Langley, British Columbia / Oakville, Ontario
Provider of mobile on-site refueling and fuel management services in Canada and the U.S.
Exploration and production company focusing on oil and gas development in the Permian Basin
Leading asset management platform serving institutional and retail investors
Leading national supplier of on-the-field team uniforms and other team related sportswear
Kelso was involved in myriad ways.
Montreal, Quebec, Canada
Canadian lumber manufacturer with ownership of sawmills and timber rights in Eastern Canada
Eagle Foods (“Eagle”) is a leading domestic manufacturer of canned milk, popcorn and other salty snack products. Eagle operates in two stable and growing categories within canned milk with #1 branded market share in sweetened condensed milk and #2 branded share in evaporated milk, as well as #1 private label market share in each category. Additionally, Eagle manufactures ready-to-eat popcorn under the brands G.H. Cretors and Popcorn, Indiana, as well as private label popcorn and other salty snack products for a diverse set of retail customers. G.H. Cretors is one of the fastest growing brands in the ready-to-eat popcorn category. Popcorn, Indiana is one of the leading brands in the ready-to-eat popcorn category, with a wide array of unique flavors and product offerings. Eagle’s products have a rich history with the 150-year heritage of the iconic Eagle canned milk brand and strong consumer awareness of the Cretors family name as the inventors of the popcorn machine.
- In December 2015, Kelso purchased the Eagle canned milk assets from The J.M. Smucker Company as part of a negotiated transaction. This acquisition established the foundation upon which to build a portfolio of food brands.
- On August 1, 2016, Eagle successfully transitioned to its own ERP system, on time and on budget.
- In August 2016, Eagle closed on the acquisition of Cornfields, Inc., a leading branded and private label manufacturer of popcorn and other salty snack products, which significantly increased the size of the business.
- In August 2017, Eagle closed on the acquisition of Popcorn, Indiana, a leading brand in the ready-to-eat popcorn category, which strategically complements the G.H. Cretors brand and private label popcorn offerings, and increases Eagle's scale and importance in the high growth ready-to-eat popcorn category.
Partnership Aspects that Led to Sourcing of Transaction
Kelso was selected by Paul Wagstaff, a successful and seasoned food executive, to build a food platform together. Kelso’s unique characteristics were responsible for our selection by Paul as his Partner of Choice: our 35+ years of investing, the stability and longevity of our team and our focus on alignment of interest.
Demonstrated Ability to Execute a Corporate Carve-out
Our ability to move quickly through an accelerated due diligence process and cause minimal business disruption to the seller was critical to being selected as the preferred buyer of the Eagle canned milk assets. Kelso’s commitment to smoothly transition key employees into the new Eagle Foods organization was also a differentiating factor.
Buyer of Choice for Family-Owned Business
Eight months after closing the initial investment, Kelso and management invested additional equity into Eagle to complete the acquisition of Cornfields, Inc. Kelso purchased Cornfields from the founding Cretors family in a negotiated transaction. The Eagle management team’s reputation for building brands was a key factor in the Cretors family’s decision to sell its company to Eagle.
Leading provider of home healthcare services including personal care services, skilled home healthcare and hospice.
Emtec is a digital IT services firm primarily serving mid-to-large enterprises and specializing in outsourced digital product development (“DPD”), which includes application / software development and product engineering services. Emtec also provides a variety of non-DPD services, including managed IT services, software implementation, and hardware / software procurement.
Foodservice distributor focused on the Italian specialty and pizzeria markets.
Foundation Consumer Healthcare
Over-the-counter (“OTC”) pharmaceutical platform that owns market leading brands including Plan B One-Step (emergency contraceptive), Theravent (snoring relief), Campho-Phenique (cold sore relief), St. Joseph (low-dose aspirin), Bronkaid (asthma relief), and Neo-Synephrine (nasal decongestant).
Global Ship Lease
London, United Kingdom
Owner of containerships
Harbor Community Bank
Community banking platform in Florida
Helios is a leading provider of pharmacy benefit management (“PBM”) services, durable medical equipment, home health care, transportation, translation and Medicare compliance solutions for workers’ compensation insurance carriers and third-party administrators. Helios was formed at the time of Kelso’s investment through the merger of Progressive Solutions (“Progressive”) and PMSI, which were the #2 and #3 PBM providers in the workers’ compensation market at the time. The combination created the largest dedicated PBM serving the workers’ compensation industry.
- The workers’ compensation PBM market continued to grow due to drug price inflation and moderate script growth post-investment.
- Helios achieved the $35 million in run-rate cost savings initially forecasted.
- In June 2014 based on the strength of the underlying business, Helios raised $210 million in incremental term loans, which allowed for a distribution to shareholders.
- In October 2015, Helios was sold to OptumRX Inc.
Partnership Aspects that Led to Sourcing of Transaction
Kelso’s focus on the PBM sector and industry relationships allowed us to identify a strategic (Progressive) with which to partner in the acquisition of PMSI. We proactively approached Progressive to be our partner, which gave the Kelso/Progressive combination a competitive edge in the auction process. Our successful track record of partnering with corporates made us an attractive partner to both PMSI and Progressive. Existing management from both companies rolled over significant equity and led a combined management team.
Navigated a Complex Auction Process
Kelso was able to navigate a complex auction process and bring significant resources to bear to complete diligence on two companies within a condensed timeline and ultimately merge Progressive and PMSI.
Identified Meaningful Synergy Opportunity Post-Merger
In evaluating the combined business, Kelso and management were able to identify and underwrite $35 million of cost savings. These costs savings were fully implemented on a run-rate basis within two years of Kelso’s investment.
Capitalized on Opportunity for Strategic Sale
Timely, successful integration led by a combined Progressive/PMSI management team positioned the business for a sale to a strategic buyer. Kelso had identified this opportunity for a strategic exit in a rapidly consolidating industry as part of its investment thesis.
Healthcare Industry Experience Provided Key Insights
The Kelso Healthcare Services team had evaluated the PBM sector in depth prior to the Helios investment. Our conclusions regarding industry structure, barriers to entry, and differentiated services required in workers’ compensation PBM were core to our investment thesis.
Joint venture between Kelso and the Hunt Oil Company formed specifically to acquire and develop natural gas assets in the Marcellus shale
Leading distributor of foodservice disposables, janitorial & sanitation supplies, and non-perishable food products
Investment - Foundation Consumer Brands
Platform of seven OTC brands that primarily compete in the nasal strip, pediatric cough & cold, and oral analgesic categories
Investment - Inovar
A leading provider of decorative labels to high-growth customers in food and beverage, nutraceuticals, pet care, and medical end markets.
Investment - WilliamsMarston
National leader in complex accounting, tax, and valuation advisory services to pre-IPO, public, and private equity-backed companies managing rapid growth and transformation.
J.S. Held is a specialized global consulting firm whose professionals serve as trusted, expert advisors to organizations facing high-stakes events.
KAR Auction Services
KAR Auction Services (“KAR”) is a leading provider of vehicle auction services in North America for sellers of used and salvage vehicles through numerous auction locations and multiple proprietary internet venues. Revenues are generated from auction fees from both vehicle buyers and sellers, as well as value-added ancillary services, including inspections, storage, transportation, reconditioning, salvage recovery, titling and floorplan financing.
- We successfully integrated IAAI and ADESA, achieving significant operational and financial benefits.
- KAR completed numerous tuck-in acquisitions and the critical acquisition of Openlane, which enhanced KAR’s web-based auction and technology capabilities.
- Despite a recession and significant decline in new vehicle sales and lease originations during Kelso’s ownership period, KAR grew revenue and EBITDA and successfully managed expenses and capital spending to generate free cash flow and pay down a substantial amount of debt.
- In December 2009, Kelso took KAR public, in one of the first IPOs coming out of the Global Financial Crisis. To fully exit its investment, Kelso completed six secondary offerings between December 2012 and November 2013, with each successive offering price exceeding the previous sale’s offering price.
Partnership Aspects that Led to Sourcing of Transaction
KAR was formed in April 2007 by taking ADESA, a publicly-traded company, private and combining it with Insurance Auto Auctions (“IAAI”), an existing Kelso portfolio company. IAAI was an ideal platform to consolidate the auction industry by building out a national physical footprint and online business to compete with the only two other national competitors. Kelso installed Brian Clingen as CEO - Brian had previously been CFO of Universal Outdoor, a Kelso Fund V company. Kelso also hired Jim Hallett, the former CEO of ADESA, to run the used vehicle division.
Partnered with Former Kelso Manager to Create a Market Leading Auction Service Company
Brian Clingen was formerly the CFO of Kelso’s successful investment in Universal Outdoor. Brian also had experience in the automotive collision repair and insurance sectors. Kelso partnered with Brian in the going private transaction of IAAI in 2005, at which point Brian became Chairman of the Board. Kelso identified a substantial opportunity for value creation by consolidating the fragmented salvage vehicle auction sector, including by combining IAAI with the salvage operations of ADESA. Brian oversaw the go-private purchase of ADESA and the subsequent merger of IAAI and ADESA. After combining the two businesses, which resulted in substantial revenue and cost synergies, we ultimately took the combined business public in December of 2009.
Supported KAR’s Growth Through Operational Initiatives, Acquisitions and Greenfields
During our ownership, Kelso and management worked together to substantially transform the business through operational improvements, acquisitions and a further organic build-out of the combined company’s North American footprint. Significant opportunity for cost savings existed through combining IAAI with ADESA’s salvage auction businesses and implementing best practices at ADESA’s used vehicle locations.
Affordable, full service restaurant chain across the U.S.
Walnut Creek, California
Leading independent provider of retirement services in the U.S., with over one million employee participants and more than $160 billion in assets under administration
Largest supplier of aftermarket parts and accessories to the golf cart market
Leading distributor of rigid container and life sciences packaging.
West Palm Beach, FL
Leading professional employer organization serving businesses in a diverse range of industries
Leading operator of gastroenterology-focused ambulatory surgery centers
Provider of outsourced services for the maintenance, repair and installation of electric and natural gas infrastructure
Reinsurance company focused on the property and casualty run-off market
Refresh Mental Health
Jacksonville Beach, FL
National provider of outpatient mental health services with over 200 locations in the United States
Mount Airy, NC
Largest designer, marketer and manufacturer of socks sold in the U.S.
A leading provider of outsourced business process management and consulting / advisory services to U.S. based insurance brokers, managing general agents, carriers, and third-party administrators.
Risk Strategies Company
Founded in 1997 by Chairman Mike Christian, Risk Strategies Company (“RSC”) is a leading specialty-focused insurance broker that provides retail brokerage solutions for commercial clients and high net worth individuals, and wholesale products for agencies. RSC has a client-centric approach with 100,000+ retail clients supported by 100+ offices across the U.S. and 3,000+ employees. RSC benefits from a differentiated business model focused largely on more complex specialty practices, including healthcare, professional liability, entertainment, and fine arts.
Sandler O'Neill + Partners
New York, NY
Full-service investment banking firm focused on the financial services sector
Wealth management firm providing fee-based wealth advisory services.
Sentinel Data Centers
New York, NY
Developer and operator of highly fault tolerant data centers for internal data processing and disaster recovery purposes
Sirius Computer Solutions
San Antonio, TX
Leading provider of data center-focused technology integration services, including product provisioning, design and implementation
Leading distributor of fastening and packaging products to construction and industrial end markets
Tallgrass Energy is a growth-oriented midstream energy company operating across 10 states with transportation, storage, terminal and processing assets that serve some of the nation’s most prolific crude oil and natural gas basins.
- Completed a ~$314mm MLP IPO just six months after closing the transaction, creating Tallgrass Energy Partners, LP (NYSE: “TEP”).
- TEP has recorded 17 consecutive quarters of distribution increases (every quarter since IPO)
- Completed a ~$1.4bn IPO of its general partner, Tallgrass Energy Partners GP, LP (NYSE: “TEGP”), two years after the IPO of TEP.
- TEGP has recorded nine consecutive quarters of distribution increases (every quarter since IPO)
- To date, Tallgrass Development has successfully completed ~$3.4bn of drop down transactions to TEP
- TEP has completed over $1.4bn of third party acquisitions
- Successfully completed multiple development / repositioning projects across the asset base, including:
- Development of Pony Express, creating an approximate 320,000 bbl/d crude oil pipeline serving multiple production basins in the Rockies
- Transformation to bi-directional gas flows in and expansion of Zone 3 on Rockies Express Pipeline, repositioning the pipeline as a bi-directional header system capable of serving producers and end markets from the Rockies to the Utica Shale in Ohio
- Acquisition and development of Tallgrass Terminals, with over 3.5mm barrels of capacity across its systems
Partnership Aspects That Led Sourcing of Transaction
Kelso evaluated the assets with multiple strategic partners during Kinder Morgan’s FTC-mandated divestiture of certain pipelines and other midstream assets prior to working with Tallgrass. We worked closely with our KSN members, many of whom had direct experience previously operating the assets, to identify the opportunity and develop an understanding of the value of the midstream asset portfolio. As a result, we were able to give management confidence that Kelso was the right choice when securing a financial partner and negotiating the transaction.
History of Success in Midstream Sector
Our deep experience in the energy sector, specifically our strong track record in midstream, along with the experience of our KSN team, gave us the insights and confidence to pursue this very large acquisition, which required a differentiated perspective on the potential of its key assets.
Substantial Upside To Be Unlocked Under New Ownership
Management developed a unique perspective on the assets which was not apparent to all bidders in the process, including a large development project (Pony Express Pipeline) and a large asset repositioning (Rockies Express Pipeline). Through our independent due diligence, we ultimately developed a similar perspective with management on the substantial upside embedded in the asset portfolio.
Partnership with a Highly Experienced and Respected Management Team
Management, led by CEO David Dehaemers, had a strong track record of successfully operating midstream assets and creating significant value for investors. Our energy experience and perspectives aligned well with those of management as they searched for a financial partner.
Calgary, Alberta, Canada
Industry leading provider of integrated and environmentally-responsible services to oil and gas companies in Canada and the U.S.
Third Point Re
Specialty property and casualty reinsurance company
Truck-Lite is a leading manufacturer of signal lighting, forward lighting, wiring harnesses, mirrors, fuel filters and other products to the medium and heavy duty commercial vehicle, trailer and light vehicle industries. Kelso acquired a 49% ownership stake in Truck-Lite from the Penske Corporation and other investors in 2010. Truck-Lite operated as a standalone subsidiary of Penske Corp, benefitting from Penske Corp’s relationships with truck fleets and commercial and light vehicle OEMs. Truck-Lite maintains #1 or #2 market shares across all of its major product categories in the U.S.
- Commercial vehicle and trailer production volumes met or exceeded industry expectations in 2011-12, thereby validating the market timing aspect of the Kelso investment thesis.
- In 2012 based on the strength of the underlying business, Truck-Lite completed a $325 million debt refinancing, the proceeds of which were used to repay debt and fund a $100 million distribution to shareholders.
- In February 2015, Truck-Lite acquired Rigid Industries, a leading manufacturer of LED lighting for the off-road and powersports industries.
- In December 2015, Kelso and The Penske Corporation sold Truck-Lite to entities affiliated with Koch Equity Development and BDT Capital Partners.
Partnership Aspects that Led to Sourcing of Transaction
The Penske Corporation was seeking a partner to purchase a 49% interest in Truck-Lite.& Management and the Penske organization (including Roger Penske) selected Kelso as their partner due to our successful record of investing in the transportation industry, substantial experience with corporate partnerships and significant personal investment by the Kelso employees in our transactions. The Penske Corporation retained 51% ownership in the business. The Truck-Lite partnership was the first of two investments we have made with entities controlled by Roger Penske. Kelso continues to actively review new investment opportunities with the Penske organization.
Invested at an Attractive Entry Point in the Commercial Vehicle Cycle
Following the Global Financial Crisis, the average truck fleet age of 6.5 years in 2010 was the highest on record, with strong new build rates projected. Kelso observed one year of growth from the historically low build rate in 2009 and believed the industry was in the early stages of a significant recovery.
Invested Behind a Unique Business Model
Market leader in commercial vehicle lighting (#1 or #2 share across major product categories); low-cost producer in important, high-volume product lines; unique two-pronged selling strategy involving vehicle fleets and OEMs; ~11,000 points of distribution blanketing the U.S.
Supported Strong R&D Organization and New Product Pipeline
Kelso supported Truck-Lite’s strong R&D program with the launch of numerous new products during our ownership, including a greater focus on forward LED headlamps which were expected to significantly increase lighting product revenue in the coming years. In addition, we completed a significant acquisition which expanded Truck-Lite’s LED lighting franchise into an attractive new market.
Buffalo Grove, IL
Leading building products distributor serving residential and commercial construction end markets
Exploration and production company focusing on oil and gas exploration in the deep water Gulf of Mexico
Midstream company focused on operating, building and acquiring terminals and related infrastructure across North America.