Archives for November 2020

Gryphon’s Fund V Acquires Vessco

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O2 Investment Partners has sold wastewater equipment distributor Vessco to Gryphon Investors.

Vessco is a distributor of parts and equipment used in municipal and industrial water and wastewater treatment projects, and it also provides related systems integration services.

The company’s water treatment services include initial consultation and design, installation assistance, field service and parts delivery. Vessco provides its products and services in over 18 states throughout the Central US, Midwest, Northeast, and Mid-Atlantic regions.

Vessco, founded in 1983, is led by CEO Brian DeWolf and is headquartered near Minneapolis in Chanhassen, Minnesota with an additional office in Ames, Iowa.

O2 acquired Vessco in November 2018. During its two-year ownership term, O2 completed five add-on acquisitions for Vessco that diversified its products and services and expanded its geographic reach.

“Our relationship with the O2 group has been outstanding. They worked very closely with our team and were instrumental in executing our model and exceeding our growth expectations,” said Mr. DeWolf.

“We are grateful to have had the opportunity to partner with Brian DeWolf and the excellent team at Vessco,” said Pat Corden, a partner at O2. “We shared a vision to create an industry-leading business with an emphasis on culture and teamwork. The people at Vessco are best-in-class at every level of the organization, and it was a privilege to work together.”

With the sale to Gryphon, industry executive Jim McGivern will become the executive chairman of Vessco. Mr. McGivern was previously the COO of American Water, CEO of Elster Group and CEO of Sigma Corporation. Members of Vessco’s senior management team, led by Mr. DeWolf, will continue to manage the business and remain significant owners of the company.

“Vessco operates at the nexus of Gryphon’s experience with infrastructure and utility products and value-added distribution businesses,” said Leigh Abramson, a partner and head of the industrial growth group at Gryphon. “We are pleased to partner with Brian, a highly talented and visionary leader, and the other members of the management team. Vessco is poised for rapid growth as it capitalizes on its track record, reputation and know-how to serve its customers.”

San Francisco-based 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 enterprise values ranging from $100 million to $600 million. Sectors of interest include business services, consumer products and services, healthcare, industrial growth, and software. In July 2019, the firm held a final closing of Gryphon Partners V LP at its hard cap of $2.1 billion. The new fund was oversubscribed and exceeded its original target of $1.5 billion.

O2 makes control investments in companies with EBITDAs from $4 million to $15 million located anywhere in the US and Canada with a preference for companies based in the Midwest or the Great Lakes regions. Sectors of interest include B2B services, technology, niche industrial companies, services, distribution, and certain special situations. 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.

Gryphon was advised by the water investment banking group, led by managing directors Brendan Tierney and Andy Schwartz, at Raymond James. William Blair was the financial advisor to Vessco and O2 on this transaction.

© 2020 Private Equity Professional | November 19, 2020

Berwind Sells WellPet to Clearlake

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Clearlake Capital Group has agreed to acquire Wellness Pet Food from Berwind Corporation.

WellPet is a supplier of premium pet food and treats under several brand names including Wellness, Old Mother Hubbard, WHIMZEES, Eagle Pack, Holistic Select, and Sojos. According to WellPet, it is the largest independent North America-based pet food manufacturer, producing proprietary formulations at its three facilities in Indiana, Minnesota, and the Netherlands.

The company, led by CEO Camelle Kent-Rizkalla, who will continue in her current position, has more than 400 employees with headquarters north of Boston in Tewksbury, Massachusetts.

Berwind first invested in its pet food platform through the 2007 buy of Mishawaka, Indiana-based Eagle Pack Pet Food. In 2008, Berwind added to the platform with the $400 million acquisition of Old Mother Hubbard Pet Food/Wellness Pet Food, a portfolio company of Catterton Partners. In the following years, numerous other add-ons were completed including Minnesota-based raw pet food maker Sojos in 2016 and Netherlands-based dental chew maker WHIMZEES in 2017.

“We are thrilled to partner with WellPet during such a pivotal time in the premium pet food and treats category,” said José Feliciano, co-founder and managing partner at Clearlake. “We believe the current market tailwinds, enduring increase in pet ownership, and pet humanization dynamics offer a unique opportunity to meaningfully invest behind the company and accelerate WellPet’s near- and long-term growth objectives to serve pet parents in the best possible ways.”

Clearlake invests in industrials and energy; software and technology-enabled services; and consumer sectors. The firm was co-founded by Mr. Feliciano and Behdad Eghbali in 2006 and is headquartered in Santa Monica, California with an additional office in Dallas, Texas.

In April 2020, Clearlake held a hard cap and oversubscribed final close of its sixth private equity fund, Clearlake Capital Partners VI LP, with more than $7 billion in commitments. Clearlake currently has approximately $25 billion of assets under management.

“We are excited to leverage our extensive experience investing in consumer brands, emerging food platforms, and health and wellness trends to the pet food and treats ecosystem,” added Arta Tabaee, Managing Director, Clearlake. “We believe deploying our deep bench of operating partners and our O.P.S.® value creation framework can drive accelerated growth at WellPet through best-in-class innovation, enhanced brand investment, and careful attention to the Company’s customers and retail partners.”

Philadelphia-based Berwind, founded in 1886 as Berwind-White Coal Mining Company, is a fifth-generation, family-owned investment management company that invests in middle-market companies with transaction values of $200 million to $900 million across a range of industries.

Centerview Partners was the financial advisor to Wellness Pet Food on this transaction.

© 2020 Private Equity Professional | November 19, 2020

IOP’s Creative Foam Buys Aetna Felt

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Creative Foam Corporation, a portfolio company of Industrial Opportunity Partners, has acquired the assets of Aetna Felt. The buy of Aetna is the first add-on acquisition for Creative Foam since being acquired by IOP in October 2017.

Aetna is a converter, fabricator, and distributor of felt and other non-woven materials used in podiatry, foot-care, and other applications. The company’s podiatry products include insoles and inserts, gel cushions, padding, sleeves, straps and socks, and rubber or foam pads and sheets.

Aetna’s customers include medical distributors, hospitals, schools, surgery and health centers, government facilities, and private label sellers. In addition, Aetna provides non-woven material products – chipboard, cork, foam, neoprene, sponge rubber and vinyl – to the industrial, consumer, and crafts markets. Aetna Felt was founded in 1929 and has a 93,000 square foot facility and headquarters in Allentown, Pennsylvania.

Creative Foam manufacturers die-cut, formed foam, nonwoven, and other multi-material components that are used in the automotive, medical, and wind energy markets. The company’s products are used in noise, vibration, sealing, airflow, and insulation applications; as foam patient positioners and table pads in diagnostic imaging applications; and as cores used in turbine blade construction in the wind energy market.

Creative Foam, led by President David Swallow, was founded in 1969 and is headquartered north of Detroit in Fenton, Michigan and has one million square feet of production space in 11 facilities in Michigan, Tennessee, Colorado, Indiana, Ohio, and Mexico.

“The acquisition of Aetna is an excellent fit for Creative Foam and our growing healthcare division,” said Mr. Swallow. “Aetna provides access to a variety of complementary end-markets and customers that we believe will benefit from Creative Foam’s innovative culture and technical resources.”

“It is very exciting to have Aetna join Creative Foam,” said Phil Fioravante, the chairman of Creative Foam and an operating principal at IOP. “We believe Aetna has a strong position in its served markets, particularly in podiatry and footcare, and we look forward to offering our combined capabilities to customers to better serve them.”

IOP focuses on acquiring middle-market manufacturing and value-added distribution businesses, typically with revenues between $30 million and $450 million. The firm targets businesses with strong product, customer, and market positions and provides both management and operational resources to support sales growth and operational improvements. IOP is headquartered in the Chicago suburb of Evanston.

© 2020 Private Equity Professional | November 19, 2020

Teleo Closes $250 Million Inaugural Fund

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TELEO Capital Management has held and oversubscribed hard cap closing of its inaugural fund, TELEO Capital LP, with $250 million of capital.

The firm’s first fund received capital from a range of institutional limited partners including endowments, insurance companies, pension funds, fund of funds and family offices.

“We are honored to welcome such high-caliber institutional investors as long-term partners, and we are grateful for their overwhelming support and confidence amidst a highly competitive fundraising market,” said TELEO Capital in a released statement.

TELEO invests from $10 million to $25 million of capital in North American and European-based companies with $10 million to $100 million of annual revenue. Sectors of interest include technology and software, healthcare IT, business services and industrial.

Earlier this month, TELEO acquired Rand McNally, a Chicago-based provider of fleet management and route mileage optimization software used by carriers, shippers and third-party logistics companies. Rand McNally continues to produce and distribute its iconic atlases and other education-focused products.

Rand McNally was founded in 1873 by William Rand and Andrew McNally. Parts of the company have been sold over the years to various strategic and private equity buyers. In November 1997, the remaining core mapmaking part of the company was sold to AEA Investors for a reported $500 million. In 2003, AEA’s ownership interest was acquired by Leonard Green through a prepackaged Chapter 11 restructuring plan. In 2007, Patriarch Partners, which had been a minority owner, bought out Leonard Green and other minority owners to become the sole owner of Rand McNally. Through a series of transactions between Patriarch, The Zohar Funds (a series of collateralized debt funds related to Patriarch that acquired the debt of Rand McNally), and MBIA Insurance, the decision was made in 2020 to sell Rand McNally.

“Rand McNally is a leader in the fleet management software market.  Its cloud-based telematics platform helps fleets manage increasing regulatory compliance requirements and improves profitability through advanced driver and vehicle analytics.  We see significant future expansion opportunities through both organic and inorganic growth initiatives,” said TELEO Capital in a released statement.

GCA Advisors was Teleo’s placement agent on this fundraise and Goodwin Procter provided legal services.

TELEO has offices in Boise, Idaho and Los Angeles, California

© 2020 Private Equity Professional | November 19, 2020

THL Closes New Automation Fund

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Thomas H. Lee Partners (THL) has closed THL Automation Fund LP with $900 million of capital.

The new fund invests in partnership with the THL’s flagship funds in companies that provide automation products, software or services, or use technology to improve productivity in business processes. Specific targets within automation include software and artificial intelligence, robotics, additive manufacturing, and systems design and integration.

THL has broad experience in the automation sector. Since 2017, the firm and co-investors have acquired four platform companies and closed eight add-on transactions in the sector. THL’s current automation platform companies include Autostore, Material Handling Systems, Fortna and Phytech.

As many in private equity already know, companies across multiple end markets – distribution and logistics, e-commerce, manufacturing, healthcare, agriculture, food and beverage, and consumer products – are rapidly adopting automation to drive efficiency, accuracy and speed across business applications in order to counter persistent labor shortages, to accommodate heightened customer demands and to address increasingly complex supply chains.

“Automation is everywhere in the news now as a result of the pandemic, but the reality is that the return on investment from automation was already high for businesses that deployed automation pre-pandemic,” said Jim Carlisle, a managing director at THL and the head of the Automation Fund. “We started building our thesis, network and capability years ago because the fundamental drivers of adoption — labor pressures, business resiliency, efficiency gains, throughput improvements and more — were already top of mind for business leaders across sectors and the technology exists to solve those problems.”

THL was founded in 1974 and is one of the oldest private equity investment firms in the United States. Industries of interest include consumer and retail; healthcare; media and information services; and business and financial services.

“We created this new fund to invest in companies driving step-function change through automation and to support management teams in accelerating growth with both capital and with a 20-member integrated team of automation experts,” added Mr. Carlisle.

Since its founding, Boston-based THL has raised over $25 billion of equity capital, acquired over 140 portfolio companies and completed over 400 add-on acquisitions.

© 2020 Private Equity Professional | November 18, 2020

KKR Forms Medical Device Platform

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KKR has partnered with medical device executive Duke Rohlen to form Zeus Health to invest in medical device companies.

The formation of Zeus, with $100 million of capital, continues a long-standing relationship between KKR and Mr. Rohlen.

In March 2016, KKR invested in Spirox, a California-based ears, nose, and throat (ENT) device company, led by Mr. Rohlen as CEO, that focused on minimally invasive medical device technologies. Spirox was sold to Entellus Medical in July 2017 and the combined business was later sold to Stryker Corporation, a Michigan-based medical technology company, in February 2018.

In May 2017, KKR and Mr. Rohlen formed Ajax Health to invest in medical device developers and healthcare technology companies. Later that year, Ajax invested in EPIX Therapeutics, then known as Advanced Cardiac Therapeutics. EPIX was sold to Medtronic in 2019 for $350 million.

“With the formation of Zeus Health, I am thrilled to further deepen my relationship with KKR, whose unmatched reputation, scale and depth of health care expertise will continue to open new doors for us as we look to bring innovative medical devices to patients in need,” said Mr. Rohlen.

KKR’s investment in Zeus is being funded through the firm’s Health Care Strategic Growth Fund which closed in November 2017 with $1.45 billion of capital.

“We are excited to have the opportunity to work with Duke and his team again, now for the third time following our previous success with Ajax Health and Spirox,” said Ali Satvat, the co-head of KKR’s North American health care investing platform. “Duke is a proven leader in the medical device field, as are his team of industry and operational experts. We look forward to working together to identify and scale much-needed next-generation medical technologies.”

KKR (NYSE: KKR) makes private equity, fixed income, and other investments in companies in North America, Europe, Asia, and the Middle East. KKR was founded in 1976 and in addition to its New York headquarters has offices in 19 cities around the world.

© 2020 Private Equity Professional | November 18, 2020