Archives for October 16, 2020

Arbor Grabs $1.7 Billion of Dry Powder

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Arbor Investments has closed its fifth fund, Arbor Investments V LP (Arbor V), with $1.5 billion of outside capital commitments. The firm has also closed its second captive subordinated debt fund, Arbor Debt Opportunities Fund II LP (Arbor Debt II), with $168 million of outside capital commitments.

The marketing and closing of these two funds was achieved in just three months – conducted entirely virtually – and brings Arbor’s total assets under management to $2.9 billion. In July 2016, the firm closed Arbor Investments IV LP with $765 million of capital and its first subordinated debt fund, Arbor Debt Opportunities Fund I LP, with $125 million of capital.

“We are humbled by the commitments from our longtime limited partners as well as the interest from new investors who have entrusted Arbor with their capital,” said Gregory Purcell, Arbor’s co-founder and CEO. “The quick and successful closing of Arbor Fund V, especially during this unique fundraising environment, is not only a testament to our outstanding investment track record but also a continued endorsement of the highly differentiated strategy we’ve refined over more than two decades. We anticipate tremendous opportunity to deploy this new capital with outstanding entrepreneurial families and blue-chip strategic players.”

Arbor invests from $100 million to $250 million of equity per transaction in food, beverage, and related companies. Since founding in 1999, the firm has acquired or invested in over 80 North America-based companies with a multiple on invested capital of 5.1x and an internal rate of return of 37%.

“Contrary to typical private equity firms, Arbor has always been focused on adding value beyond just capital and our results reflect this unconventional approach,” said Timothy Fallon, a senior operating partner at Arbor. “We’re firm believers in the advantages of industry specialization and our model is rooted in leveraging the firm’s experienced team of in-house resources to identify and execute transformative changes to our portfolio companies. It’s an operationally intense, all-hands-on-deck attitude that we believe drives value creation and positions us as the partner of choice to companies in the food and beverage sector.”

“Arbor’s brand is stronger than ever,” said Carl Allegretti, Arbor’s president. “We are honored to have earned the trust of our investors and I couldn’t be prouder of our people. To raise this amount of capital so efficiently in this unprecedented time is a testament to the strength of our team and the track record that has been built over the 21 years of Arbor. The best is yet to come.”

Shannon Advisors was the placement agent for this fundraise and Kirkland & Ellis provided legal services.

Arbor is headquartered in Chicago with an additional office in New York.

Private Equity Professional | October 16, 2020

Cascadia Forms “Industry 4.0” Practice

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Cascadia Capital has formed a new investment banking practice dedicated to the robotics, automation, and artificial intelligence (RAAI) sectors.

Cascadia’s RAAI practice has been formed in response to the Fourth Industrial Revolution – commonly referred to as “Industry 4.0” – the ongoing automation of traditional manufacturing and industrial practices, using modern smart technology. Sectors of specific focus for the RAAI include robotics; mobility tech; manufacturing automation; artificial intelligence and machine learning; computer vision; data management and analytics; augmented and virtual reality; and the Internet of Things.

The RAAI practice is led by Cascadia Chairman & CEO Michael Butler and Managing Directors Jamie Boyd and Firdaus Pohowalla, with support from Vice Presidents Yee Lee and Jason Lippenberger, Associate Tarek Elmasry, and Analysts Scott Whiting and Mikaela Slade.

“The Fourth Industrial Revolution is underway, and the breadth and depth of its impact are shifting paradigms across all industries on a global scale,” said Mr. Pohowalla. “Our team will be able to leverage the deep industry expertise across our platform and understanding of end markets, which is critically important to crystalizing value and understanding the proposition of different technologies.”

The RAAI practice leverages Cascadia’s internal expertise and its history of advisory work through its long-standing industrials, energy & applied technology, healthcare, consumer, and food & agriculture practice groups.

“We have been active in the RAAI space for several years with growing excitement and felt that the time was right to formally pull together the firm’s expertise in a way that maximizes the service we deliver to our clients,” said Mr. Butler. “Our bankers have established a deep understanding of the underlying technologies and end markets while simultaneously developing unparalleled relationships with strategic buyers and investors.”

Recent engagements for the RAAI practice include Lucidyne Technologies, an Oregon-based manufacturer of AI-enabled computer vision systems that was acquired earlier this year by Italy-based Microtec; Vexcel Imaging, an Austria and Colorado-based provider of digital mapping and drone technologies; and Qi2, a Washington-based developer of robotic sensor systems used in the energy sector.

“The formation of this practice reinforces Cascadia’s commitment to our highly targeted sub-vertical industry focus, which provides the most innovative and expertise-driven service for clients,” said Mr. Boyd. “Given the shifting economic dynamics in light of COVID-19 and other world events, sector and sub-vertical expertise have never been more critical as each industry and corresponding transaction environment is impacted in nuanced ways.”

Seattle-headquartered Cascadia Capital is an independent middle-market investment bank that provides merger and acquisition advice, capital raising, and strategic advisory services.

Private Equity Professional | October 16, 2020

HarbourVest’s Performance Leads to Hard Cap Close

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HarbourVest Partners has held an oversubscribed and hard cap close of its latest secondaries fund, Dover Street X LP (Dover X), with $8.1 billion of capital commitments.

The hard cap close of Dover X follows strong net IRR performances by earlier Dover funds including Dover IX (2016 vintage) at 65.6%; Dover VIII (2012) at 22.4%; Dover VII (2008) at 9.9%; Dover VI (2005) at 5.0%; and Dover V (2003) at 18.3%.

Limited partners in Dover X include corporations, pension funds, endowments, foundations, sovereign wealth funds, and ultra-high net worth investors.

Over the past 35 years, HarbourVest has invested over $25 billion into secondaries transactions. “Nearly 35 years after our first secondary transaction, it is exciting to close the 10th fund in our Dover Street program,” said Jeff Keay, a managing director at HarbourVest. “We’ve completed more than 500 transactions over the past three decades, providing our investors with high-performing, mature, global portfolios of private market assets.”

HarbourVest has more than 600 employees, including more than 145 investment professionals across Asia, Europe, and the Americas. As of June 30, 2020, HarbourVest had $69 billion in assets under management across a range of strategies including venture capital, buyout, mezzanine debt, credit, and real estate.

“As the secondaries market continues to grow in both size and complexity, HarbourVest’s ability to deliver customized liquidity solutions to GPs and LPs at scale has become a key differentiator for us,” added Mr. Keay. “Our global secondaries team has decades of experience and deep industry relationships, which, combined with our expertise, have continued to make HarbourVest a preferred partner in private markets.”

HarbourVest has offices in Beijing, Bogotá, Boston, Dublin, Hong Kong, London, Seoul, Tel Aviv, Tokyo, and Toronto.

Private Equity Professional | October 16, 2020

Wind Point Partners Acquires Handgards

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Wind Point Partners has acquired Handgards, a manufacturer of disposable products used in the foodservice sector.

Handgards’ branded and private label products – sold through an independent sales representative network – include more than 200 types of gloves, bags, protective apparel and flexible packaging that are sold to broadline distributors, group purchasing organizations and national foodservice accounts. The company has more than 300 employees at its 250,000 square foot facility and headquarters in El Paso, Texas.

Wind Point is partnering with industry executive Joe Kubicek on the buy of Handgards and he now becomes the company’s CEO. From 2014 to 2019, Mr. Kubicek was the president of Ansell’s (ASX: ANN) global healthcare business which manufactured surgical gloves, exam gloves, and other consumables used in the healthcare, industrial and life sciences markets.

Earlier, from 2007 to 2014, he was the CFO and COO of BarrierSafe Solutions, an Illinois-based maker of disposable gloves and protective footwear used in non-acute healthcare and industrial applications. BarrierSafe was a portfolio company of Linden Capital and The Edgewater Funds from 2007 to 2011. Odyssey Investment Partners acquired BarrierSafe in 2011 and sold it to Ansell in 2014.

“I am excited to join Handgards and work alongside the company’s top-caliber management team,” said Mr. Kubicek. “The team has built a tremendous business, and they are the core driver of Handgards’ stellar reputation. The company’s safety-oriented product offering is increasingly critical to its customers’ operations, and we will remain dedicated to supporting our customers’ growth by supplying the highest quality products coupled with industry-leading service.”

“Handgards represents another example of Wind Point’s ability to partner with a successful middle-market company in need of a leadership succession plan,” said Paul Peterson, a managing director at Wind Point. “Handgards has demonstrated impressive organic growth, driven by its unique collaborative culture and a strategic vision developed by the company’s late CEO, Bob McLellan. We will remain committed to continuing Bob’s legacy by investing further in the company’s growth while staying true to its values and collaborative culture.”

Chicago-based Wind Point invests from $50 million to $100 million in companies with EBITDA of at least $10 million. Industries of interest include business services, consumer products and industrial products. Wind Point is currently investing out of Wind Point Partners IX LP which began fundraising in 2019.

BKD provided transaction advisory services to Wind Point on this transaction and Kirkland & Ellis provided legal services.

Private Equity Professional | October 16, 2020