October 18, 2023
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Archives for October 18, 2023

OpenGate Continues Build of its IPG Chemical Distribution Platform

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Integrity Partners Group (IPG), a chemical distribution platform of OpenGate Capital, has acquired selected assets of the military and aerospace division of West Penetone.

West Penetone is a maker of specialty chemicals used in cleaning and sanitation applications. The company operates facilities in California, New Jersey, Wisconsin, Quebec, and Alberta.

West Penetone’s military and aerospace division (MAD) provides specialty cleaners and degreasers that are used to remove soils and deposits on painted and unpainted surfaces, windows, plastics, composites, and engines of helicopters, gunships, jets, and other air transports.

Source: West Penetone

MAD’s products will not corrode aluminum, magnesium, plated metals, will not dull paint, and will not damage acrylic or polycarbonate windows.

In January 2022, to begin building a chemical manufacturing and distribution platform covering the entire United States, OpenGate acquired Chemisphere, a St. Louis, Missouri-based specialty solvent blender and chemical distributor; and ChemSolv, a Roanoke, Virginia-headquartered regional distributor of commodity and specialty chemicals.

OpenGate formed IPG in June 2023 to consolidate its investments in ChemSolv and Chemisphere. IPG is led by CEO Darren Birkelbach and is headquartered in Roanoke, Virginia.

Now under the IPG umbrella, the combined companies are a full-line chemical distribution platform  with more than 1,000 SKUs of high-purity solvents, industrial additives and modifiers, surfactants, lubricants and metalworking fluids, and diesel exhaust fluids. Specific products of IPG include acetone, ethanol, heptane, methanol, methyl acetate, isopropyl alcohol, and xylene.

In addition to its distribution capabilities, IPG also provides value added services including blending, packaging, quality testing, white-label formulations, logistics, repurchasing, and solvent recycling.

Source: Integrity Partners Group

IPG has 2.7 million gallons of storage capacity, 80,000 gallons of blending capacity, 35,000 square feet of manufacturing space, 300,000 square feet of storage across 8 warehouses, and a private fleet of more than 50 trucks. The company operates across more than 43 states and several international locations, and its customers are active in the industrial, food and beverage, agriculture, personal care, life sciences, and coatings, adhesives, sealants, and elastomers (CASE) markets.

The carve-out of the assets from West Penetone will be integrated into the IPG platform and will expand its product line with new formulations used in the aerospace and defense sector.

“The acquisition of the product portfolio and intellectual property from West Penetone is an important development in the growth and expansion of our business,” said Mr. Birkelbach. “We are now able to serve more customers with a broader and specific offering including propriety formulations acquired from West Penetone. We are excited to build on the highly successful business with the expanded capabilities of IPG.”

OpenGate invests in companies that have revenues from $50 million to $1 billion and specializes in corporate carve-outs and complex situations. The firm was founded in 2005 and is based in Los Angeles with an additional office in Paris.

© 2023 Private Equity Professional | October 19, 2023

J.F. Lehman is Crystal Clear on Crystal Clean’s Future

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J.F. Lehman & Company has closed its acquisition of publicly traded Crystal Clean at a valuation of $1.2 billion.

Crystal Clean is a provider of parts cleaning services, used oil re-refining, hazardous and non-hazardous waste disposal, emergency and spill response, and other industrial and field services.

Customers of the company include vehicle maintenance businesses, manufacturers and other industrial businesses, as well as utilities and governmental entities. Crystal Clean is headquartered near Chicago in Hoffman Estates, Illinois, and operates through 105 branch and industrial services locations serving approximately 104,000 customer locations.

Source: Crystal Clean

In FY2022, Crystal Clean’s used oil re-refining program recycled approximately 66 million gallons of used oil into high quality lubricating base oil that was sold to companies that produce and market finished lubricants. The company’s wastewater vacuum services program treated approximately 84 million gallons of wastewater in FY2022.

For the trailing twelve months ending June 30, 2023, Crystal Clean had revenues of $799 million and an Adjusted EBITDA of $156 million. Based on the  enterprise valuation of $1.2 billion, this equates to an Adjusted EBITDA valuation multiple of 7.7x.

J.F. Lehman is a middle-market private equity firm focused primarily on the maritime, defense and aerospace sectors. The firm was founded in 1992 by Dr. John Lehman, who served six years as Secretary of the United States Navy. J.F. Lehman is headquartered in New York City with an additional office in Washington, DC.

William Blair & Company was the financial advisor to Crystal Clean, and J.F. Lehman was advised by Houlihan Lokey and Jefferies.

© 2023 Private Equity Professional | October 19, 2023

NexPhase Beats Fund V Target

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NexPhase Capital has closed NexPhase Capital Fund V LP (NPC V) with $795 million in capital, $45 million above its $750 million target.

NexPhase was formed in 2016 by former principals of Moelis Capital Partners, the private equity division of Moelis Asset Management. The NexPhase team is led by managing partners Kurt Larsen and Ted Yun.

The close of NPC V – technically the third fund raised by NexPhase since spinning out from Moelis – was oversubscribed with backing from both existing investors and new institutional investors.

“The overwhelming support from our investors demonstrates the strength of our platform and talented team,” said Mr. Yun. “Our thematic approach to sourcing compelling investment opportunities, paired with the methodical application of our value creation strategy, has delivered attractive returns for our investors. With NPC V, we look forward to continuing to partner with exceptional entrepreneurs and management teams to build institutional-quality companies within the most attractive segments of our industry verticals.”

Typical NexPhase investments will have EBITDA of up to $30 million and will be active in the consumer, healthcare and software verticals. Since its founding in 2016, NexPhase has completed over 100 investments, including add-ons, and targets control equity investments between $25 million and $150 million in consumer, healthcare and software companies with EBITDA of up to $30 million.

“We are proud to announce the successful close of NexPhase Capital Fund V,” said Ariana Scotti, a vice president and the head of investor relations at NexPhase. “In a challenging fundraising environment, we are deeply grateful for the enthusiastic support from both our existing investors and the new investors who have come onboard. Exceeding our target for NPC V speaks volumes about the trust and confidence placed in NexPhase, and we remain committed to continuing to deliver exceptional results for our valued investors.”

With the close of NPC V, NexPhase has now raised approximately $2.6 billion of capital. NexPhase’s earlier fund, NexPhase Capital Fund IV LP closed at its hard cap of $544 million in April 2021.

NexPhase is headquartered in New York City and has a team of 21 investment professionals, including 8 partners that is supplemented by a team of 15 senior-level C-suite experienced operating executives.

Atlantic-Pacific Capital was used by NexPhase as its fundraising adviser and Kirkland & Ellis provided legal services.

© 2023 Private Equity Professional | October 19, 2023

Graycliff Hits Fund V Hardcap

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Graycliff Partners has closed the firm’s fifth lower middle market private equity fund, Graycliff Private Equity Partners V LP (Fund V).

The firm’s new fund was oversubscribed and closed at its hard cap of $600 million in limited partner commitments in a single closing and included significant additional capital commitments from Graycliff’s partners and employees. New York City-based Graycliff was formed in December 2011 by the former investment team of HSBC Capital.

The raising of Fund V was completed in less than four months with backing from both existing and new investors including pension funds, endowments, insurance companies, and family offices.

“We are extremely pleased with the outcome of this fundraise and want to thank all of our limited partners for their overwhelming support,” said Andrew Trigg, the managing partner of Graycliff.

Graycliff invests from $10 million to $50 million of control equity in companies with revenues of $10 million to $200 million and EBITDA of $4 million to $20 million. Sectors of interest include niche manufacturing, value-added distribution, and industrial services. Fund V has not yet closed on any new investments.

The newly formed Private Capital Advisory group at William Blair & Company was engaged by Graycliff as its advisor and placement agent for this fundraise, and Weil, Gotshal & Manges provided legal services.

© 2023 Private Equity Professional | October 19, 2023

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