News

Breakwater Continues Build of Senior Team

by

Breakwater Investment Management, continuing to add to its senior team, has hired Harry Chung as the firm’s new Chief Financial Officer. In December 2014, Eric Beckman, a former Senior Partner at Ares Management, joined Breakwater as Chairman and Co-Managing Partner.  Mr. Beckman manages the firm alongside Saif Mansour, Breakwater’s Founder and other Co-Managing Partner.

“I am extremely pleased to welcome Harry to the firm,” said Mr. Mansour. “His experience managing financial services organizations will be invaluable as we further develop the infrastructure and systems necessary to manage our growing business.”

Prior to joining Breakwater, Mr. Chung was Chief Financial Officer at Los Angeles-based investment bank Imperial Capital where he was a member of the Executive Committee and was responsible for business planning, tax, budgeting and financial reporting.  Earlier, Mr. Chung was at Jefferies & Company, most recently as Managing Director and Chief Operating Officer (Finance), and as a Senior Vice President in Corporate Development. He is a graduate of the University of Illinois.

“I am excited to join Breakwater and to have the opportunity to work with such an experienced team of investment professionals and operating executives. The firm’s equity and debt financing verticals provide a broad set of capital solutions for the lower middle market, and I very much look forward to supporting Breakwater’s next phase of growth,” said Mr. Chung.

Breakwater specializes in direct investments in small to lower middle market growth businesses with annual sales ranging from $5 million to $100 million. The firm serves as general partner of Breakwater Structured Growth Opportunities Fund, a $100 million open-ended private investment partnership formed in August 2008. The fund’s investment objective is to generate both current income and capital appreciation through secured debt investments accompanied with equity participation rights, primarily in growth-oriented companies across a variety of industries.  Breakwater is based in Los Angeles (www.breakwaterfunds.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 2-24-15

Golub Provides Debt for Buy of PowerPlan

by

Golub Capital was the Joint Lead Arranger, Joint Bookrunner and Senior Administrative Agent, on a $195 million senior credit facility to back the recent acquisition of PowerPlan by Thoma Bravo.

PowerPlan is a provider of asset-centric accounting, tax, budgeting and analytics software for asset-intensive businesses that operate within the utility, oil and gas, transportation, and telecom industries.  The company was founded in 1994 and is based in Atlanta (www.powerplan.com).

PowerPlan marks the sixth Thoma Bravo portfolio company that Golub Capital has invested in.  The firm’s most recent transactions include the 2014 acquisitions of Sparta Systems and Global Healthcare Exchange. “Golub Capital provided a deep understanding of the industry and our execution strategy, which provided us with confidence they would deliver an effective financing solution,” said Peter Stefanski at Thoma Bravo. “Golub Capital once again exceeded our high expectations for a financing partner.”

“PowerPlan is a leading enterprise-class provider with an extraordinary management team,” said Spyro Alexopoulos, Managing Director at Golub Capital. “We are thrilled to be working yet again with our long-time partner and world-class sponsor Thoma Bravo.”

Golub offers buy-and-hold products ranging from $10 million to $75 million and includes one-loan financings, senior, 2nd lien and subordinated debt, preferred stock and co-investment equity.  The firm underwrites and syndicates loans up to $500 million and will hold up to $250 million per transaction. Industries of interest include consumer products, business and consumer services, defense, manufacturing, value-added distribution, media, healthcare services and restaurants. Golub has offices in New York, Chicago, and San Francisco (www.golubcapital.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 2-24-15

Nik Shah Makes MD at H.I.G. Growth

by

H.I.G. Growth Partners, the growth capital investment affiliate of H.I.G. Capital, has promoted Nik Shah to Managing Director. Mr. Shah joined H.I.G. in 2007 and has been responsible for a number of investments in the technology, digital media, marketing and business services sectors.

Mr. Shah has over fifteen years of experience investing in lower middle market growth companies. Prior to joining H.I.G., he was a Senior Associate at Landmark Growth Capital Partners, an Associate at AH Ventures and an Analyst at Adams Harkness. Mr. Shah received his undergraduate degree from Harvard and his MBA from Dartmouth.

“Nik has made significant contributions to the firm and has been responsible for sourcing and structuring a number of successful investments. His experience investing in high-growth small-cap businesses, especially in technology-based companies, allows Nik to bring significant value to our group and portfolio investments,” said John Black, Head of H.I.G. Growth Partners.

H.I.G. Growth makes both majority and minority equity investments ranging from $5 million to $30 million in businesses that have revenues between $10 million and $100 million.  The firm considers investments across all industries, but areas of specific interest include healthcare, technology, internet and media, consumer products and technology-enabled financial and business services (www.higgrowth.com).  As a new Managing Director Mr. Shah will continue to focus on investments across a range of sectors as H.I.G. Growth continues to invest its $500 million equity fund.

© 2015 PEPD • Private Equity’s Leading News Magazine • 2-24-15

Abacus’ Flexibility and Industry Smarts Closes Latest Deal

by

Cash flow based senior lender Abacus Finance Group was the Administrative Agent and Sole Lead Arranger for senior secured credit facilities that backed the acquisition of Infinity Behavioral Health Services by Thompson Street Capital Partners.

Infinity Behavioral Health Services is a revenue cycle management company servicing 120 behavioral health facilities that provide substance abuse and mental health treatment across 14 states.  Services include utilization review, dispute resolution and claims submission.  The company is based in Fort Lauderdale (www.infinitybehavioral.com).

Abacus team members involved in the transaction included Sean McKeever , Tim Wong, and Rafal Rydzewski.  “Abacus Finance’s healthcare industry knowledge – in particular about outsourced revenue cycle management services – and the team’s flexibility in transaction structure were critical to the success of this transaction,” said Elizabeth Borow, Managing Director of Thompson Street. “As they have done in the past, the Abacus team met an aggressive schedule for closing the investment on time as promised.”

Abacus targets debt financing opportunities of up to $50 million with a typical hold size ranging from $10 million to $25 million. The companies that Abacus finances generally have EBITDAs between $3 million and $15 million. Abacus was formed in June 2011 and is an affiliate of New York Private Bank & Trust, the holding company for Emigrant Bank, founded in 1850, the largest privately held bank in America with approximately $10 billion in assets. Abacus is based in New York (www.abacusfinance.com).

“We know that when Thompson Street, a long-time trusted client that shares our lower-middle market focus, comes to us with a transaction, it will involve a high quality company,” said Tim Clifford, President and CEO of Abacus Finance. “Although only four years old, Infinity – which is led by a great management team – has become a dominant player in its niche market. As in prior transactions with Liz and her partners, flexibility, speed and certainty of close were key objectives in keeping with of the emphasis we place on exceptional client service in our Total Partnership Approach.”

Thompson Street Capital Partners makes investments in manufacturing, service and distribution businesses with annual revenues between $20 million and $200 million and a minimum EBITDA of $5 million.  Founded in 2000, the firm has managed more than $800 million in private equity capital and is currently investing its third fund. Thompson Street is based in St. Louis (www.tscp.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 2-23-15

Prospect Backs Carlyle Buy of PrimeSport

by

Prospect Capital has provided a first lien senior secured floating rate loan facility to support the acquisition of PrimeSport by The Carlyle Group, Moorad Sports Partners and RSE Ventures. PrimeSport had been majority owned by Clearlake Capital.

“Carlyle selected Prospect based on its ability to provide committed capital to finance our acquisition of PrimeSport on an accelerated basis due to Prospect’s thorough knowledge of PrimeSport and its industry,” said David Stonehill, a Managing Director of Carlyle.

PrimeSport is a provider of consolidated sporting event packages including tickets, travel, hospitality, and VIP experiences for corporations, professional sports teams and fans.  PrimeSport maintains partnerships with some of the largest sporting events and organizations in the country including NCAA Championships®, the NCAA® Men’s Basketball Tournament and Men’s Final Four®, Men’s College World Series®, Division I Wrestling Championships, Women’s College World Series®, Women’s Final Four®, Women’s Volleyball Championship and Men’s Frozen Four®, NHL, 20 NFL teams, 2015 College Football Playoff National Championship, Rose Bowl, Sugar Bowl, Alamo Bowl, Orange Bowl, Holiday Bowl, Poinsettia Bowl, Chick-fil-A Bowl, and many others.  PrimeSport is headquartered in Atlanta (www.primesport.com).

“Prospect is pleased to complete this important transaction with Carlyle,” said Jason Wilson, a Managing Director of Prospect Capital.  “We look forward to continued strong performance at PrimeSport, a company with a compelling value proposition for professional and collegiate sports leagues, teams, and fans involved in many of the biggest sporting events in the world.”

Prospect invests in private and micro-cap public businesses located in the US and Canada that have from $3 million to $30 million of EBITDA. Investment structures include senior debt; unitranche debt; 2nd lien and mezzanine debt; and “one stop” debt and equity.  The firm invests in an array of industries and is effectively industry agnostic.  Prospect closed nearly $3.2 billion of new originations during calendar year 2014, with further origination activity expected in the current quarter.  The firm is headquartered in New York (www.prospectstreet.com).

“Prospect demonstrated creativity by parallel processing a dividend recapitalization, which closed in September 2014, with a possible change of control process, and we were pleased to strongly recommend Prospect as a leading provider of staple financing in this transaction,” said Behdad Eghbali, a founding partner of Clearlake.

As part of the acquisition by Carlyle, Clearlake Capital and existing management have rolled over a significant equity stake in the company.  Sam Soni, PrimeSport’s founder, remains the CEO of PrimeSport.

© 2015 PEPD • Private Equity’s Leading News Magazine • 2-23-15

Excellere Continues Strong Run, Sells U.S. Water Services

by

Excellere Partners has completed the sale of its portfolio company U.S. Water Services to Allete (NYSE: ALE) for $194 million.  U.S. Water, which was acquired by Excellere in January 2011, had revenue of approximately $120 million in 2014.

Allete initially purchased 87 percent of U.S. Water for $168 million, based on an enterprise value of $194 million. Current employees and management of U.S. Water will continue to own the remaining 13 percent will be purchase by Allete in the future for a contingent amount based on U.S. Water’s future earnings.

When Excellere acquired U.S. Water the firm believed that the increasing cost of water due to scarcity, quality challenges and environmental policies had, and would continue to drive, small and mid-sized companies and other water users to out-source the treatment of their water supply for industrial processes and/or discharge.

Following Excellere’s four year investment period, U.S. Water grew from an upper-Midwest regionally-focused provider of industrial water treatment services to an industry leader with production facilities and representation nationwide.  Today, the company serves over 3,600 customers, including a significant number of Fortune 500 companies.  The company’s chemicals division offers a line of approximately 350 chemical products and support services, and the equipment division offers a line of equipment, parts, and consumable supplies. U.S. Water is headquartered northwest of Minneapolis in St. Michael, MN (www.uswaterservices.com).

The sale of U.S. Water is a continuation of momentum Excellere is experiencing in the marketplace.  According to Managing Partner David Kessenich, “The momentum started in July with an investment in DentMall, a Miami-based dental practice management company, and continued with three highly-successful exits, two additional platform investments, and one strategic add-on. The pace of activity continues into 2015 with a strong pipeline of new investment opportunities.”

In the midst of what many private equity insiders consider to be a challenging market, driven by strong competition for quality companies and valuations at historical highs, Excellere has been able to achieve its most active period in the firm’s history.  “It may seem like an over-simplification, but it’s a combination of a lot of hard work, a sound long-term investment strategy, a proprietary value creation model that is highly attractive to entrepreneurs and some good fortune,” said Mr. Kessenich.  “In looking back over the last half of 2014, it really is a culmination of all the efforts we’ve put into our industry-focused investment thesis and the value creation programs that we implement with our management teams.”

In addition to the DentMall investment in July that started this run for Excellere, in December the firm made investments in TrialCard (Raleigh, NC), a provider of patient access and medication adherence support services to the pharmaceutical industry, and completed the acquisition of a geospatial information software and services provider for Systems Integrity Management Solutions (Houston, TX), a provider of asset integrity services to midstream and downstream energy companies.  Excellere’s most recent investment occurred last month with the recapitalization of a neuro-rehabilitation company that provides post-acute rehabilitation to persons who have sustained a brain injury.

Exits have equally been active for Excellere. In August, the firm sold Personable Insurance (San Diego, CA), a provider of specialty auto insurance programs; and in November, PhyMed Healthcare Group (Nashville, TN), an anesthesia and pain management provider, was sold to Ontario Teachers’ Pension Plan.

Excellere Partners invests in middle-market companies with revenues ranging from $20 million to $150 million. Sectors of interest include energy products and services; healthcare; industrial technology and services; business services; and agri-business.  The firm has $737 million of capital under management and is based in Denver (www.excellerepartners.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 2-19-15