MidOcean Partners has acquired Cloyes, a manufacturer and distributor of engine components, from Hidden Harbor Capital Partners.
Cloyes products include timing drive systems and components for replacement applications in the automotive aftermarket and high-performance racing segment. Timing drive systems – using either timing belts or timing chains – synchronize an engine’s crankshaft and camshaft to ensure that its valves open and close at exactly the right moment to maximize power delivery and minimize fuel consumption and emissions.
The company sells its products under the Cloyes and Dynagear brands to wholesale distributors, national and local retailers, re-packagers, and production engine builders. The company, led by CEO John Hanighen, was founded in 1921 and is headquartered northwest of Little Rock in Fort Smith, Arkansas.
“We are excited to partner with MidOcean to accelerate growth and innovation for the Cloyes platform,” said Mr. Hanighen. “MidOcean has an impressive track record in executing transformational growth, and they bring deep expertise in the auto aftermarket that will enhance our ability to better serve our customers, our employees, our vendors, and our partners, while also providing support for the company to expand into additional markets and product lines.”
MidOcean invests in middle-market companies that are active in the business and consumer services sectors. In September 2018, the firm held a final close of its latest fund, MidOcean Partners V LP, at its hard cap of $1.2 billion in limited partner commitments. The new fund was oversubscribed and closed above its original $1 billion target. MidOcean was founded in 2003 and is based in New York City.
“We continue to see significant tailwinds in the auto aftermarket space and are thrilled to bring Cloyes into the portfolio of best-in-class auto aftermarket products and services MidOcean has invested behind,” said Daniel Penn, a managing director at MidOcean. “Our focus in this sector has been in partnership with our operating partner, Marc Graham, who brings over 35 years of experience in this industry, and we are pleased to have Marc involved as the chairman of the board going forward. We are also thrilled that Linda Taliaferro will be joining the company’s Board, as her over 35 years of experience in quality and global supply chain in the automotive industry will be a tremendous asset to Cloyes.”
This acquisition marks MidOcean’s third recent investment in the auto aftermarket, closely following its acquisitions of Holley Inc. (July 2021) and FullSpeed Automotive (November 2020). Holley was acquired through a merger with Empower, a publicly traded special purpose acquisition company (SPAC) formed by the firm.
In 2006, family-owned Cloyes Gear was acquired by KPS Capital Partners and became part of the firm’s Hephaestus Holdings (HHI) automotive platform. In October 2012, HHI was sold to American Securities which merged it with Metaldyne to form Metaldyne Performance Group (MPG). MPG went public in December 2014 and was acquired by publicly traded American Axle & Manufacturing (NYSE: AXL) in April 2017. One year later, in April 2018, Hidden Harbor carved out the aftermarket division of Cloyes Gear from American Axle.
Boca Raton-based Hidden Harbor makes investments in North American-based companies across a range of sectors with revenues between $50 million and $500 million and EBITDA up to $25 million. The firm closed its debut fund, Hidden Harbor Capital Partners I LP, at an above-target $265 million in January 2019.
Hidden Harbor was formed in May 2016 by John Caple, a former partner of Comvest Partners; David Block, the former CEO of Swiss Watch International and a former operating partner at H.I.G. Capital; and Christopher Paldino, a former managing director at H.I.G. Capital.
Cloyes was advised on this transaction by Stifel, Nicolaus & Company (lead advisor) and Donnelly Penman (co-advisor).
© 2022 Private Equity Professional | March 1, 2022
