering of fittings and branch connections,” said Greg Gleason, a managing director at Wynnchurch. “We are excited to partner with Joe and his team to continue the company’s impressive track record.”

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.

Wynnchurch has recent experience investing in the forging and machining sector. Last June, it formed Premier Forge Group to acquire two closed-die forging facilities from publicly traded Allegheny Technologies.

The acquired operations are located in Portland, Indiana and Lebanon, Kentucky and produce forgings used by OEMs in the transportation, oil & gas, construction, mining, agricultural, and aerospace and defense markets.

In January 2020, Wynnchurch closed its fifth private equity fund, Wynnchurch Capital Partners V LP, with $2.28 billion of committed capital. The new fund, which began its marketing in September 2019 with a target of $1.6 billion, was oversubscribed and closed at its hard cap. Wynnchurch is actively seeking investment opportunities for its new fund.

The buy of Penn Machine follows Wynnchurch’s buy last November of Clyde Industries, an Atlanta-based designer and manufacturer of soot blowers that are used to clean residue and deposits from the walls of steam boilers and heat exchangers.

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

© 2020 Private Equity Professional | February 27, 2020