Archives for April 9, 2021

Branford Castle Buys Lie Detector Maker

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Branford Castle has acquired Lafayette Instrument, a maker of polygraph equipment and other scientific instruments.

Lafayette’s polygraph products were first introduced in 1972 and include software and algorithms, computers, heart rate monitors, headsets, arm cuffs, electrodes, and activity sensors.

These products are used by federal law enforcement and security agencies, as well as state and local law enforcement agencies. According to Lafayette, it has sold more polygraph and credibility assessment instruments to private examiners, government, and military organizations than any other manufacturer in the world. Lafayette was founded in 1947 by Max Wastl and is headquartered 60 miles northwest of Indianapolis in Lafayette, Indiana.

Lafayette also provides neuroscience products – mouse and rat activity systems and mazes, test and sleep deprivation chambers, and touch measurement systems – to both public and private research laboratories.

Branford partnered on this transaction with Lafayette’s CEO and owner Jennifer Rider, Vice President of Operations Steve Rider, and other members of the company’s senior management team.

“Steve and I are proud of our family’s leadership of Lafayette over the last 25 years,” said Ms. Rider. “We are excited about this new chapter of the company’s development as we work with Branford Castle to provide the best service to our customers and achieve new levels of growth.”

“We are excited to partner with Jennifer and Steve Rider at Lafayette,” said Laurence Lederer, a senior managing director at Branford Castle. “The company’s long-standing position as the leader in the polygraph market, along with their growing suite of proprietary neuroscience products, make it a terrific platform for continued growth.” In addition to Mr. Lederer, the Branford transaction team included Vice President Ceon Francis.

The buy of Lafayette is the second platform for Branford’s second fund, which closed in 2019, and follows the firm’s August 2020 buy of Fibrix Filtration, a Charlotte-based maker of air filtration media products that are used in commercial and industrial HVAC systems.

Brookside Capital Partners provided mezzanine debt financing to support the buy of Lafayette and Byline Sponsor Finance, a division of Byline Bank, provided the senior debt financing. Dinan Capital was the financial advisor to Lafayette on this transaction.

New York City-based Branford Castle invests in companies that have enterprise values of up to $100 million and EBITDAs of less than $15 million. Sectors of interest include consumer products and services, commercial distribution, industrials and specialty manufacturing, business services, and logistics.

© 2021 Private Equity Professional | April 9, 2021

Main Street Invests in Grand Flower Growers

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Main Street Capital has made a minority investment in Grand Flower Growers (GSG), a grower and distributor of plants and flowers.

GFG products includes annuals, mums, poinsettias, perennials and other floral arrangements. The company supplies its products to Home Depot garden centers in the greater Chicago metropolitan area.

GFG was founded in 1999 and operates three greenhouses with a combined 700,000 sq. ft. near Grand Rapids in Wayland, Michigan. The business also sources additional products that are grown under contract with third parties with a total of 1,000,000 sq. ft. of greenhouse space.

Main Street partnered with the company’s existing owners and senior management team on this investment. Main Street provided $20.6 million in capital through a combination of a senior secured term loan and an equity investment.

Houston-based Main Street Capital (NYSE: MAIN) provides long-term debt and equity capital to middle-market and lower middle-market companies in that generally have annual revenues ranging from $10 million to $150 million. Main Street’s middle market debt investments are made in businesses that are generally larger in size than its lower middle market portfolio companies.

© 2021 Private Equity Professional | April 9, 2021

Wind Point Adds Again to Specialty Chemical Platform

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Ascensus Specialties, a portfolio company of Wind Point Partners, has acquired Strem Chemicals.

Strem is a manufacturer of specialty chemicals used in the life sciences and microelectronics sectors. The company’s products include high-purity, research-grade catalysts, ligands, organometallics, metal carbonyls and CVD/ALD (atomic layer deposition and chemical vapor deposition) precursors that are used by manufacturers, researchers and academics in the life sciences and microelectronics sectors. Strem also provides synthesis and manufacturing services for high-potency active pharmaceutical ingredients (APIs).

Strem was founded in 1964 by Michael Strem and is headquartered north of Boston in Newburyport, Massachusetts. Ephraim Honig, the CEO of Strem, is joining Ascensus as its chief science and innovation officer and will oversee the combined businesses’ research and development activities.

“We thoughtfully chose Ascensus as the partner for the next phase of Strem’s growth,” said Mr. Strem. “Our employees’ interests and well-being have been my top priority, and the strong cultural fit will provide opportunities for our team. The additional resources and global reach of Ascensus will deliver Strem’s strong capabilities to an even broader audience of customers.”

According to Wind Point, Ascensus is the largest global producer of dry and liquid sodium borohydride which is used predominantly as a synthesis and process aid in the production of a variety of APIs including antiretrovirals for the treatment of HIV/AIDS.  Sodium borohydride is also used to bleach wood pulp in the paper industry.

Bellevue, Washington-headquartered Ascensus was founded in 1939 as Metal Hydride, Inc. and was acquired by Thiokol Chemical in 1976. Thiokol merged with Morton International in 1982 to become Morton-Thiokol. In 1999, Rohm & Haas acquired Morton-Thiokol and in 2009 Rohm & Haas in turn was acquired by Dow Chemical.

Wind Point acquired Ascensus in January 2015 from Dow Chemical as an add-on for Vertellus Specialties, a former Wind Point portfolio company (exited in November 2016), and Ascensus, led by CEO Mike Huff, is now a standalone company under Wind Point ownership.

“We are extremely excited to have Strem join the Ascensus family,” said Mr. Huff. “Strem has a world-class team and a renowned reputation that has been methodically fostered for over half a century under the leadership of Michael Strem and Ephraim Honig. We will look to further support the team’s highly technical R&D culture, differentiated product offering and value-added customer relationships. Together, Ascensus and Strem will be a global specialty chemicals leader serving the demanding, high-growth life sciences and specialties markets.”

“Strem represents an excellent addition to the Ascensus platform,” said Alex Washington, a managing director at Wind Point. “The combined business will have capabilities to offer solutions ranging from lab to large scale commercial production. Strem’s industry-leading technical competency is a meaningful addition to Ascensus’ existing capabilities, and Ascensus looks forward to working with Ephraim and the Strem team to amplify new product and application development efforts.”

In September 2019, Ascensus completed another add-on acquisition with the buy of Callery from Edgewater Capital. Callery was formed by Edgewater to acquire the inorganic specialties business of chemical giant BASF in March 2017. Callery is a Pennsylvania-based developer and producer of inorganic chemicals that are used in the pharmaceutical, agricultural, electronics, polymers, and adhesives markets.

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 closed in February 2021 with $1.5 billion of capital. Fund IX is the largest fund ever raised by Wind Point.

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

© 2021 Private Equity Professional | April 9, 2021

Southfield Tops Fund III Hard Cap

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Southfield Capital has held a final close of Southfield Capital III LP with $303 million of capital commitments.

Fund III exceeded its hard cap and was oversubscribed with support from numerous institutional investors including public pensions, insurance companies, endowments, fund-of-fund managers, and family offices.

Southfield Capital makes control investments in companies that are active in the outsourced business services sector and have EBITDA of $4 million to $12 million. The firm was founded in 2005 and is headquartered in Greenwich, Connecticut.

“We’re so pleased to see such a high level of participation from our existing limited partner relationships investing again in Southfield’s Fund III, many of whom meaningfully upsized from their Fund II commitments,” said Andy Levison, Southfield’s managing partner. “We also added several new relationships with industry-leading institutional investors, further validating our mission to invest in exceptional lower middle-market businesses and generate outstanding returns for our limited partners.”

Last month, Southfield acquired its first Fund III platform with the buy of Alba Wheels Up, a Long Island-based provider of brokerage and freight forwarding services for US importers and exporters.

Southfield Capital used Atlantic–Pacific Capital as its placement agent for this fundraise and Proskauer provided legal services.

© 2021 Private Equity Professional | April 9, 2021