For those of you used to receiving our occasional missives in
the mail, welcome to the new e-version of the CHB newsletter. We are fairly
sure this whole Internet thing is here to stay and have, at last, bowed to
the march of technology. You can expect to continue to receive these newsletters
(unless you tell us you would rather not) every six months or so to update
you on what we are doing here at CHB.
New Investments - In August, we completed a $7 million equity investment in Newline Products, Inc. Headquartered in Plano, TX with manufacturing operations in Shanghai, China, Newline is a manufacturer of visual display products such as markerboards, tackboards and chalkboards and is a distributor for numerous other product lines used in the education construction market. The Company has grown rapidly since its founding in 2003 (over 100% per year compounded) and partnered with CHB to help it continue to penetrate new markets in the US and internationally. To learn more about Newline please call Blake Morris.
Last month, we acquired Zhone Technologies’ optical networking
division. Renamed Sorrento Networks, the company is a global provider of metro/regional
optical access solutions, offering wavelength-division multiplexing product
portfolio to telecom carriers and enterprises. Sorrento’s products efficiently
add and manage bandwidth across existing fiber infrastructure. The company
is located in Denver, CO with operations in Oakland, CA and Stuttgart Germany.
To learn more about Sorrento, please call Sean McClenaghan.
In addition, we are now working on three platform deals under
letter of intent with an aggregate equity commitment of approximately $25 million.
Subject to the completion of our due diligence, we expect these deals to close
throughout the next few months.
Fund Raising - With the above investments, Fund III, which had a final close in early 2006, will be largely invested and we expect to be in the market for Fund IV some time this year.
Portfolio Update - HiRel Systems, a Minnesota
based manufacturer of custom magnetics and power supplies, continues to ramp
up its manufacturing operations in Zhuhai City, China and Santo Domingo, The
Dominican Republic. In 2008, the Company is projecting that more than half
of its magnetics business will be made in these new facilities. This investment
in offshore capabilities has positioned the company to capture new business
opportunities in its core medical, military, avionics and industrial controls
markets. To learn more about HiRel, please call Sean McClenaghan.
In June, CT Systems, a Kansas based assembler and integrator
of complex electromechanical assemblies and provider of precision-machined
components acquired a St Louis based manufacturer of precision-machined parts
for use primarily in the aerospace market, substantially broadening its customer
base and capabilities. In December, the Company acquired another precision
machining provider outside of Wichita, KS. Independent of these acquisitions,
the Company had a record year in 2007, tripling EBITDA through organic growth
alone, primarily related to the aerospace market. To learn more about CT Systems,
please call Grant Clayton.
Micro Dynamics and Logic PD (product design and electronic
manufacturing services) continue to grow within their target markets - aerospace,
medical and industrial OEMs with lower-volume, complex, electrical products.
The company expects 2007 revenue to be up 15% over last year. To learn more
about Micro Dynamics and Logic PD, please call Blake Morris.
CanGen Holdings, a manufacturer of highly engineered wear
parts used by plastic and rubber processors, had another record year in
2007. CanGen has deployed additional sales and marketing resources to pursue
several attractive adjacent market opportunities and is also in the process
of identifying and contacting international acquisition candidates to broaden
its geographic reach. To learn more about CanGen, please call Steve Greene.
Personnel - In August, Will Kilpatrick joined the Atlanta office as an associate, replacing Jim Shilkett who is now at University of Chicago Graduate School of Business. Will previously spent two years with Harris Williams in Richmond, VA.
About CHB Capital Partners - Founded in 1993, CHB Capital Partners is a private equity fund with over $150 million under management that provides equity capital and strategic, financial and operating expertise required for smooth ownership transitions and growth. CHB's eight investment professionals have over 100 years of management consulting, operations and investment experience.
Investment Strategy - CHB makes equity investments
of $3-$15 million in three types of transactions: leveraged recapitalizations,
management-led buyouts and growth equity investments. The common element in
each of our transactions is that we invest alongside strong management teams
that have, or are willing to make, a significant equity commitment to the business.
Consequently, CHB does not participate in transactions where an owner is contemplating
the complete sale of the business and management is not in a position to invest
with CHB in the recapitalization of the company.
Generalists – niche manufacturing, distribution and service businesses
Target Investment Characteristics:
Minimum revenues of $10 million
EBITDA between $2 million and $10 million
Scalable business operating model
Proven management team
Headquartered in United States
We encourage you to call us with interesting investment opportunities. Should you call, we guarantee you a thoughtful and timely response.
511 Sixteenth Street, Suite 600, Denver, CO 80202
P: (303) 571-0100 F: (303) 571-0114
75 Fifth Street NW, Suite 1025, Atlanta, GA 30308
P: (404) 806-7520 F: (404) 806-7530