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The days may be getting shorter as fall approaches but our
days at CHB seem to be stretching out...
In November, we will be opening an office in Atlanta, Georgia.
Grant Clayton and Sean McClenaghan are relocating to Atlanta
to manage the office. Sean won the coin-toss for the corner
office and Grant, fresh from watching the summer Olympics,
has filed an official protest. They will be joined by Steve
Greene, who worked with CHB for three years prior to attending
Harvard Business School, and by Amy Mulkey, who comes to CHB
with two years experience with McKinsey & Company’s
Atlanta office.
Back in Denver, Kyle McNeal left CHB in May after three-years
to relocate to Hong Kong and help one of our portfolio companies,
HiRel Systems, start up its manufacturing operations in China.
In July, we hired David Anderson as CFO to improve LP reporting
and address the infrastructure requirements of two offices.
We had a first close of $32 million on CHB Capital Partners
III in May, comprised primarily of existing investors along
with a lead institutional investor. We are late in discussions
with a number of additional institutional investors and expect
a second close in December. We are targeting $100 million,
in aggregate.
In September, we completed our first investment from our third
fund, a $9.5 million investment in Micro Dynamics Corporation.
Headquartered in Eden Prairie, MN, Micro Dynamics is a manufacturer
of complex circuit board assemblies for original equipment
manufacturers in the military/aerospace, industrial, computer,
communications and medical industries. This investment fits
well with our strategy of providing capital to smaller middle
market companies for ownership transition and growth in partnership
with successful management teams.
Believe it or not, the forecast this week calls for snow,
signaling the start of ski season. This season will be different
from previous years for us as we recently completed the sale
of skiwear company Spyder Active Sports to Apax Partners.
Since CHB’s investment in September of 1997, Spyder has
made extraordinary progress, growing revenue from approximately
$10 million to over $85 million. With the sale of Spyder,
CHB Capital Partners I is fully realized, with a gross fund
IRR of 55%.
HiRel recently signed a definitive agreement to acquire a
magnetics’ manufacturer located in the Pacific Northwest.
The acquisition will add several new customers and expand
HiRel’s presence into two new industries and onto the
west coast. Pro Forma for the acquisition, HiRel will grow
revenues by over 50% while more than doubling EBITDA in 2004.
After a record revenue year in 2003, Alternative Technology
continues to outperform the overall IT market and is on pace
for sales growth of over 30% in 2004. CT Systems (formerly
Cable-Tech) enjoyed strong growth in the first six months
of 2004. However, we expect this growth to slow through the
remainder of 2004 as several large projects have started off
more slowly than expected.
We encourage you to call us with interesting investment opportunities
within the closely held and family owned business market.
We look for transactions where we can invest equity capital
in established companies with $10 million or more in revenue.
Should you call, we guarantee you a thoughtful and timely
response.
Tad Kelly, John Flanigan, Blake Morris, Grant Clayton, Sean
McClenaghan, Steve Greene, Frederick Antwi, Amy Mulkey, David
Anderson & Andrea Kasper
511 Sixteenth Street,
Suite 600 Denver, CO 80202
Telephone: (303) 571-0100 Facsimile: (303) 571-0114
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