Archives for January 20, 2021

BBH Capital Invests In American Spraytech

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BBH Capital Partners (BBHCP) has made an investment in aerosol products maker American Spraytech. BBH’s investment was made in partnership with the company’s existing management team and founding shareholders.

American Spraytech (AST) is a formulator and contract filler of aerosol products. The company’s products include air fresheners, shampoos, hair sprays, sunblock sprays, deodorant body sprays, contact lens saline, lens & glass cleaners, and many other personal care, cosmetic and over-the-counter medical products. AST’s customers range from boutique salons and personal care brands to Fortune 500 consumer goods companies.

AST operates 5 through-the-valve (TTV) aerosol filling lines and 1 bag-on-valve (BOV) line at its 200,000 square foot campus which includes six buildings and twelve propellant tanks. The company, led by CEO Allen Lalwani, was founded in 2003 and is headquartered 45 miles west of New York City in Branchburg, New Jersey.

“The AST team is thrilled to join forces with BBH for our next phase of growth,” said Mr. Lalwani. “We could not have found a more ideal partner than the oldest and most reputed private bank in the United States. Their strategic and financial support will allow us to pursue several attractive organic and inorganic growth opportunities that will enhance our product offering and help us better serve our customers.”

“Allen and his management team are proven executives with a long track record of driving growth, and we are looking forward to our partnership with the entire AST team. We were attracted to AST due to its reputation for innovation and formulation capabilities within the outsourced aerosol manufacturing market,” said Brad Langer, a managing director of BBH and a co-manager of BBHCP. “In addition to AST’s in-house research and innovation capabilities and full suite of manufacturing solutions, we believe the company’s focus on the personal care, cosmetic and over-the-counter medical end markets is quite attractive due to the stability of these categories.”

Boston-based BBH Capital Partners (BBHCP) makes control and non-control investments of $40 million to $150 million in North American-based companies with enterprise valuations between $10 million to $500 million. Sectors of interest include healthcare, technology, media and telecommunications, and business products and services.

© 2021 Private Equity Professional | January 21, 2021

GS Foods Group Acquires Fresno Produce

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GS Foods Group, a portfolio company of Highview Capital and Alvarez & Marsal Capital Partners, has acquired family-owned and operated Fresno Produce.

Fresno Produce provides a wide range of fruits and vegetables, spice and salsa blends, and guacamole to schools and restaurants located in California’s Central Valley. The California-based company was founded in 1990 by David and Laura Miller and counted as one of its first customers the Fresno Unified School District which today includes more than 100 schools and over 73,000 students.

Highview and Alvarez & Marsal formed GS Foods Group in October 2019 to acquire Gold Star Foods from Castle Harlan, and then immediately merged the company with Good Source Solutions, a portfolio company of Highview. GS Foods Group is led by CEO Sean Leer.

Gold Star is a food distributor to more than 3,500 K-12 schools in 800 school districts across 13 states and provides more than 6.5 million meals daily. Many of these meals are provided through federal and state programs for breakfasts and lunches that include program-approved healthy ingredients. Gold Star purchases products from more than 600 food manufacturers and farms, and sells over 7,500 products comprised of refrigerated, frozen and dry menu items as well as fresh bread and produce. The company is headquartered near Los Angeles in Ontario, California.

Good Source Solutions is a specialty food distributor to the education, corrections and foodservice sectors. Good Source’s products focus on center-of-plate items including poultry, meats, pasta, fruits, vegetables, bakery items, beverages, appetizers, sides, and snacks. The company is headquartered north of San Diego in Carlsbad, California.

“The COVID-19 pandemic has underscored the critical role school nutrition programs play in feeding our communities, yet today the specialized foodservice distribution industry remains highly fragmented,” said Mr. Leer. “By partnering with like-minded companies such as Fresno Produce, GS Foods expands the reach of our expertise and takes another key step in establishing a coordinated, national school nutrition supply system. This allows us to better meet the diverse and increasing needs of our customers in California and beyond.”

“We continue to be impressed by GS Foods’ distribution capabilities and presence within the K-12 market, delivering outstanding customer service and product quality,” said Jack McCarthy, a senior managing director and a founder of A&M Capital Partners. “We believe that partnering with local and family-owned companies like Fresno Produce illustrates how GS Foods continues to expand its footprint and pioneer the establishment of a national supply system.”

Highview Capital, headquartered in Los Angeles, invests from $10 million to $125 million of equity in companies with revenues of $50 million to $500 million and EBITDA of $5 million to $50 million. Highview invests in many sectors and is effectively industry agnostic. The firm sources its capital from a $500 million evergreen fund and is backed by Karlin Asset Management, a Los Angeles-based investment company.

Greenwich, Connecticut-based Alvarez & Marsal Capital Partners makes control and significant minority investment of $40 million to $150 million in North American-based companies that have from $10 million to $75 million in EBITDA. Sectors of interest include business services, industrials, healthcare, consumer and retail, government services, financial services, and energy services.

© 2021 Private Equity Professional | January 21, 2021

Audax Closes First Ever Secondary Fund

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Audax Private Equity has closed its first general partner-led secondary fund (“Continuation Fund”) with $1.7 billion in capital commitments.

Capital from the Continuation Fund was used to purchase portfolio companies from Audax Private Equity Fund IV LP including Innovative Chemical Products, a Massachusetts-based specialty chemical company that formulates and manufactures coatings, adhesives and sealants (acquired in 2015); Justrite Safety, an Illinois-based manufacturer of industrial safety products for the handling and storage of flammable and hazardous liquids (2015); 42 North Dental, a Massachusetts-based dental practice management company (2015); and TPC Wire & Cable, an Ohio-based producer of ruggedized wires and cables used in harsh industrial applications (2015).

Investors in the Continuation Fund include AlpInvest Partners, Lexington Partners, and Hamilton Lane, and numerous Fund IV limited partners. All Fund IV limited partners had the option of reinvesting their Fund IV value into the Continuation Fund or receiving full or partial liquidity.

“We are grateful for the support of our existing limited partners and welcome the backing of such an exceptional group of new investors, including AlpInvest, Lexington, and Hamilton Lane,” said Joe Rogers, a managing director of Audax. “This transaction not only marks a new chapter of growth for our portfolio companies, but also for Audax Private Equity. We are pleased we could deliver optional liquidity to our existing Fund IV limited partners, and we look forward to leveraging the support of our new capital partners as we work alongside management teams to support transformative initiatives.”

“This is an important milestone for Audax Private Equity. We are pleased to have the support of our longstanding limited partners and a blue-chip set of new institutional partners,” said Don Bramley, a managing director of Audax. “We are proud of the performance of our Fund IV portfolio and believe that there is value we have yet to unlock. By leveraging the additional time and capital from this fund, we can continue to execute our proven Buy & Build acquisition strategy, with a goal of allowing our portfolio companies to reach their full potential. We look forward to continuing to work to create value for our existing and new limited partners.”

Audax invests in middle-market companies that have from $8 million to $50 million in EBITDA and enterprise values of $50 million to $400 million. Sectors of interest include business and consumer services; energy; healthcare; technology, media and telecom; and industrials including chemicals, infrastructure, and building materials. Audax has offices in Boston, New York, and San Francisco.

Evercore was the financial advisor to Audax and Kirkland & Ellis provided legal services.

© 2021 Private Equity Professional | January 20, 2021

New Mountain Closes on $10 Billion

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New Mountain Capital has closed two new private equity funds with $10.2 billion in total capital commitments.

The two funds include its flagship fund, New Mountain Partners VI LP (“Fund VI”), with $9.6 billion of capital, and the firm’s first non-control private equity fund, Strategic Equity Fund I LP (“SEF I”) with $640 million of capital.

According to New Mountain, demand for Fund VI significantly exceeded its hard cap and closed with $9.0 billion of limited partner commitments and $600 million of general partner and affiliated investor commitments. New Mountain’s non-control fund held its final closing in September.

Fund VI investors include more than 300 pension funds, insurance companies, sovereign wealth funds, asset managers, family offices, high net worth individuals and endowments. The majority of New Mountain’s Fund V limited partners invested in Fund VI and the firm also added new investors from Asia, Europe and Latin American regions.

“We thank our limited partners for their friendship and support, particularly during a pandemic and among other significant global challenges,” said Steven Klinsky, the founder and CEO of New Mountain. “Since our founding twenty years ago, New Mountain has sought to consistently “build great businesses” in carefully chosen acyclical growth sectors and to build a great and highly operationally-focused team. We will strive to continue to build great businesses for the benefit of our investors, and the community at large, in the years ahead.”

New Mountain’s previous flagship fund closed with $6.2 billion of commitments in September 2017 and is now fully invested. The firm’s new flagship fund has already closed on three portfolio investments and in December 2020 agreed to acquire a fourth, a yet undisclosed provider of digital services.

The three new Fund VI platforms – representing 10% of its capital commitments – include HealthComp, a California-based provider of third-party administration services to self-funded healthcare plans (November 2020); Tinuiti, a New York City-based provider of digital marketing performance services to the retail, consumer packaged goods, home services, and eCommerce sectors (December 2020); and Inframark, a Pennsylvania-based provider of operations and maintenance services to water and wastewater treatment facilities (December 2020).

New Mountain’s new non-control fund has made two investments so far – one in Lincoln Investment, a Pennsylvania-based broker-dealer with more than 1,000 financial advisors nationwide; and IMA Financial, a Wichita-based property and casualty-focused specialty insurance brokerage (November 2020).

New Mountain’s two new funds cap a busy 2020 which included acquisitions of eight platform companies, two non-control investments, and five add-on acquisitions (deploying, in total, $2.6 billion of fund capital); and the sale of seven platform companies with $5.4 billion of realizations.

New Mountain is an industry generalist and invests between $100 million and $500 million per transaction in companies with enterprise values typically between $100 million and $1 billion. The firm, founded in 2000 and headquartered in New York City, has 175 investment professionals and staff and now manages over $30 billion in aggregate assets in private equity, credit, net lease real estate and public equity funds.

© 2021 Private Equity Professional | January 20, 2021

Sheridan Hits Fund II Hardcap

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Sheridan Capital Partners has held an oversubscribed and hard cap closing of its second fund, Sheridan Capital Partners Fund II LP, with $300 million in limited partner commitments. The firm’s first fund closed in 2012 with $150 million in limited partner commitments.

Investors in Fund II, which had an initial target of $250 million, include a mix of insurance companies, fund-of-funds, family offices and asset managers located across North America, Europe and the Middle East.

Sheridan makes investments of $15 million to $50 million in lower middle-market companies with $3 million to $15 million of EBITDA. The firm invests in recession-resistant, non-discretionary markets within the healthcare industry including service providers, information technology, outsourced services, consumer health, and medical products. Sheridan, led by its partners Jonathan Lewis and Sean Dempsey, was founded in 2012 and is headquartered in Chicago.

“We are extremely pleased with the support provided by our investors, both new and existing, which allowed us to exceed our target and hit our hard cap for Fund II in a competitive and challenging fundraising environment,” said Mr. Lewis. “We would also like to thank our placement agent Sixpoint Partners for their partnership throughout the fundraise.”

“Sheridan’s oversubscribed sophomore fundraise in a highly selective environment shows a strong vote of confidence in Jonathan, Sean and the rest of the Sheridan team,” said Eric Zoller, the founder and a partner at Sixpoint.

New York City-headquartered Sixpoint is an advisor to the middle-market private equity industry with three areas of focus: primary fund placement and advisory; secondaries fund advisory; and co-investment placement across a range of industries, strategies, and geographies.

“The entire Sheridan team is excited to continue its strategy of partnering with high quality, lower middle market healthcare businesses and executives, leveraging our sector expertise and proven operating playbook to accelerate growth across our portfolio both organically and through acquisitions to build market-leading companies,” concluded Mr. Dempsey.

Kirkland & Ellis provided legal services to Sheridan on this fundraise.

© 2021 Private Equity Professional | January 20, 2021

Audax Closes Sale of Gabriel at 11x

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Audax Private Equity has closed its December-announced sale of Gabriel Performance Products to publicly traded Huntsman Corporation for $250 million in cash.

Akron-headquartered Gabriel is a maker of specialty additives and epoxy curing agents used in the coatings, adhesives, sealants and composite end-markets. Gabriel, led by CEO Seth Tomasch, operates three manufacturing facilities in Ohio, Pennsylvania and South Carolina.

“Audax has been a valuable partner in helping us grow Gabriel into a leading specialty chemicals manufacturer that delivers state-of-the-art, scalable, ready-made, and customized chemical solutions with exceptional customer service,” said Mr. Tomasch.

Audax acquired Gabriel in October 2014 and completed six add-on acquisitions during its ownership term. In 2019, Gabriel had revenues of $106 million with an adjusted EBITDA of $23 million. This yields an 11x EBITDA valuation multiple and, according to Huntsman, an 8x valuation multiple of pro forma adjusted EBITDA including expected synergies.

“We are proud to have partnered with Seth and the Gabriel team in creating a leading platform serving the coatings, adhesives, and composites markets,” said Don Bramley, a managing director at Audax. “The company expanded its proprietary products organically and through acquisitions while investing in its direct commercial team, research & development capabilities, manufacturing facilities, and key talent to support and sustain continued growth. We wish continued success for Seth and the entire Gabriel organization as they embark on their next chapter of growth.”

Huntsman has been actively pursuing transactions in 2020. In May, Huntsman acquired CVC Thermoset Specialties, a maker of specialty additives and epoxy curing agents with two manufacturing facilities in Ohio and New Jersey, for $300 million in cash from Emerald Performance Materials, a portfolio company of American Securities. CVC had revenues of $115 million in 2019 and the $300 million purchase price was equal to an adjusted EBITDA multiple of 10x, or 7x if expected operating synergies are included.

Huntsman (NYSE: HUN) is a manufacturer and marketer of a range of chemical products with 2019 revenues of approximately $7 billion. The company has more than 70 manufacturing, R&D and operations facilities in 30 countries and employs more than 9,000. Huntsman is headquartered north of Houston in The Woodlands, Texas and has executive offices in Salt Lake City, Utah.

“The acquisition of Gabriel broadens the offering in our specialty portfolio and is complementary to our recent acquisition of CVC,” said Scott Wright, the president of Huntsman’s advanced materials division. “Gabriel makes highly specialized toughening and curing agents and other additives used in a wide range of composite, adhesive and coatings applications. We expect that the Gabriel business will strengthen our North America footprint and provide significant commercial synergies.”

Audax invests in middle-market companies that have from $8 million to $50 million in EBITDA and enterprise values of $50 million to $400 million. Sectors of interest include business and consumer services; energy; healthcare; technology, media and telecom; and industrials including chemicals, infrastructure, and building materials. Audax has offices in Boston, New York, and San Francisco

Grace Matthews was the financial advisor to Gabriel on this transaction.

© 2021 Private Equity Professional | January 20, 2021