Archives for September 25, 2023

Crest Rock Partners Invests in Specialty Alloy Distributor Midalloy

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Crest Rock Partners has acquired sister companies Midwest Alloys & Technology and Midalloy Specialty Materials (together Midalloy).

Midalloy operates through two segments, Midalloy Performance Welding Products (MID) and Midalloy Specialty Materials (MSM).

MID was founded in 1985 and provides welding consumables and bar and wire rod products that are used in a wide array of industries including aerospace, defense, and petrochemical sectors. MSM was founded in 2006 and provides nickel alloy and specialty stainless products – in round bar, hex bar, wire rod, and flat-rolled formats – to manufacturers nationwide. Midalloy operates two facilities in Saint Louis, Missouri, and Houston, Texas.

Source: Midalloy

The founders of Midalloy – Dennis Nelson and Brad Brunk, along with MSM President Cliff Bailye – invested alongside Crest Rock.

“Midalloy’s breadth of products and employee expertise provide exceptional value to its customers,” said Steve Johnson, a co-founder and Partner at Crest Rock. “The company’s metallurgic and welding engineering knowledge, long-standing relationships with steel mills, and partnership approach have created many satisfied customers who have remained loyal to the company, in many cases for decades. The specialty alloys environment is becoming increasingly challenging to navigate with supply chain issues, geopolitical tensions, and pricing fluctuations.”

“We are thrilled to partner with Crest Rock on the next phase of our company’s journey,” said Mr. Nelson. “Brad, Cliff, and I were looking for a partner who brought extensive operating expertise and knowledge, in addition to capital, to support our strategic plan and provide fresh ideas to lead Midalloy to new heights. Crest Rock is exactly the partner we envisioned.”

Source: Midalloy

Crest Rock makes control investments in software, technology, IT services, tech-enabled business services, and industrial services and manufacturing companies that have enterprise values from $15 million to $150 million. The firm was founded in 2019 and is based in Denver.

“Midalloy is well positioned to address its customers’ needs with its differentiated expertise and specialized offerings,” concluded Mr. Johnson. “We are excited to partner with Midalloy as they continue to serve as a value-added supplier to distributors and manufacturers and help them address their specialty alloy needs.”

© 2023 Private Equity Professional | September 26, 2023

Altamont Exits Insect’s Arch Enemy

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Altamont Capital Partners has sold Douglas Products to Brightstar Capital Partners.

Douglas Products is a manufacturer and distributor of branded specialty chemical products used in pest management, thermal fluids, and sanitary sewer applications. The company was founded in 1916 and is headquartered northeast of Kansas City in Liberty, Missouri.

Douglas’ products include Vikane, used to eliminate wood-destroying insects, bed bugs, cockroaches, spiders and rodents; ProFume, PH3, Vapocide and Dustacide which are all used to protect grain-based commodities and food processing facilities from insects and rodents; and BioStim, a microbial formulation used to control fat, oil, grease, and other organic accumulations in plumbing lines and septic systems.

Altamont first invested in Douglas Products in June 2015 in partnership with its owners and senior managers Bill Fuller and Wes Long. At that time, Douglas was acquiring the assets of the Vikane and ProFume gas fumigant business from Dow AgroSciences. In 2022, Altamont sold Duke’s Root Control, a division of Douglas, to Comvest Partners.

“We’re proud to have partnered with such a strong team at Douglas over the years,” said Randall Eason, a managing director at Altamont. “Our partnership has seen immense growth and success for Douglas since we carved the business out from Dow, and we look forward to continued success in its partnership with Brightstar.”

“Our partnership with Altamont has positioned us for long-term growth as we look to continue to expand the business,” said Mr. Long. “We are grateful for the strong support from Altamont and are excited to continue this trajectory and our dedication to quality solutions, expertise, and collaboration for distributors and customers with Brightstar.”

Altamont invests equity of $15 million to $150 million in companies that have up to $100 million of EBITDA. Sectors of interest include business services, healthcare, consumer and retail, industrials, and financial services. The firm was formed in 2010 by Mr. Eason, Jesse Rogers, and Keoni Schwartz who previously worked together at Golden Gate Capital and Bain & Company. Today, the firm has $4 billion of capital under management and is based in Palo Alto, California, with an additional office in Austin, Texas.

New York City-based Brightstar was founded in July 2015 by CEO and Managing Partner Andrew Weinberg and makes control investments of $50 million to $250 million in closely held or family-owned middle-market companies. Brightstar closed its second fund, Brightstar Capital Partners Fund II LP, at its hard cap of just over $1.25 billion in April 2021 and is currently raising its third fund with a $2 billion capital target.

“We are impressed by Douglas’ strong financial track record and its position as an environmentally responsible market leader providing critical and differentiated solutions to its agricultural and pest control customers,” said Mr. Weinberg. “We look forward to working closely with Wes and his team as they execute on both organic and acquisition growth strategies.”

Evercore was the financial advisor to Douglas Products and BMO Capital Markets was the financial advisor to Brightstar.

© 2023 Private Equity Professional | September 26, 2023

SkyKnight’s Newest Fund is Sky High

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SkyKnight Capital has held a final closing of SkyKnight Capital Fund IV LP with $1 billion in hard cap capital commitments.

San Francisco and New York City-based SkyKnight invests from $50 million to $250 million in North America-based healthcare, financial services, and tech-enabled services companies. SkyKnight’s earlier fund, SkyKnight Capital Fund III LP, closed in April 2021 at its hard cap of $600 million.

Since its founding in 2015 by Managing Partner Matt Ebbel, SkyKnight has made 16 platform investments and closed more than 100 add-on acquisitions. In addition to Mr. Ebbel, SkyKnight’s other partners include Mara Hunt, Claude Burton and Jordan Milich.

SkyKnight’s new fund was significantly oversubscribed with backing from both returning and new limited partners including endowments, foundations, pensions, family offices, and institutional investors.

“We are honored by the responsibility entrusted to us by our investors, and we are excited to continue to execute our differentiated private equity strategy,” said Ms. Hunt. “Fund IV was raised with over 100% net retention from existing limited partners, and we also welcomed over twenty new limited partners, representing America’s leading endowments, corporate and state pensions, and private market institutional investors.”

In February 2023,  SkyKnight formed FirstCall Mechanical Group as a new platform in the commercial services sector. The Austin, Texas-based company provides HVAC, refrigeration, electrical, and plumbing services to commercial and industrial customers including distribution centers, cold storage facilities, food manufacturing facilities, universities, and other commercial properties. FirstCall has approximately 150 employees and operations across Viriginia, North Carolina, South Carolina, Georgia, Florida, and Alabama. SkyKnight partnered with Evan Eachus, FirstCall’s founder and CEO, in launching the platform.

“We are grateful for the support of our like-minded limited partners and pleased to announce the closing of Fund IV, which will allow us to continue to execute our investment strategy,” said Mr. Ebbel. “Fund IV will aim to invest in approximately ten platform companies where SkyKnight can bring our collaborative, entrepreneurial approach to building industry-defining businesses alongside aligned management and owners.”

SkyKnight did not use a placement agent for Fund IV and Ropes & Gray provided legal services.

© 2023 Private Equity Professional | September 26, 2023

Blue Wolf Adds New Business Development Pro

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Blue Wolf Capital Partners has added Stephen Madsen to its team as a managing director and the leader of the firm’s business development effort.

Prior to joining Blue Wolf, Mr. Madsen led business development at Monomoy Capital with a focus on sourcing new investment opportunities from intermediaries, family owners and corporations. Earlier in his career, from 2013 to 2017, he worked at Intralinks Dealnexus, an online transaction sourcing and marketing platform, as its manager of global business development and origination.

“Stephen will greatly enhance our business development efforts and deal pipeline,” said Jeremy Kogler, a managing partner at Blue Wolf. “His extensive background in driving growth for private equity firms in various capacities will help expand our investment portfolio and reinforce the strong partnerships we forge both with our investors and sponsored companies.”

“Blue Wolf has an unmatched level of creativity and intelligence behind its investment capabilities,” said Mr. Madsen. “Very few firms are capable of completing transactions in as wide of a range as Blue Wolf, let alone doing so at such a high level of success.”

Mr. Madsen began his career in investment research in 2008, first at New York City-based Coleman Research Group and later, in 2010, at New York City-based Gerson Lehrman Group. Mr. Madsen has his undergraduate degree in history and Italian from Columbia University.

New York City-based Blue Wolf invests from $25 million to $250 million of equity in companies that have at least $50 million of revenue and an enterprise value of $50 million to $500 million. Sectors of interest include healthcare, building products, energy services, manufacturing, distribution, and industrial.

© 2023 Private Equity Professional | September 26, 2023