NEW YORK, Sept. 10, 2012 /PRNewswire/ -- Behrman Capital, a private equity investment firm based in New York and San Francisco, today announced the formation of Behrman Capital PEP L.P. ("PEP"), a $1.0 billion, six-year investment partnership that was formed primarily to acquire the five remaining investments in Behrman Capital III ("Fund III"). The transaction provided immediate and full liquidity to all of the 2000-vintage fund's limited partners. At the same time, PEP will allow investors in Behrman Capital IV ("Fund IV"), a 2007-vintage fund that more recently invested in two of these companies, to see their investments fully mature. In addition, approximately 25% of aggregate commitments to PEP will be devoted to add-on acquisitions in the existing portfolio and select new platform investments. PEP was significantly oversubscribed and closed at its hard cap.
The five companies now owned by PEP are Ark Holding Company, ILC Holdings/DDC Inc., Pelican Products, Inc., Selig Sealing Products, Inc. and ILC Dover Inc. The two companies in which Fund IV is also invested are Ark Holding Company and Pelican Products, Inc.
The valuation of the five companies for the purpose of their acquisition by PEP was set through an independent auction process, resulting in the selection of the Canada Pension Plan Investment Board (CPPIB) as lead investor. The combined enterprise value of the five companies acquired from Fund III was approximately $2.5 billion.
As the lead investor, CPPIB committed $654 million to PEP and was joined by other investors such as Goldman Sachs Vintage Fund V, which invested $100 million.
The PEP transaction was approved by more than 75% of Fund III limited partners and 95% of Fund IV limited partners, as well as both funds' advisory boards.
Cogent Partners acted as exclusive financial advisor to Fund III and Behrman Capital in connection with this transaction.
Grant G. Behrman, Managing Partner of Behrman Capital, said, "Given the desire of Fund III limited partners for near-term liquidity and the interest of Fund IV limited partners in seeing their investments realize their full potential, we are proud to have devised an innovative solution that reflects our commitment to meeting the diverse objectives of all our investors. Our advisory boards were kept informed throughout the process, and they encouraged us to pursue this creative option. PEP delivered immediate liquidity to all of our Fund III limited partners, at an attractive valuation determined through a robust and independent auction process, and gave them the opportunity to remain investors in companies that are performing well, alongside our new investors and our Fund IV limited partners. We thank all of our investors and our advisory boards for their partnership and support in reaching this important milestone.
"We are also delighted to welcome the Canada Pension Plan Investment Board, one of the world's most respected institutional investors, as the lead investor in PEP. CPPIB's investment, together with that of Goldman Sachs Asset Management and several new investors, gives us the ability to patiently support these companies as they execute their growth strategies over the coming years," Mr. Behrman added.
Andre Bourbonnais, Senior Vice President, Private Investments, CPPIB, said, "We are pleased to partner with Behrman Capital and invest in five soundly managed companies that are well positioned to create significant value over the long term. As an active participant in the secondary private equity market, we were able to lead a transaction which provided a swift, innovative and constructive solution to a complex situation. The Behrman team has assembled an excellent portfolio with strong underlying management teams. We look forward to collaborating with Behrman in the coming years to maximize the value of these companies."
Ralf Kratzenberg, Senior Manager in Private Equity at Gothaer, a limited partner of Fund III, Fund IV and PEP, said, "We are grateful to Behrman for creating a means of securing an immediate and attractive return on the remaining five investments in Fund III, and pleased that the firm will be able to help steward these businesses for the duration of time necessary to realize their full value for Fund IV and PEP investors. We are excited to participate in this continuing effort."
Brian Murphy, Managing Director of Portfolio Advisors, an investor in Fund III, said, "We are pleased with this transaction. In light of our time horizon and objectives, this liquidity option was extremely attractive."
About Behrman Capital
Based in New York City and San Francisco, Behrman Capital was founded in 1991 by Grant G. and Darryl G. Behrman. The firm invests in management buyouts, leveraged buildups and recapitalizations of established growth businesses. The company's investments are primarily focused in five industries: health care, specialty manufacturing, business to business outsourcing, defense and information technology. The firm has raised five funds with a combined capital base in excess of $3.0 billion. For more information, please visit www.behrmancap.com.
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SOURCE Behrman Capital