Castle Harlan

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Castle Harlan
Type Private
Industry Private equity
Founded 1987
Headquarters New York, New York, U.S.
Products Leveraged buyout, Growth capital
Employees 25+
Website www.castleharlan.com

Castle Harlan is a private equity firm based in New York that focuses on buyouts and growth capital investments in middle-market companies across a range of industries. Founded in 1987, Castle Harlan invests in controlling interests in middle-market companies in North America and Europe, as well as in Australia and Southeast Asia through Castle Harlan Australian Mezzanine Partners.

Castle Harlan’s team of 18 investment professionals, based in New York City, has completed over 50 acquisitions since its inception with a total value of approximately $10 billion. The firm currently manages investment funds with equity commitments of approximately $3.5 billion.

History

Castle Harlan was founded in 1987, but traces its origins to the 1960s, when John K. Castle headed all of the private equity activities, including the Sprout Capital Group, at Donaldson Lufkin & Jenrette (“DLJ”). At that time, DLJ used some of the first limited partnerships to bring institutional investors into private equity investing. Subsequently, Castle rose to be President and Chief Executive Officer at DLJ during the period of 1979 to 1986.

Leonard Harlan joined DLJ in 1965 and was a friend of Castle. Harlan left DLJ in 1969 and formed a successful real estate investment group, The Harlan Company. In 1987, Castle and Harlan, with a handful of others, raised $125 million for its new limited partnership, Legend Capital Group, L.P., to invest in leveraged buyout transactions.

In 1999, Castle Harlan teamed with Bill Ferris and Joseph Skrzynski of Australian Mezzanine Investments to create Castle Harlan Australian Mezzanine Partners, also known as CHAMP. CHAMP focuses on control investments in middle-market businesses in Australia and Southeast Asia with similar criteria to Castle Harlan. CHAMP also has an affiliate, CHAMP Ventures, that invests in small buyouts, non-control growth capital and venture capital. CHAMP raised its second fund with A$950 million of investor commitments in 2005 and its third fund with A$1.5 billion in 2010.[1]

Investments

Investment funds

Since its inception, Castle Harlan has participated in eight private equity funds, five in the United States and three in Australia. The U.S. funds are:

  • Castle Harlan Partners V (2010, approx $1.0 billion)[2]
  • Castle Harlan Partners IV (2003, $1.2 billion)[2][3]
  • Castle Harlan Partners III (1997, $625 million)[2]
  • Castle Harlan Partners II (1992, $275 million)[2]
  • Legend Capital Group (1987, $125 million)[2]

These partnerships, together with the three Australian funds, have represented committed equity capital of approximately $6.0 billion.

Portfolio companies

Castle Harlan focuses on investing in control positions in private middle-market companies. The firm prefers to partner with existing managers, who know the business the best. In order for Castle Harlan to acquire a company, the business must be priced realistically in terms of growth prospects and fundamental value in the marketplace.

Current and former portfolio companies include Securus Technologies, the leading provider of secure inmate telecommunications for the corrections industry; IDQ Holdings, the largest provider in the U.S. of aftermarket automotive air conditioning repair products for the do-it-yourself market; Pretium Packaging, a leader in short-run plastic bottles; Americast Technologies, Inc., a leading North American designer and manufacturer of large, highly engineered steel and complex ferrous alloy castings, Bravo Brio Restaurant Group, which owns and operates more than 50 mid-to-upscale Italian restaurants, and United Malt Holdings.[4]

Examples of investments made during the last decade.

Investment Results
Polypipe Group One of the two leading suppliers of plastic pipe systems in the U.K. and Ireland, Polypipe was purchased in 2005 by Castle Harlan and 50 Polypipe managers for $527 million from IMI plc, an international engineering company. Two years later, Castle Harlan sold its interest to company management and the Bank of Scotland for $880 million. Castle Harlan helped management refocus the company by concentrating on its core businesses. The Castle Harlan investment group realized a 4.5 times return on invested capital.[citation needed]
Horizon Lines Horizon Lines is the only Jones Act container-shipping company servicing ports in the continental U.S. and Alaska, Puerto Rico, Hawaii and Guam. The Jones Act requires that maritime trade between U.S. ports be conducted exclusively by companies owned and organized in the U.S. that use ships built and registered in the U.S. and that employ U.S. crews. Horizon Lines benefits from limited competition, stable demand and diversity of freight carried for long-standing customers. Castle Harlan purchased the company in July 2004 for $650 million and worked with management to grow the business. In 2005, Horizon completed an IPO.[5] Subsequently, there were three secondary offerings, and in 2007 Castle Harlan completed divesting its interest. The Castle Harlan investment group’s return was 3.2 times invested capital.[citation needed]
Ames True Temper Ames, in business since 1774, sells 80 percent of the long-handled tools, such as shovels, rakes and hoes, used in the U.S. and is the market leader in North America for other lawn and garden products, including wheelbarrows, pots and planters. Castle Harlan bought the company in July 2004 for $380 million.[6] Ames was sold, on September 30, 2010 to Griffon Corporation for $542 million. The Castle Harlan investment group’s return was 2.1 times invested capital.[citation needed]
Austar United Communications Castle Harlan and CHAMP co-invested in 2003 in a majority interest in Austar, the leading provider of satellite pay television in non-urban Eastern Australia, by purchasing company debt from a Chapter 11 bankruptcy procedure for US$34.5 million. Austar was taken public through an IPO in Australia in 2005.[7] The Castle Harlan investment group’s return was 7.2 times invested capital.[citation needed]
McCormick & Schmick's Castle Harlan owned McCormick & Schmick twice, first acquiring the company in 1994, building the business, then selling it in 1997. It bought the company back in 2001. McCormick & Schmick went public in 2004.[8][9] The Castle Harlan investment group’s return was 4.5 times invested capital in the 1994-1997 period and 2.6 times invested capital in the 2001-2004 period.[citation needed]
RathGibson RathGibson is a leading manufacturer of highly engineered premium stainless steel and alloy welded tubing products. Castle Harlan purchased the company in February 2006 for $260 million. In August that year, RathGibson acquired a complementary tubing manufacturer, Greenville Tube Company, for $37 million. When Castle Harlan sold the company in June 2007 for $440 million, revenues and earnings had increased by approximately 50 percent.[10] The Castle Harlan investment group’s return was 2.6 times its invested capital.[citation needed]
United Malt Holdings Based in Omaha with operating companies in the U.S., Canada, Australia and the U.K., this is one of the world’s largest producers of malted barley for production of whiskey and beer. Castle Harlan and its Australian partner, CHAMP Private Equity, purchased it in September 2006 and sold it in 2009 to GrainCorp Ltd., a major bulk-grain handler and trader in Australia. Management and Castle Harlan invested in expanding plants and shifted the business from maximizing volume to customer-specific specialized products that supported premium prices.[11]

The Castle Harlan investment group made a return on investment of 4.5 times its invested capital.[citation needed]

AmeriCast Technologies AmeriCast Technologies is a North American leader in the design and manufacture of large, complex steel castings. In November 2006, Castle Harlan took a controlling interest in AmeriCast. Organic growth and strategic acquisitions expanded the business approximately 70 percent by August 2008, when Castle Harlan sold its majority interest to Bradken Ltd, an Australian manufacturer of cast steel and other products, primarily for the mining and railroad industries, for approximately $288 million.[12] The Castle Harlan investment group’s return was 2.6 times invested capital.[citation needed]

Recent awards

  • 2010: Castle Harlan and CHAMP recognized by The Australian Private Equity and Venture Capital Association (AVCAL) for its successful investment in United Malt Holdings.
  • 2010: John K. Castle is inducted into the M&A Advisor Hall of Fame.[13]
  • 2010: Castle Harlan named as one of the “Consistent Performing Buyout Managers" by Preqin Private Equity Performance Monitor.
  • 2008: John K. Castle is given the Lifetime Achievement Award by M&A Advisor.[14]
  • 2006: Castle Harlan named with CHAMP the Private Equity Firm of the Year by M&A Advisor. From October 2005 through September 2006, the period covered for the award, Castle Harlan and CHAMP executed 24 transactions, including purchases, sales, add-ons and recapitalizations, with a total value of approximately $3.6 billion.
  • 2005: Castle Harlan named winner of the 2005 International/Cross-Border Deal of the Year by M&A Advisor. This was for the acquisition of Polypipe Group.
  • 2003: Castle Harlan named winner of the 2003 Middle Market International Cross-Border Deal of the Year and winner of the 2003 Middle Market Media and Telecommunications Deal of the Year by M&A Advisor. This was for the acquisition of Austar United Communications, Inc.

References

  1. ↑ CHAMP II Australian buy-out fund closes on A$950m. AltAssets, Aug 3, 2005
  2. ↑ 2.0 2.1 2.2 2.3 2.4 Data collected from Preqin, a private equity database system
  3. ↑ US Castle Harlan closes fourth fund on $1.2bn. Sep 24, 2003
  4. ↑ GrainCorp Agrees to Buy United Malt for $655 Million. Bloomberg, October 6, 2009
  5. ↑ Horizon: Castle to Take Horizon Public. The Deal, Mar 3, 2005
  6. ↑ Ames True Temper: Castle Harlan Completes $542M Sale of Garden Tools Company to Griffon Corp. PE Hub, Sept 30, 2010
  7. ↑
    • Austar: Private Equity Funds Sell A$567 mln Stake in Austar. Reuters, Dec 14, 2005
  8. ↑ McCormick and Schmick: Avado Brands Agrees To Sell Restaurants To New York Investors. Wall Street Journal, June 11, 2001
  9. ↑ McCormick & Schmick Gets $24M Investment From Castle Harlan. Dow Jones News Service, Oct 19, 1994
  10. ↑ RathGibson: DLJ Beefs Up Portfolio With Manufacturing Purchase. Buyouts, May 14, 2007
  11. ↑ United Malt Holdings: How One Private Equity Firm Beat The Odds. Business Week, Nov 13, 2009
  12. ↑ AmeriCast: Bradken To Buy Rest of AmeriCast Tech for A$114M. Dow Jones, July 29, 2008
  13. ↑ Finalists Announced for 9th Annual M&A Advisor Awards. M&A Advisor, October 29, 2010
  14. ↑ Lifetime Achievement Award 2008 Recipient - John K. Castle. M&A Advisor, October 11, 2009

External links

Private equity and venture capital investment firms
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