Archives for July 25, 2023

Gainline Hits Fund II Hard Cap

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Gainline Capital Partners has held a final, above target, oversubscribed, and hard cap close of its second fund, Gainline Equity Fund II LP, with $400 million in capital. The fund’s original target was $300 million. Gainline’s earlier fund, Gainline Equity Fund LP, closed in 2019 with $155 million in capital.

Fund II received broad institutional support, with every institutional investor from Fund I returning to invest in Fund II and a variety of new institutions joining as limited partners.

“We are thrilled and fortunate to have the continued support of such a distinguished group of limited partners coupled with new, well-known, well-regarded partners, many of whom had been tracking our progress through the deployment of Fund I,” said Allan Weinstein, Gainline’s co-founder and managing partner. “It is a powerful endorsement of our investment strategy.”

Gainline invests in United States-based businesses that have enterprise values of less than $250 million and EBITDA from $5 million to $50 million. The firm specializes in first institutional capital opportunities and its sectors of interest include business services, niche manufacturing, consumer, logistics and transportation services.

Fund II has already invested $106 million of capital in two companies: Galaxy Universal, a New York City-based wholesaler, sourcing and brand management company, focusing on the athletic, work and outdoor categories (2021); and Harvest Right, a Salt Lake City-based producer and distributor of in-home freeze dryers (2023).

With the final close of Fund II, Gainline now has a total of $1.3 billion of assets under management across its two funds along with several co-investment vehicles.

“We have quickly become a partner of choice for founders, entrepreneurs, and family businesses who are prioritizing partnership,” said Rick Sullivan, a Gainline partner and co-founder. “We continue to find exciting opportunities where business owners are recognizing the importance of collaboration, thoughtful alignment, and the merits of building long-term value appreciation with an experienced sponsor. The transition of a closely held or family business or a carve-out into a strong stand-alone institutional quality investment requires deep experience. Our success is a function of our transparent working environment and commitment to fostering a team culture of sound and reasoned judgment, technical proficiency, and thoughtfully aligned partnerships.”

Credit Suisse was the placement agent for Fund II and Willkie, Farr & Gallagher provided legal services.

Gainline was founded in 2015 by Mr. Weinstein and Mr. Sullivan, and is headquartered in Stamford, Connecticut.

© 2023 Private Equity Professional | July 25, 2023

Eagle Merchant Partners Soars Past Target

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Lower middle-market investor Eagle Merchant Partners has held an above target closing of its inaugural fund, Eagle Merchant Partners I LP,  with over $265 million in capital.

Limited partners in the new fund include United States and international institutions, endowments, foundations, wealth managers and family offices.

Atlanta-based Eagle invests in franchise, consumer, and industrial companies that are located primarily in the Southeastern United States. The firm’s typical targets have revenues of $20 million to $200 million and EBITDA of $2 million to $20 million.

In May 2023,  Fund I acquired Impact Home Services, a Tampa-based owner and operator of three home services brands, including Mr. Rooter, Mr. Electric and Precision Door Service.

One month earlier, Fund I acquired Furniture Medic, a Memphis-headquartered franchise-based company that provides furniture, wood, and cabinet restoration and repair services within the disaster restoration, insurance claims, commercial and residential sectors (April 2023); and AmeriSpec, a Memphis-headquartered and franchise-based company that provides inspection services to residential and commercial customers (April 2023).

“The Eagle team is excited about the six platform investments we have already made in Fund I, all of which are representative of our strategy,” said Bill Lundstrom, a partner and founder of Eagle. “As we deploy the rest of the fund, we look forward to partnering with additional founders, owners and management teams to help them create value and achieve sustainable growth.”

“We are grateful for the support from our previous investors and the positive response we received from our diverse group of new investors. We appreciate their confidence in our focused investment strategy and experience across our core sectors,” said Stockton Croft, a partner and founder of Eagle.

Aviditi Advisors was the placement agent for Fund I and Kirkland & Ellis provided legal services.

© 2023 Private Equity Professional | July 25, 2023

Carveout Specialist Brynwood Still Hungry

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Brynwood Partners has formed West Madison Foods and has agreed to acquire the Marie’s salad dressing brand and the Dean’s Dip business from Ventura Foods. Ventura acquired the Marie’s dressings and Dean’s dips businesses from Dean Foods in 2005 for $198 million.

Brynwood’s investment in West Madison Foods was made through its ninth fund, Brynwood Partners IX LP. The acquisition of Marie’s salad dressing and Dean’s Dip includes a manufacturing facility in Thornton, Illinois (30 miles south of Chicago) where the company’s products – Blue Cheese, Caesar, Ranch and Coleslaw dressings, and French Onion, Ranch and Guacamole dips and spreads – are manufactured.

Source: West Madison Foods

West Madison Foods is headquartered in Chicago and now has approximately 84 full-time employees.

“Dean’s and Marie’s are extraordinary brands, and we are delighted to lead these brands into their next phase of growth and expansion,” said Henk Hartong III, the chairman and CEO of Brynwood. “We look forward to partnering with the team in Thornton to enhance manufacturing and bring more products and new innovations to market. We thank the Ventura Foods team for being a great partner in the transaction.”

“The acquisition of West Madison Foods represents another corporate carveout for Brynwood, an area where we have developed a specific investment expertise,” added Mr. Hartong. “We have completed three carveouts in the last seven months starting with Birch Benders in December 2022, followed by Uno Foods in March 2023 and now the Dean’s Dip and Marie’s businesses.”

Source: West Madison Foods

The Brynwood investment portfolio also includes Harvest Hill Beverage Company, Carolina Beverage Group, Hometown Food Company, Buitoni Food Company and Great Kitchens Food Company. With the addition of West Madison Foods, the total Brynwood manufacturing network will total 17 facilities, approximately 4,700 employees and more than $2.6 billion in annual sales.

Greenwich, Connecticut-based Brynwood is an operationally focused firm that makes control investments in North American-based lower middle-market companies. The firm targets non-core brands or companies operating exclusively in the consumer sector.

Ventura Foods , the seller of Dean’s and Marie’s, is a producer of branded and private label dressings, sauces, mayonnaises, shortenings, and oils that are sold to foodservice companies, restaurants, and retailers in over 70 countries. Ventura Foods was formed in 1996 and is a privately held joint venture of CHS, a publicly traded  agricultural cooperative, and Mitsui & Co. The company has $4 billion in annual revenue with manufacturing facilities in the United States, Canada, Mexico and the Philippines.

BofA Securities was the advisor to Ventura Foods on this transaction.

© 2023 Private Equity Professional | July 25, 2023

One Rock Exits Kova

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One Rock Capital Partners has closed the sale of Kova International to LGC Group, a portfolio company of private equity firms Cinven and Astorg.

Kova International is a developer, manufacturer and marketer of supplies for the medical laboratory market. Kova operates two product lines: (1) urinalysis controls, consisting of urine-based controls for urine chemistry and microscopy urinalysis; and (2) toxicology controls, consisting of urine- and saliva-based controls for drug abuse screening and confirmation testing.

Source: Kova International

The company also provides plastic disposables such as slides, tubes, petters (a transfer pipette with a bulb-like base) for use in manual microscopy urinalysis tests. Kova is headquartered in Garden Grove, California.

In 2013, an investor group led by One Rock carved out Kova International, the urinalysis division of Hycor Biomedical. In 2016, Kova added-on with the buy of Biochemical Diagnostics, a New York-based manufacturer of controls and disposable sample preparation products used in drug abuse testing.

“This transaction marks the end of a partnership between Kova and One Rock, during which we worked closely with CEO Nita Moritz and the Kova management team to enhance the company’s leadership in urinalysis and expand its product lineup into toxicology controls,” said Joshua Goldman, a partner at One Rock. “We fully expect to see Kova continue to thrive under new ownership.”

LGC Group is a provider of measurement products and services including reference materials and proficiency testing, genomics reagents, and sample analysis and interpretation. The company’s customers are active in pharmaceuticals, agricultural biotechnology, food, environment, government and academia. LGC – formerly the Laboratory of the Government Chemist – is headquartered near London in Teddington, UK. Cinven and Astorg acquired LGC in 2019 from KKR which had acquired the business in 2015 from UK-based private equity firm Bridgepoint.

Cinven invests in European and United States-based companies that have enterprise values typically greater than €300 million. Sectors of interest include business services, financial services, healthcare, industrials, consumer, and technology, media and telecommunications. The firm was founded in 1977 and is headquartered in London.

Astorg invests in European-based companies that have enterprise values from €200 million to €1 billion. The firm invests across a range of industries but has a specific interest in technology-based industrial companies, healthcare, and business-to-business professional services. Astorg has offices in Paris (headquarters) London, New York, Luxembourg, Frankfurt, and Milan.

One Rock invests in companies that are active in the manufacturing, chemicals, business services, and auto retail sectors. The firm has expertise in complex transactions including corporate carve-outs. Since its founding in 2010 by managing partners Tony Lee and Scott Spielvogel, One Rock has invested in over 35 platform investments and add-on acquisitions. In March 2021, One Rock held a hard cap and final close of One Rock Capital Partners III LP with total capital commitments of $2 billion.

Baird was the financial advisor to Kova on this transaction.

© 2023 Private Equity Professional | July 25, 2023