Willis Stein Closes Fund 3 Secondaries Transaction

Willis Stein Closes Fund 3 Secondaries Transaction

Willis Stein & Partners, Landmark Partners and Vision Capital have completed a transaction benefitting investors in Willis Stein’s third fund. The Fund 3 portfolio companies were sold to a new partnership formed by Landmark Partners, Vision Capital, and a syndicate of other investors including PineBridge Secondary Partners II.

“Landmark Partners is delighted to have worked in partnership with Willis Stein and Vision Capital to develop a unique secondary transaction that creates a liquidity solution for limited partners and provides support for a very interesting portfolio of companies with good growth potential,” said Scott Conners of Landmark Partners.

Fund 3 investors received the option to receive liquidity from this transaction in cash and/or to participate in the new partnership to benefit from the growth potential of the portfolio. The transaction is structured to address the objectives of investors in Fund 3, some of whom had expressed a desire for liquidity. Investors were given the option to take cash proceeds or to roll the value of their interests into the new partnership. A majority of investors elected to receive cash; however, a significant number chose to participate in the value creation opportunity in the three retained portfolio companies of Fund 3.

Fund 3’s portfolio comprises three mid-market businesses: Education Corporation of America, Strategic Materials, and Velocitel.

  • Education Corporation of America is a provider of post-secondary education which operates under four brands across 26 campuses and online. Founded in 1983, the company offers associate degrees, diploma courses and baccalaureate degrees. In 2011, the company reported revenue of $315 million.
  • Strategic Materials is the largest glass processing and recycling business in North America, and is one of the top ten plastics processors in the market. For the latest fiscal year the company reported revenue of $228 million.
  • Velocitel is a provider of outsourced engineering and design services for the wireless telecom and renewable energy industries. Headquartered in California, Velocitel has 13 offices across the US. Velocitel is projected to generate over $110 million in revenue in 2012.

“Through this innovative transaction, Willis Stein’s investors have been offered a unique combination of options and benefits, allowing them to realize liquidity or to continue to participate in the portfolio’s value creation prospects. The three companies in the portfolio have attractive qualities and solid underlying business fundamentals,” said Julian Mash, Chief Executive of Vision Capital. “We are looking forward to working with Willis Stein and the management teams to help them realize their potential.”

Willis Stein invests in the consumer services, education and specialized business services sectors of the economy. Since 1989, Willis Stein has invested almost $3 billion in 50 portfolio companies and has completed more than 200 add-on acquisitions and has raised more than $4 billion in debt capital. The firm is based in Chicago, IL (www.willisstein.com).

“We are very pleased to have secured the future of ECA, SMI and Velocitel through this transaction with Landmark Partners, Vision Capital and other investors. Each business has a compelling business model, a strong position in its market and an industry leading management team in place. This transaction provides each business with the time necessary to fulfill its full potential,” said Avy Stein, Managing Partner.

Landmark is a private equity and real estate investment company specializing in secondary funds. Formed in 1989, the firm has one of the longest track records in the industry and is a source of liquidity to owners of interests in venture, mezzanine, buyout, and real estate limited partnerships. Ninety-five percent of its total capital is committed to secondary products. The remaining capital is committed to co-investment, fund-of-funds, and growth capital programs. The firm is based in Simsbury, CT (www.landmarkpartners.com)

Vision Capital makes investments in European and the US transactions with valuations of €50 million to €500 million. The firm has raised seven funds totaling over €1.9 billion and has invested in over 45 companies acquired in 14 transactions, including 11 portfolios. Vision Capital was founded in 1997 and has offices in London and New York (www.visioncapital.com).

Landmark’s investment will be made from Landmark Partners XIV, a $2 billion fund, and Vision Capital’s investment will be made from Vision Capital Partners VII LP.

Moelis & Company acted as exclusive financial advisor to Fund 3 in connection with this transaction.

© 2012 PEPD • Private Equity’s Leading News Magazine • 8-31-12

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