Archives for June 3, 2020

MiddleGround Builds Specialty Metals Platform

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MiddleGround Capital has completed the acquisition of Supra Alloys and EDGE International from Titan Metal Fabricators. Post-closing, the two businesses will be combined with Banner Industries, a processor and distributor of metal bar products that was acquired by MiddleGround in December 2019.

Banner Industries 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 operates through two divisions – Banner Service Corporation, a value-added distributor of carbon and stainless steel, aluminum, brass, titanium, and other exotic materials; and Banner Medical Innovations, a processor of medical-grade metals for device manufacturers in the orthopedic, spine, and dental sectors.

Like Banner, Supra Alloys and EDGE International are value-added stocking distributors of metal bar, plate, and sheet product. Supra, based near Los Angeles in Camarillo, California and led by General Manager Craig Schank, supplies titanium and titanium alloys that are used in the aerospace, medical, and industrial end markets. Edge, based in Dayton, Ohio and led by General Manager Stephen Smith, provides medical-grade cobalt-chrome, stainless and titanium bar used in medical implants and instruments.

“The addition of Supra and Edge builds scale in medical and aerospace end markets and broadens our geographic reach,” said Dan Stoettner, the president of Banner Industries. “We are thrilled about working with the Supra and Edge teams and learning from their expansive industry knowledge so we can further enhance the high-quality product and service we provide to our customers.”

“We are excited to welcome the Supra and Edge teams to the MiddleGround family,” said John Stewart, a partner at MiddleGround. “With the complementary capabilities and product offering they bring to Banner we believe the future of this platform is very bright. This is a transformational step forward, and we look forward to what this next phase of growth means for our customers.”

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.

MiddleGround closed its first fund, MiddleGround Capital I LP, at its hard cap of $459.5 million in September 2019. The firm is headquartered in Lexington, Kentucky with an additional office in New York City.

Titan Metal Fabricators, the seller of Supra Alloys and EDGE International, is a California-based manufacturer of process equipment including heat exchangers, pressure vessels, reactors, and distillation towers using titanium, zirconium, tantalum, niobium, and high nickel alloys.

Private Equity Professional | June 3, 2020

Arcline Grinds Away

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Arcline Investment Management has acquired Glebar Company from its management shareholders led by Chairman and former CEO Adam Cook.

Glebar manufactures and services micromachining, centerless grinding and electrochemical grinding systems used in the production of medical guidewire and minimally invasive surgical components, as well as in aerospace, consumer, and industrial applications.

The company also supplies consumables, replacement parts and repair and maintenance services to its installed base of systems. Glebar, led by CEO Robert Baker, is headquartered in Ramsey, New Jersey.

Simultaneous with its acquisition by Arcline, Glebar acquired the electrochemical grinding assets (ECG) of Everite Machine Products, a portfolio company of Eureka Equity Partners. Electrochemical grinding is a process that removes material from a workpiece (positively charged) using a grinding wheel as used as a cutting tool (negatively charged) and an electrolyte fluid that captures the excess material. New Jersey-based Everite provides electrochemical grinding equipment as well as grinding wheels and electrolyte products that are used in the healthcare, medical device, power tools, and aerospace sectors.

“We are excited to partner with Glebar management and to continue the company’s focus on maximizing its customers’ return on investment and throughput in the production of increasingly complex components used in minimally invasive surgery, aerospace and other mission-critical industrial applications,” said the partners of Arcline in a released statement. “We are committed to investing both organically in the company’s engineering, technology, and aftermarket service capabilities, as well as through acquisitions such as Everite, to continue to build Glebar into a leading, full-service provider of innovative process improvement solutions for its customers.”

“As the owner of Glebar, I focused on finding the right partner for the company and the management team to continue building on what we started,” said Mr. Cook. “We chose Arcline because of their growth mindset, passion for building market-leading companies, and reputation for doing what they say.  I am excited to watch the value creation that the partnership between Glebar and Arcline will create for its customers, stakeholders and employees.”

Arcline makes control investments in companies that have from $10 million to $100 million of EBITDA and enterprise values of up to $1 billion. Sectors of interest include industrials, technology, life sciences, and specialty chemicals. The firm closed its first fund, Arcline Capital Partners LP, with $1.5 billion of committed capital in March 2019. Arcline was founded in September 2018 and has offices in San Francisco and New York.

Cowen was the financial advisor to Glebar and Piper Sandler was the financial advisor to Arcline.

Private Equity Professional | June 3, 2020

H.I.G. Invests in Specialty Chemical Maker

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H.I.G. Capital has made an investment in USALCO, a provider of specialty chemicals. The investment in USALCO is H.I.G.’s tenth current platform in the chemical sector.

USALCO (United States Aluminate Company) is a manufacturer of aluminum-based chemicals – including aluminum sulfate and polyaluminum chloride – that are used in water and wastewater treatment processes; and a manufacturer of alumina powder catalysts used by refineries to make fuels from lower-quality oils and heavier distillates.

USALCO operates nine manufacturing facilities in Ohio (4), Maryland (2), Indiana, Louisiana, and Arkansas. The company was founded in 1980 by Lawrence Askew and is headquartered in Baltimore.

H.I.G. is partnering with President David Askew and CEO Peter Askew (sons of the founder) as well as other members of the company’s management team on this transaction.

“We are very excited to partner with Peter and David and the USALCO management team, who have a proven track record of building a best-in-class business and providing the highest levels of quality for their customers,” said Keval Patel, a managing director at H.I.G. ”The company’s steady and growing revenue profile, highly efficient operations and numerous growth opportunities make this an attractive investment.”

H.I.G. specializes in providing debt and equity capital to small and medium-sized companies and invests in management buyouts, recapitalizations, and corporate carve-outs of both profitable as well as underperforming manufacturing and service businesses. Founded in 1993, H.I.G. has invested in more than 300 companies and has a current portfolio of 100 companies with combined sales in excess of $30 billion.

“We are very excited about partnering with H.I.G. to support USALCO’s growth objectives,” said Peter Askew. “We have numerous opportunities to expand both organically and inorganically, and H.I.G.’s experience and resources will help us continue and accelerate our successful growth trajectory.”

H.I.G. has $37 billion of equity capital under management and is headquartered in Miami with additional offices in New York, Boston, Chicago, Dallas, Los Angeles, San Francisco, Atlanta, and Stamford.

Private Equity Professional | June 3, 2020

Mike Kay Joins Angeles Equity

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Angeles Equity Partners has added Mike Kay to its team as a new operating partner. Mr. Kay has experience across multiple industrial sectors, including automotive, aerospace and defense.

Before joining Angeles Equity, Mr. Kay was with McKinsey for nearly four years, most recently as an engagement manager where he worked with industrial companies on growth initiatives, operating improvements, and working capital enhancements.

Earlier, for just over five years, he was a detachment commander in the U.S. Army Special Forces Green Berets with deployments to Afghanistan and the Philippines. Prior to becoming a special forces officer, he deployed to Iraq with the 101st Airborne Division.

“Mike Kay is a high caliber addition to our organization,” said Timothy Meyer, co-founder and managing partner of Angeles Equity. “We are excited to have Mike join the team and look forward to him playing an integral role in evaluating new investment opportunities as well as partnering with management teams to realize the full potential of our investments.”

Angeles Equity makes control investments in companies with enterprise values up to $200 million that have headquarters and primary operations in the United States and Canada. Sectors of interest include aerospace, automotive, building products, capital goods, chemicals, electronics, manufacturing, metals, transportation and logistics, packaging, and distribution. In January 2017, the Los Angeles-based firm closed Angeles Equity Partners I LP with $360 million in capital.

“The addition of Mike further demonstrates our commitment to attracting and recruiting top talent,” said Jordan Katz, co-founder and managing partner of Angeles Equity Partners. “Mike possesses a unique skill set we believe will have a positive impact on our firm and the performance of our portfolio companies.”

Mr. Kay has his MBA from The Wharton School at the University of Pennsylvania, and his undergraduate degree from the United States Military Academy at West Point.

Private Equity Professional | June 3, 2020