Southfield Capital has completed the sale of Hallcon Corporation, a provider of services to the rail transportation industry, to Montreal-based private equity firm NOVACAP.
Hallcon is a provider of specialty outsourced services to freight and passenger railways as well as to the oil and gas, mining, and airline industries. Services include crew and employee transportation; passenger rail coach, bus and train station cleaning and maintenance; and providing uniformed attendants at transit station platforms. The company has offices in Toronto and Lenexa, KS (www.hallconcorp.com).
Southfield Capital acquired Hallcon in 2011. During the course of its ownership Hallcon’s EBITDA increased by a factor of four. This growth was driven through geographic expansion into the US, the introduction of additional services, and strategic acquisitions. While no numbers were provided by Southfield Capital, the firm did characterize the transaction as a very successful exit.
“Working with the Hallcon team over the past four years has been a real pleasure. Because of the strong leadership and commitment to growth at Hallcon, we were able to execute on the highly ambitious goal of taking a business that was primarily hauling rail crew members in Canada, and expanding it to become a provider of outsourced employee transportation throughout North America,” said Heb James, a Partner with Southfield Capital.
Southfield Capital provides capital for majority recapitalizations and management-led buyouts of lower middle-market businesses. The firm makes control investments of $10 million to $40 million of equity in transactions with $20 million to $100 million of enterprise value. Typical target companies will have from $4 million to $12 million of EBITDA. Sectors of interest include: business services; consumer products & services; distribution & fulfillment; energy; healthcare; media & entertainment; niche manufacturing; power & infrastructure; specialty finance; and specialty retail. Southfield Capital was founded in 2005 as the successor company to the private investment firm Levison & Company and is headquartered in Greenwich, CT (www.southfieldcapital.com).
Novacap, with $750 million in assets under management, invests in middle market companies within traditional industries and in companies in the information and communication technologies sector. The firm was founded in 1981 and is based in Quebec (www.novacap.ca).
“We see this transaction as a growth platform and a step forward for Hallcon, said Domenic Mancini, Senior Partner at NOVACAP. “This company has a steady growth history, and the whole category still shows a lot of potential for expansion. As we have done numerous times in the past, we intend to invest the necessary resources in order to take Hallcon to the next level.”
“This new capitalization by NOVACAP and its partners allows us to consolidate our position in the market and move forward with the development of new markets, as we did with the acquisition of Loop Transportation, which was announced last week but was made possible through our discussions with NOVACAP”, said Tony Plut, President and CEO of Hallcon.
Capital for the transaction was provided by NOVACAP Industries IV Fund, Hallcon’s senior management team, Export Development Canada, and BMO Capital Partners.
Lazard was the lead financial advisor and BB&T Capital Markets acted as co-financial advisor to Hallcon.
© 2015 PEPD • Private Equity’s Leading News Magazine • 8-5-15
